TAX LIEN WEALTH BUILDERS

Know aboutdifferent types ofbidding in tax lien sales

INTRODUCTION

A tax lien is a lien imposed on the delinquent propertyby the federal government. Once the lien is issued on

the property, it is auctioned for sales to theinterested investors. Investors will bid and the

investor with the highest bid will win the auction. Theinvestor must know about the bidding method of the taxlien sales. There are many types of bidding methods oftax lien sales in the U.S, but the premium bidding and

percentage bid down bidding methods are the mostcommonly using bidding methods.

Types ofBidding

01 Premium Bidding Method

02 Percentage Bid-Down biddingmethod

03 Rotational bidding

04

05

Percentage Bid-Down thenPremium Bidding

First to bid Tax Amount

We will be discussing below thesebidding methods also some of the othermethods followed while auctioning tax lien.

In this bidding process, each property has an initial or minimum

bidding amount, Investors and auctioneers can start their

bidding from the minimum amount and the highest bidder will

win the bid. The amount which is raised above the minimum bid

amount is referred to as the premium. For example, the

minimum bidding amount is $100 and it auctioned to the amount

of $110, means the premium amount is the difference of two

amount, i.e. $10. In tax lien sales, the premium is not recouped

by the investors.

Premium Bidding Method

Percentage Bid-Down biddingmethod

In this method, the bid amount is finalized

initially before the bidding and it will never

change during the bidding. What does happen

is only the percentage rate of interest on the

bidding amount is lowered. The investor with

the lowest rate of interest will win the bidding.

In this method, the registered investors are

given bidder numbers according to the number

they can participate in the auction. The

minimum bid and the rate of interest remain

unchanged during the bidding. This process

starts with the first investor in the auction, if

they are not interested in that property, it is

forwarded to the next investors in the auction

like this the auction goes on until the tax lien

property is taken by someone.

Rotationalbidding

PercentageBid-Downthen PremiumBidding

First to bid TaxAmount

This is a hybrid bidding

process, where the

bidding process starts

with the Percentage Bid-

Down method, if the bid

rate goes to 0% then the

bidding process is

changed to the premium

bidding process.

Here the “first come

first served” principle

is used. The first

person who pays the

full amount of the

bidding of tax lien

sales is the winner.

https://www.marketpressrelease.com/Tax-Lien-Wealth-Builders-Tax-Lien-investing-and-Its-Process-1590675599.html