Tax Lien Investing - Why bid a premium?

[Chris Laino]

Hi,

I participated in an online auction recently for tax liens. This was my first time doing this so I played things as safe as possible (bidding only the max possible of 18%, in nice areas of the town on properties that were not in foreclosure or pre-foreclosure). I was only bidding on liens that were $350 and under. Unfortunately, I did not win any of the liens, and when I saw the winning bid, all of them were premiums (ranging from $300 on a $130 lien to $1,100 on a $350 lien). I was wondering what the benefit of bidding a premium is since the property owner does not have to reimburse the premium of the lien. 

Thanks!