Understanding premium on the bid

[Jonathan Keiser]

Hello everyone. I am a newbie in real estate. I am interested in looking into tax liens in Indiana. I understand the 10% first 6 months and 15% the second 6 with the 1 year redemption period. I am unclear when it comes to bidding over the price of the lien. If you bid over the price of the lien what happens to the excess bid when the homeowners pays the tax lien? You get the lien amount back with interest but do you get the excess premium back as well? Any help would be greatly appreciated. 

Thank You 

Jon

[Jay Redding]

Hi Jonathan:

We have invested in Indiana tax liens for a number of years.  If the owner pays off the lien, you will receive all of your money back plus interest.  If the owner does not pay off the lien, you will receive the property via a tax deed.  Before you take title, make sure you run a title search as well as check the utilities so you know all the liens that are on the property.  There can be federal liens, IRS liens etc.  You will want to consult an attorney to make sure you know what will get wiped out and what will not.  Most items will be removed.  As a standard procedure, we typically do a quiet title action once we take ownership to make sure anyone that might have an interest that was missed gets extinquished.  If the title is pretty clean, some title insurance companies will insure over the top and you would not need to do a quiet title.  Hope that helps.