Bidding on Tax Lien and Deed Sales Online

Are you bidding in the online tax sales?

Whether you’re participating in tax lien sales, tax deed or redeemable deed auctions online, you’ve got to know what you are bidding. It’s important to know 2 things…

  1. If you are bidding premium, does your bid amount include the starting bid or face amount of the lien, or is it a separate amount, and…
  2. Is your bid a proxy bid or a direct bid

What is a Proxy Bid?

When you are bidding on the online tax sales, it’s a little different than bidding in person. Some online bidding platforms will let you see the current highest bid, and some will not. It’s hard to know what to bid when you can’t see the other bids. Some bidding platforms will let you put in a proxy bid instead of a direct bid. What’s the difference? In a direct bid situation, if you are the winning bidder you must pay the amount that you bid. In a proxy bidding situation, you only pay one bidding increment above the next highest bidder.

Here’s an Example…

Consider a $1000 lien in a tax sale where premium is bid as a separate amount. Let’s say you bid $10,000 to get the lien. You can’t see the other bids until the tax sale is over and this is a direct bid situation. After you’ve won the bid at $10,000 you can see all the other bids. 4 other bids on this liens, they were at $1100, $1500, $5000, and $5500. Since you were the highest bidder at $10,000 and now you’ll pay $11,000 to get the lien, (The lien amount plus the premium you bid).

For this same scenario in a proxy bid situation, if the bidding was in $100 increments, you are still the winning bidder. But now you win the bid at $100 more than the next highest bidder. In this case $5,600. So now you pay only $6,600 for the lien.

So you can see why it’s important to know if your bid is a proxy bid or a direct bid when you’re bidding in the online tax sales!

Need help determining which tax sales are right for you? Or researching tax sale properties and deciding which properties to bid on and how much to bid? Tax Lien Profits Accelerator™ members get tools and resources and coaching from me each month.

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