Are you ready to buy tax liens online?

You’ve purchased a couple of tax liens and/or tax deeds and now you want to branch out to other areas by investing online. Or maybe you haven’t even started investing yet, but you want to invest in a tax lien state and you live in a tax deed state, or visa versa. Or perhaps you don’t live in the U.S. but you want to invest in U.S. tax liens or tax deeds. You’ve heard that you can buy tax liens or tax deeds online and you think that sounds like the way to go.

Here’s what you need to know about buying tax liens and tax deeds online before you get started:

1. Only a few states offer online tax sales, though the list is constantly expanding as more counties find it easier to sell their tax sale properties online. As of the writing of this article there are 8 states that have counties or municipalities that conduct online tax lien sales, and 6 states with counties that have online tax deed sales. The number of states that have online tax lien or tax deed sales has doubled in the last couple of years, and new counties are going to online auctions each year.

2. Once a county moves to online sales the bidding becomes more competitive, so be prepared for the competition. Also most of the online tax sales require a big deposit before you are allowed to bid. The deposit usually has to be in a few a days before the tax sale begins, so online tax sales are not tax sales that you can register for a day or 2 before the sale. You need to register and get your deposit in early. Sometimes you need to be registered and have your deposit in weeks ahead of time, and it others you just need to be registered and have your deposit in before the bidding closes.

3. Although most online auctions require that you only register once for the tax sale, some online sales require that you register both with the county tax collector or treasurer and with the online auction site.

4. You will need to have a U.S. bank account in order to participate in any online tax sale. For some tax sales you will also need proof of your age (your drivers license or birth certificate will suffice), and for tax lien sales you will need to supply a W-9 form with a US tax ID number.

5. All of the online tax sales take place only take place once a year.

6. You will need to do due diligence on the tax sale properties, more due diligence is necessary for tax deeds than for tax liens. For tax liens, at the very least you will need to get the tax assessment information for the property, find the market price for the property, drive by the property and look at it (or have someone else look at the property for you). If you are investing from another state or another country and cannot physically look at the property, you can look at a satellite photo or aerial map of the property, but it is best to find someone who can actually look at the property and take pictures of it for you.

7. If you bid on a property by mistake and you’re the winning bidder, you’re stuck with it. There are no refunds. And if you do not pay for your winning bids, you will lose the lien, your deposit money, and be barred from future tax sales in that county.

Now you’ve got a good understanding of what’s involved with buying tax liens online you’ll be more prepared to bid successfully at the online tax sales. However this is not all you need to know, but it is a guide to help you get started. You’ll learn more as you actually do the investing. Just remember to read all of the terms and conditions of the sale and do your due diligence on the tax sale properties before you bid.

© 2013 Tax Lien Consulting LLC. All Rights Reserved. Any use of this article without the express permission of the author is a violation of copyright law.

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