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Are Online Tax Lien Auctions Worthwhile?

Aug 17, 2007
In today's day and age, the local tax collector has finally caught up with technology. The trend of online tax auctions is in full swing and now you too can buy tax liens from the comfort of home.

Here is how an online tax sale works: The county tax collector, through a third party provider, sets up an auction website. They have a bidding window, usually around a week. You as an investor simply logs in, submits your best offer and if it's accepted, then you have a tax lien.

It's easy to see why the county would want to sell tax liens online instead of a regular sale. It's cheaper, easier and less hassle to do the tax sale online.

From an investor's point of view, there are advantages and disadvantages to using online auctions to invest in tax lien certificates. The first one is convenience. You don't have to take off work, make a long road trip, pay for hotels and airfare or any of that stuff. You just log in and make an offer.

It has also leveled the playing field. In the previous years, the tax sales were dominated by the big players because they were the only ones who had the time to attend the tax sale. Now, anyone can do it from home on their computer.

It's easy. Just log on and do it.

Of course, being simple and easy comes at a price. With the increased exposure comes increased competition. You aren't going to get the higher rates that you possibly might get at a live event.

Additionally, there really is something to be said for having a chance to visit a community and see the properties. You will know the good areas from the bad. It's always a good idea, if possible to visit the property where your certificate is located to see if it's really a worthwhile investment.

Also, just being able to be there and network with the other investors help you understand what's going on in the area. "Table talk" does happen at tax auctions, whether the county likes it or not. Obviously, buying a tax lien through the internet does not allow you this luxury.

So, as you can see, like it or not, online auctions are here to stay. If you are new to tax liens, they are great for starting out. Like anything in real estate, proper planning and research is essential.
About the Author
Carlos Scarpero is an experienced real estate investor who specializes in land. On his blog at http://www.scarpero.com/real_estate , he discusses innovative and creative real estate strategies to make your real estate investing more profitable.
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