This guide to purchasing tax liens online explains the process used by most local government authorities to allow investors to buy tax liens online.
How to buy tax liens online is a relatively simple process; though the rules are set by each state that sells tax liens at auction, and those rules are administered by the local government (county, parish, township, city, town). Most tax liens are bought at government administered public auctions, where investors bid on and buy tax liens online.
In some cases tax liens are sold by the local government without an auction process, this is where investors can buy tax liens online without a bidding process, and meaning the investor buys the tax lien and receives the maximum interest rate allowed by law. Most local governments that sell tax liens will have a guide to purchasing tax liens online, and many have practice sites, where investors can learn the steps of how to buy tax liens online without having to put up any money.
Each state has an annual tax lien auction with the time of year for the auction set by state law. Anyone can buy at the auction or sale, even non-United States citizens; all you need is a tax identification number (social security number or a business tax identification number for most U.S. citizens, and an Individual Tax Identification Number for most foreign nationals). All investors can buy tax liens online from their home state or country.
The following is a basic step by step process to go about purchasing tax liens online:
1. The investor logs onto the online tax lien auction website and provides some basic information to register as an online tax lien bidder such as:
a. Name of the person or other legal entity who will own the investment
b. Tax identification number of the investor
c. Bank account information for the transfer of funds electronically
d. The deposit amount the investor wishes to transfer is specified and transferred from the investors bank account (the deposit is typically a percentage of the total maximum value of tax liens the investor wishes to buy)
2. Next the investor researches each tax lien they are considering buying to ensure that the real estate backing the tax lien has sufficiently greater value than the tax lien. Most or all of the research you want to do can be found online.
3. The next step to buy tax liens online is to bid. That process typically involves selecting a tax lien and defining a percentage interest rate you are willing to accept as an annual interest rate on that tax lien. You can bid to buy more tax liens than your deposit will cover and the online system will stop buying tax liens in your name once your limit is reached.
4. After the online tax lien auction process is complete you will get a summary of what tax liens you bought and will either be required to electronically pay the balance of what is owed for your tax lien purchases, or get a refund of the unused portion of your deposit.
5. Next wait until the delinquent tax payer pays the property taxes and you will receive all your original investment in each paid off tax lien plus interest electronically transferred into your bank account.
6. Should any of the tax liens you bought not get paid off by the delinquent taxpayer, you can get the property for just the cost of the back taxes and fees.
7. Tax lien certificates that are not sold during the auction are often available to investors to buy online shortly after the auction using a similar process as used during the auction, but in this case there is no bidding. The first buyer to make an offer to buy a tax lien online gets the lien at the maximum interest rate allowed by law.
Each local government agency offering the opportunity to buy tax liens online has a guide to buying tax liens online available on their website that explains the specific rules of the online tax lien auction in that jurisdiction.
There are the basics to buying tax lien certificates online. Some may profit buying tax liens with this simple guide, but the sophisticated investors use advanced strategies to find uniquely profitable investments less educated buyers of tax liens overlook.
Ted Thomas has guided many investors to buying tax liens online, showing them the safest, most secure and predictable way how to evaluate and buy tax liens online. Ted’s been showing others the steps to successfully buy tax liens for over 25 years, and Ted Thomas has become known as America’s Tax Lien Certificate and Tax Deed Authority. In the video linked below Ted introduces a short video where one of his students demonstrates how to buy tax liens online recorded during a live online tax lien auction.