We discuss three different types of tax sale and tax deed auctions and learn the advantages and disadvantages of each.
Transcript:
Hi, everybody! Casey Denman here with TaxSaleAcademy.com. And today, we’re talking about the three main types of auctions. You have the Live, the Absentee and the Hybrid Auction.
Now, let’s start off and let’s talk about the Live Auctions first. Live auctions are what most people know and what most people think of when they hear the word “auction.” It’s an auctioneer shouting numbers. You have bidders in a room holding up signs or pulling on their ear and whatever they may do to get their bid across. It’s what most people think of when they think of the word “auction.”
Now, the downfall of this is you must be present to win, or in some counties, they allow you to send an agent or a representative to bid on your behalf, but you must be there. The good thing is you know right away whether you’re going to win the property or lose the property. You can also adjust your bids. If everything’s going a little bit higher, maybe $50 or $100 higher than you expected to pay, you can adjust your bids here and there to allow for that variance. The cons are obvious. You have to travel across the country sometimes to go to these auctions.
Now, let’s move on to the next type of auctions, which is the Absentee Auctions. This could be a type of an auction or it could be a type of a bidder. What I mean by a type of a bidder, some live auctions will allow what we call “absentee bids.” Now, that auction that’s across the country, what you can do there is you can mail away or email or fill out a form online. Basically, a form to allow you to be an absentee bidder. It’ll say, “Listen, I’ll pay up to $200” or $500 or whatever it may be for this particular piece of property.
So what happens here is that the live auction, the auction company has a representative that says, “We have an absentee bid here and he’s bidding up to $200.” The con here is if somebody bids $201 for every property that you bid $200 for, you’re not going to win a single thing. You’re going to be outbid by $1 on each and every one of these properties. So you can’t adjust on the fly as if you could if you were in the auction.
Now, Absentee Auctions are an auction in and of themselves. Sometimes, there is no auction. There is no auctioneer. There’s nothing. It’s just somebody that advertises in the paper. A county puts an ad out in the paper and says, “Listen, on such and such a date, we’re going to open all the bids. So you have until this date to get your bid in.” So you’ll mail them a letter or you’ll send an email or whatever it may be and say, “I bid a maximum of this amount on all these properties.” They’ll open all these bids up. They’ll say, “This person is the high bidder” and you win. So it’s not even a real auction in the sense of the word, but they basically just choose the highest bidder. There’s no big production. There’s not auctioneers, people shouting numbers and going back and forth. They just pick the highest bid and that’s who gets the properties.
The last type of auction is the Hybrid Auction. This is the newest type of auction. It kind of mixes the absentee auction with the live bidding auction. And what happens here is you have a live auction that might be going on across the country from you and you can be sitting at your home office or your office or at Starbucks or wherever you may want to be, actually bidding on properties in real time against those live bidders. What happens is there’s a video feed or some sort of screen that you see and there’s a guy at the auction that is basically in control of this. He might press a button every time somebody in the room bids. And then you bid and he tells the auctioneer, “Hey, we have an online bidder, we have an over-the-phone bid,” or whatever it may be. However the system is set up.
This is very, very convenient. And the reason is you don’t have to travel across the country to go to this auction. You can literally be sitting in your boxers or your pajamas, for crying out loud, bidding on properties in real time against live bidders across the country sitting in an auction room. And this is becoming more and more prevalent as technology advances and as more counties discover this technology.
So hopefully, this is giving you a little bit of insight to the tax sale auctions and the type of auctions. You have the Live Auction, the Absentee Auction and the Hybrid Auction.
And for more information on the very lucrative tax sale investing business, you need to go to TaxSaleAcademy.com. That’s “TaxSaleAcademy.com.” Have a wonderful day!