Tax Sale Auctions: Good or Bad?

[Mary Margaret Bryant]

I am interested in learning more about tax sale auctions. What are the advantages? What are the things to look out for?

[Ronald Allen Barney]

Tax lien purchases and tax sale auctions are a skill set all their own, and can be very high risk for anyone who goes into that market half-prepared.  The best advantage in that space starts with the fact that it's not a saturated market for that exact reason of how risky and complex it is.  You'll be up against dozens instead of hundreds of other investors chasing after the same deals.

Biggest thing to look out for is dirty title.  The more successful tax auction investors hire top flight title search professionals to scour fully into title history to make sure liens aren't lurking that will jump right out the minute they've got keys in hand.  Often anyone who fails to pay their taxes has also failed to pay other people in a way that results in property liens.

Physical security can be a concern as losing a house is often an emotional affair, and some auction investors have had to face assault by the previous owner during attempts at due diligence at the property site.

One notorious investor I'm aware of quotes Sun Tzu with "Victorious warriors win first, and then go to war, while defeated warriors go to war first and then seek to win."  That's a reference to all the research they do up front on the property to ensure they even want it to begin with, and then laying out their bidding strategy while at the auction itself.