How to Find Tax Lien Auction Properties

Interested in attending a tax lien auction? It’s important to know what you’re getting into first, including how to find tax lien property auctions and make a smart and strategic investment decision. 

When a land or home owner fails to pay property or income taxes, the government puts a lien on their property. This lien then goes up for auction, allowing investors to purchase the debt and collect on the tax payments and interest. This could lead to returns of up to 36%, depending on the state, plus a potential opportunity to acquire the property for cheap if it eventually goes into foreclosure.

If you’re thinking of pursuing tax lien auctions, you’ll be glad to know that they’re pretty easy to find once you know where to look. Below, we’re covering the basics of searching for defaulted tax auctions in your area, plus what to know before you go. 

What is a Tax Lien Auction?

A tax lien auction is a public sale run by a county government. Usually held annually, they offer investors a chance to buy certificates on the tax liens of local properties by paying the overdue taxes. The owner then must pay back the investor — rather than the county — in order to keep the property, with high interest rates and a set redemption period of generally two or three years. 

Why Buy Lien Certificate at Auction

When you win an auction for a tax lien property, you’re not getting the property itself. You are, however, opening the door to high potential returns in the next couple of years, as well as a few other notable benefits. 

Interest on tax liens can range from 8% to 36%, and that’s on top of the tax debt itself. And because the investment is backed by real property, you do have some recourse if the owner never pays. In fact, in some states, you can put the property into foreclosure yourself and buy it on the cheap. (In other states the county handles the foreclosure, in which case you can still snag a low-cost property.)

Note that investment and return potential vary quite a bit from state to state. Make sure you understand local rules around tax lien auctions and that you know what you can (and can’t) do with a tax lien certificate in your county. 

Where to Find Tax Lien Auction Properties

You’ll usually find information on upcoming tax lien auctions in a few different places: county government websites, local newspapers, and local tax, sheriff’s, or auditor’s offices. 

County Websites

Most local governments list details of upcoming tax lien auctions right on their website. These will typically be found on either the county auditor's website or that of the county sheriff. 

Also known as tax lien sales, these auction lists normally provide not only the date of the auction and the properties with certificates for sale, but also the deposit required for bidding and the amount of tax owed. This number will provide you an idea of the likely opening and winning bid so you can set a strategy prior to attending. Keep in mind that interest and fees normally accrue daily, so the original number you view will probably rise on a daily basis. 

Local Newspapers

In addition to websites, municipal authorities often publish upcoming tax lien auctions in local newspapers and occasionally regional publications. In states like Illinois, these newspaper notices are actually legally required, and can be found in either the local town paper or its county equivalent.

County Courthouse

Those searching for tax sale auctions in their local communities may also visit the tax office, sheriff's office, or auditor's office in the county courthouse and view the list of upcoming auctions posted in those facilities. This is usually the best way to check for regular updates, as property owners may pay their tax liability at any time previous to the auction and yank the property from the auction block.

Tax Auction Buyer Requirements

It’s crucial that you pay close attention to the buyer requirements demanded by your local government and adhere to those rules and procedures exactly. This includes rules around:

• Auction Registration: You may find it necessary to register with the local tax entity prior to the auction. 
• Deposit: Look up local requirements concerning the deposit, like whether it must be in cash, money order, or cashier's check. 
• Sale Terms: Make sure you are fully aware of all the rules of the tax lien sale, including the length of time that the property owner may legally claim to pay the tax amount and penalties back to you.
• Payment Deadlines: Different municipalities and tax entities will vary in the amount of time they allow you to pay your bid in full to the government.

Whether attending the auction in-person or by proxy, savvy buyers establish a maximum bid for all properties they're interested in before the auction and adhere to that strictly. For the best outcome, create a list of liened properties you’re interested in, write it down, take it with you, and stick to it.

Stay Smart and Disciplined

Searching for tax lien properties can be a profitable way to invest in real estate and find exceptional bargains. But, like most things, it can also be a competitive arena, and demands plenty of research and attention to detail.

Go into the process with a clear idea of what you’re trying to achieve — and a clear budget for achieving it. And once you find a tax lien auction near you, do some digging into the properties you may be interested in, including their potential value, their zoning specifics, and prior tax and payment history. 

Defaulted tax property auctions happen everywhere. Start your search today via your county government website, local newspaper, or nearest tax, sheriff’s, or auditor’s office to see what’s available and what you could stand to gain as an investor.