The Tax Lien Certificate Sale Process Explained in 7 Steps

Tax lien certificate sales offer abundant opportunities to earn an inflation-beating passive income or even acquire a property just by paying the back taxes.

The tax lien certificate sale process doesn’t have to be confusing. By breaking it down into simple steps, you can easily gain an understanding of how this works.

We’ll talk about how to find a list of tax lien properties for sale, how to prepare for the auction and avoid costly mistakes. An ounce of preparation will save you a pound of headaches.

Before attending a tax lien certificate sale, know the auction rules, have a budget and a plan in place. Be prepared. Research the property and the location and surrounding neighborhood. By doing thorough research and attending the auction well-informed, you can greatly improve your chances of success when purchasing tax lien certificates.

Key Takeaways

  • Gain an understanding of tax lien certificates and how they work
  • Prepare for tax lien certificate auctions by knowing the rules, setting a budget, and researching properties
  • Success in tax lien investing depends on thorough research and patience while awaiting returns

What are Tax Lien Certificates?

Tax lien certificates are a result of property owners not paying their property taxes. In roughly half of the states in the United States, the county sells tax liens at public auctions called “tax lien certificate sales.” Tax lien certificate sales can be held online or in-person or both simultaneously.

Why Would You Pay Someone Else’s Property Taxes?

When you buy a tax lien certificate, you’re paying someone else’s delinquent property taxes, and by doing so, you become the owner of the tax lien with the right to collect the interest on the lien or foreclose on the property if the taxes are not paid before the redemption period expires.

Tax Lien Certificate Redemption Periods

If the property owner ends up redeeming the certificate, they will have to pay you back your full investment along with a high interest rate. Keep in mind that it may take time to collect your money on a tax lien certificate since redemption periods are usually 2 to 3 years depending on the state, so patience is key.

Tax Lien Certificates Pay High Interest Rates

At tax lien certificate sales, investors typically bid on the interest rate, often in a bid-down auction called a “reverse auction,” where the lowest bidder wins. The bidding begins at the maximum interest rate which could be 16%, 18%, 24% or 36% depending on the state or even the county before it’s incrementally bid down. This is the general rule, though the tax lien certificate sale process can vary, which is why it’s important to know the auction rules prior to bidding.

your tax lien investment is protected by the property tax code

Your Tax Lien Investment is Protected by the Property Tax Code

When you purchase a tax lien certificate, you’re not buying the property; you’re becoming the primary lien holder by buying the property tax lien and all the rights that come with it. Your investment is protected by the tax code and backed by the local government, making tax lien certificates a safe investment.

Your Tax Lien Certificate is Secured by Real Estate

You’re investment is also secured by real estate because if that certificate is not redeemed by the tax delinquent property owner, then you have the right to foreclose on the property. So you either get paid all of your money back plus interest or you get the property.

Tax Lien Certificate Sales Explained in 7 Steps

Step 1: Why Counties Issue Tax Lien Certificates

Tax lien certificates exist because property owners are required to pay property taxes. If they don’t pay, the local state legislature and county face financial difficulties. The local government needs to collect the tax revenue even if it means getting it from someone other than the property owner, and so tax lien certificates are sold at public auctions.

Tax lien certificates are benevolent because the county is auctioning the lien rather than the real estate which allows the property owner to remain on the property and have more time to settle the tax debt. 95% to 97% of tax delinquent property owners will redeem the tax lien certificate and keep their property, which makes tax lien certificates an excellent passive investment. When you buy a tax lien certificate, you’re helping both the county and the distressed property owner.

Step 2: Comprehending Auction Rules

Before attending a tax lien certificate sale, familiarize yourself with the rules of the auction. You can find these on the county website, state statutes, or auction lists. Knowing the county auction rules is essential for a successful investment.

Step 3: Creating a Tax Auction Budget

Plan how much you’re willing to spend on a tax lien certificate and choose the property accordingly. Determine the right tax lien amount and how you’ll spread your investment across properties before arriving at the tax lien certificate sale.

Tax lien certificates are sold in amounts that suit any budget, whether it’s $50 or $50,000. However, it would be advantageous to invest at least a couple of thousand if your objective is to earn a passive income. While tax lien certificates pay high interest rates, you won’t make much if you don’t invest much.

Ted teaches how to find tax lien certificate sales and property lists

Step 4: Locating Tax Lien Properties for Sale

You can find lists of tax lien properties for sale on county websites and in local newspapers. Tax lien properties for sale lists can run quite long, even in the tens of thousands, so focus on the properties that match your desired investment goals.

Step 5: Investigating Property Conditions

Make sure you research the condition of your chosen property, this includes viewing the property in-person or having someone do it for you. After all, if the property owner doesn’t redeem the tax lien certificate, the property will be yours, so it’s essential to know what you’re potentially acquiring.

Step 6: Analyzing Location and Neighborhood

Real estate brokers emphasize the importance of location. Check if the property is located in a good neighborhood. You want to avoid investing in a tax lien certificate that may not hold much value due to its location or surrounding area.

Step 7: Preparing for the Tax Auction

To increase your chances of success at a tax lien certificate sale, plan your approach meticulously. Locate the properties you’re interested in, research their conditions, and get familiar with the auction rules. Doing your homework and having a clear budget plan will contribute to a smooth and successful tax lien certificate investment experience.


In conclusion, tax lien certificate sales offer a unique investment opportunity with potentially high returns. As an investor, it’s crucial to follow these steps to ensure success in this venture:

  1. Understand the process: Familiarize yourself with tax lien certificates and how they work, considering the laws and state regulations, taking the interest rate and other factors into account.
  2. Know the auction rules: Prior to participating in a tax lien certificate sale, learn the rules to avoid any surprises or difficulties once the bidding starts.
  3. Budget wisely: Determine how much money you’re willing to invest and allocate it accordingly across multiple properties if necessary.
  4. Locate the auction list: The county website and local newspapers are excellent sources for finding property auction lists.
  5. Narrow down the list: Choose properties that match your investment criteria while also taking your budget into account.
  6. Research the property and location: Thoroughly examine the property and its neighborhood to ensure that it’s a valuable investment.
  7. Prepare for the auction: Plan ahead by visiting properties, securing financing, and anticipating potential challenges.


By following these steps and paying close attention to details, you can make confident and informed decisions in your tax lien investing journey. Remember, success in this field comes down to diligent research, planning, and execution.

If you’d like to know more about tax lien certificates and tax deed investing Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, auction buying tours, personal coaching with certified coaches, and an interactive map and auction calendar research tool that allows you to visit each county online to find the details about upcoming auctions.

Want to earn massive income from bargain real estate investing? Would you like to buy mortgage-free properties for pennies on the dollar? Or earn double-digit interest rates secured by real estate? Then get started today with this Free Gift.


Ted Thomas

Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.

The Ted Thomas Difference:

  • Ted is recognized as America’s Tax Lien Certificate & Tax Deed Authority and has been helping people with investing in tax defaulted properties for over 30 years.
  • Ted has built a team of certified coaches that have 70 combined years of auction experience and are available to his students by phone to guide and mentor you to avoid getting overwhelmed or worse, losing money
  • Ted has ironclad PROOF that what he is teaching you does work. With hundreds of successful students providing testimonials and a 4.9 Google rating which is unheard of in this industry.
  • Ted and his staff don’t hide behind a website; they can be reached during office hours at 321-449-9940.

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