To be a successful bidder at a tax lien sale, you must be prepared. It’s a good idea to attend a couple of sales before you actually start bidding on properties. In this way you can become familiar with the bidding procedure, which is different in each state. New people are always amazed at what actually happens at a tax sale. It’s not what they expect. They expect to bid a healthy interest rate on a lien and are totally taken by surprise when the bidding goes down to zero and then up to very high premium.

There are a few things that you need to know before you bid at a tax sale. First of all you need to pay in full with cash or certified check for anything that you are the successful bidder on. Some municipalities will accept attorney’s checks and/or money wires but most tax collectors will only accept cash, or certified funds payable to the municipality.

Some tax collectors will allow you time to go to the bank after the sale to get a certified check, but some will not. You will need to know ahead of time if you will have to pay immediately after the sale or if you will be given time to go to the bank. If you won’t be able to go to the bank after the sale, you will need to have the required funds with you. Do not wait until the day of the sale to learn what forms of payment are accepted, or you could loose a successful bid.

Get in touch with the tax collector a few days before the sale to verify the time and place of the sale, find out what forms of payment are accepted, and whether or not you need to register ahead of time. Keep in mind that in most cases, half of the properties that are on the original list for the sale will be paid off and no longer available. You don’t want to waist your time doing due diligence on all of the properties on the original list. The tax collector should be able to give you an updated list with the current properties in the sale. In many cases the tax collector will fax you the list. A few municipalities will have their lists on their website. For very large municipalities you may have to go pick the list up at the tax collector’s office. Once you have an updated list, you’ll need a day or so to do due diligence on the properties. Even though you are not buying the property, you want to make sure that you’re not getting a lien on a worthless property.

If you are successful bidder on any of the properties, you will be required to give the tax collector a Tax Sale Bidder Information Sheet. Some tax collectors will require that you hand in the form before the sale, when you register. It has to be filled out with your name address and social security number, or federal ID number if you’re bidding under a company name. It may also have a required notice and disclaimer that you have to sign. Usually there’s room to fill in the lot and block numbers of the properties that you win, along with the % bid (0 if you paid premium), premium, if any, and the amount of sale (this is the amount of the lien and could be different than the total amount paid if you paid premium). Some municipalities also require you to fill out a W-9 form so be prepared with your business information if you’re bidding under a company name, or with your social security number if your bidding under your own name.

On the day of the sale, arrive early so that you can check on last minute updates (people are always paying their taxes last minute, rite before the sale), open taxes, and zoning if you need to. I like to arrive an hour before the sale begins. You’ll need to have the Bidding Form, certified checks, and the Bidder Information Sheet. Make sure that you’re seated and ready a few minutes before the sale begins. Turn off your cell phone, once things start everything happens very quickly, and any distraction can cost you.

After the sale you will have to pay for any liens that you purchased. If the tax collector doesn’t have change, they will send you a check for the difference, but you may have to wait until the next board meeting before you get it. Keep your receipts and a copy of the bidder information sheet. In some cases the tax collector will issue a certificate immediately, but in most cases you will have to wait up to 10 days and the certificate will be mailed to you.

On the following pages is the check list that I provide to all of my bidders to help them prepare for a tax lien sale. Please realize that each state again has its own requirements.

Check list for preparing for a tax lien sale

One week before the sale;

• Call the tax collector and verify the following information:
  

?Date, time and place of the sale.

Tax collector’s contact information
(name, address,phone, fax, and office hours).

• ??Which year’s taxes are being sold (previous year or current year)?

• ??Start of the municipality’s year. Are they on a calendar or fiscal year?

• ??What forms of payment are accepted? Do they take wire transfers? If they do, what needs to be set up ahead of time?

• ??Does the municipality have a year end penalty?

• ??Do you need to register for the sale ahead of time?

• ??How can you obtain an updated list for the sale? Will they fax you a list or will you need to pick it up?

Three days before the sale;

Get the updated list from the tax collector and do your due diligence. For specifics on how to do due diligence consult the special report on my web site “Step by Step Guide: How to do Due Diligence for Tax Lien Sales”. Check the

Following:

1. ??Are there prior liens on any of the properties in the sale?
2. ??Are there open taxes on any of the sewer or utility liens?
3. ??Check zoning on any vacant land in the sale.
4. ??If you are not familiar with the municipality, look at the tax map in  the tax collector’s or tax assessor’s office to find where the properties are located
   ?It’s a good idea to have your own map for street references.

One daBefore the sale;

• Based on your due diligence, decide which properties you will bid on, and what the maximum premium that you are willing to pay is on each of the properties. Be sure to:
• ??Register for the sale if prior registration is required.
• ??Go to the bank and get the certified funds and/or cash that you will need. (Unless you’re using wire transfers or will be given time to go to the bank after the sale).

The day of the sale;

• Get to the sale an hour early, and have the following with you:

1. Necessary means of payment.
2. ??Necessary forms – Bidder Information Sheet and W-9 form.
3. ??Your own bid sheet showing all the properties in the sale, with the properties that you are bidding on highlighted with premium numbers.