Investing in real estate doesn’t always mean buying a property outright, and if you’re someone who doesn’t want the financial cost that comes along with it or the headaches that tenants can create, one lesser-known but potentially profitable real estate investing strategy is tax liens.
One place you can buy tax liens — you guessed it — is a tax lien auction.
From what they are to how much they cost and where you can find one, here’s everything you need to know about tax lien auctions.
What Is a Tax Lien Auction?
A tax lien auction is a public sale conducted by a local government to recover unpaid property taxes. When a property owner fails to pay their taxes, the county or municipality places a lien on the property. Instead of waiting for the owner to pay, the government sells that lien at auction to investors.
By purchasing a tax lien, you as the investor are essentially paying the delinquent taxes on behalf of the owner, with the understanding that the owner must repay the amount plus interest or penalties within a set period. That’s exactly how you can profit in this form of real estate investing.
How Does a Tax Lien Auction Work?
The process can vary by state, but generally works like this:
- Property Owner Misses Tax Payments: The county records a tax lien against the property.
- County Offers the Lien at Auction: Investors bid on the lien, often competing by offering the lowest interest rate they’re willing to accept.
- Winning Bidder Pays the Taxes: The investor pays the delinquent tax bill to the county.
- Property Owner Redeems the Lien: The property owner must pay back the investor the amount plus the agreed interest and penalties.
- If the Owner Fails to Pay: After the redemption period expires, the investor may have the right to foreclose and potentially acquire the property.
This makes tax lien auctions appealing because investors can either collect reliable interest or, in rare cases, end up owning the property for the cost of unpaid taxes.
Does it Cost Money to Attend a Tax Lien Auction?
Yes, there is usually a cost to participate in a tax lien auction, but the exact amount depends on your county or state. Here’s what to expect:
- Registration Fees: Many counties charge between $25 and $150 to register for an auction. Online platforms may also have technology or service fees.
- Refundable Deposits: Some counties require a refundable deposit, often around 10% of your intended bid amount or a flat fee (commonly $500–$1,500).
- Winning Bids: If you win, you must pay the full amount of the lien immediately or within 24–48 hours. This can range from a few hundred dollars to tens of thousands, depending on the property’s unpaid taxes.
- Research Costs: Investors often spend money on title searches, property condition checks, or professional help, which can add another $100–$500 per property.
In summary: You can usually attend with a minimal registration fee, but to bid seriously, expect to have at least $1,000–$5,000 available in liquid funds.
How Can You Find a Tax Lien Auction Near You?
Here are a few ways to locate upcoming tax lien auctions:
- County Treasurer or Tax Collector Website — Most counties list auction schedules, rules, and registration details online.
- Local Newspaper Notices — Many jurisdictions are legally required to publicize auctions in print.
- Online Auction Platforms — Some states host tax lien auctions entirely online through specialized marketplaces.
- Networking with Real Estate Investors — Local real estate investment groups often share updates on when and where auctions are happening.
Before attending, carefully review the county’s auction rules and property lists. Each location has different regulations, redemption periods, and bidding procedures.
Can I Attend a Tax Lien Auction Online?
Yes, in many states you can attend tax lien auctions online. Over the past decade, counties have increasingly moved from in-person courthouse auctions to web-based platforms. This makes it possible for investors from anywhere in the country to participate.
Here’s what to know about online tax lien auctions:
- Registration is required: You’ll need to sign up on the county’s auction website or third-party platform.
- Deposits may be electronic: Instead of paying a cashier’s check in person, you’ll usually wire transfer funds or upload proof of deposit.
- Bidding is competitive: Keep in mind that online auctions often attract more investors since access is easier.
- Property lists are digital: Most online auctions publish property details, lien values, and redemption rules in advance for research.
- Payment deadlines are strict: If you win, expect to wire the full amount within 24–48 business hours.
In summary: Yes, you can attend tax lien auctions online in many states, but competition tends to be higher, and you’ll need to carefully read the platform’s rules before bidding.
Conclusion
There you have it: Attending your first tax lien auction — whether in person or online — can seem daunting. If you don’t feel comfortable bidding on a tax lien for your first time, simply attend to learn more about the process, and later, once you’re ready, consider jumping into the tax lien investing world with a plan and confidence.