Transcript:
Hey Everybody,
Welcome to the Tax Sale Podcast, where tax sale investing is made easy.
I’m of course Casey Denman, a tax sale veteran, expert, and trainer, author of the tax sale playbook, and founder of the tax sale academy.
Thanks for joining me on today’s podcast, and as always, after this podcast, if you’re looking to learn more about investing in tax defaulted real estate head to taxsaleacademy.com. That’s taxsaleacademy.com.
On today’s episode, we’re talking about the Tax Sale Auctions – more specifically, we’ll be discussing the auction itself.
The auction is simultaneously, the most intimidated and most exciting part of this business. I attended my first auction 16 years ago now and to be quite honest, I vividly remember it like it was yesterday.
I was a very green investor and had my little binder ready, along with my pen and my deposit. I was just a kid at the time and everyone seemed to be decades older then me. I remember the sign in sheet was in the very front of the room – which wasn’t the most ideal thing for me, since I was assured that everyone was starting at me. When I signed in to get my bidder card and I was literally shaking so much I had to focus on what I was doing so they would be able to read my name.
Fast forward 16 years and auctions are a daily thing for me. While I no longer shake, I do still occasionally get butterflies when a property comes up that I want. And the deal is, I don’t think it’s a bad thing. I think it’s just my body reminding me that I’m still as excited today to be involved in this business as I was my very first auction.
Maybe you’re the type of person that doesn’t get nervous about much. Or maybe you’re the type of person that gets nervous and has anxiety about everything. Regardless of the situation, I wanted to do today’s podcast to provide you a little peace of mind.
First things first, the prep for the auction starts well before the auction day. We’ve discussed research and the truth is that we have a motto, which is Research equals results. You research will determine if you make a good investment or a bad one. It’s as simple as that. We won’t go into detail on this episode, but your research will include analyzing your list, researching the properties and choosing which properties you want to invest in as well as your bid amounts. I always prepare a spreadsheet that includes the property information and my max bid amounts. Even if I’m not going to bid on a property I try to still include it somehow on the sheet so I don’t lose my spot when the properties start to get auctioned.
From there, it’ll also include research about the auction itself. At least a few days before the auction begins you want to make sure you have your ducks in a row. Read the auction instructions very carefully, and if anything is not clear pick up the phone and call the county and ask.
The auction instructions will provide you with any prerequisites to registering. Typically, this will be at the minimum some sort of government issued identification. Some areas might require that you put a deposit on file, especially if it’s an online auction. Some areas might also require you to sign an affidavit that you are not currently delinquent on any property taxes in that area.
The registration process is usually straight forward. If you’re an online bidder, you’ll be registering online. This could be a completely automated process or might take a day or two for the county to approve you.
If you’re attending in person, you’ll typically signup as a registration table by providing your identification and in return you’ll get a bidder number.
Whether you’re online or at a live auction, please, please arrive early. I’ve had situations before where my internet bogged down and I couldn’t access the bidding software in time for the auction. I’ve also had situations before where I was stuck in a lengthy registration line waiting to register when I heard the auctioneer in the other room begin auctioning off a property that I was interested in. Both are not good feelings, knowing that you are potentially missing out on a profitable property.
After registration, it’ll be time to grab a seat. I always suggest that you sit as close to the front as possible and within a direct line of site of the auctioneer. This is for one primary reason: you’re bid will most certainly be heard before anyone else that bids at the same time. Since you’re the closest and in line of site of the auctioneer, you’re going to get recognized first. It’s as simple as that. There are also two secondary reasons. It helps to have the auctioneer recognize you and for you to be social with the auctioneer given the opportunity. It might not sound like much, but it can certainly help! Another reason is that you might just hear some non microphoned small talk between the auctioneer and their staff. Overhearing them mention something could mean the difference between making a good investment and making a mistake.
The first part of the auction will usually consist of the rules being read. This can can anywhere from 5 minutes to 30 minutes. While it can be a painstaking process, its very important that you don’t zone out. These rules will include information on the process, how to bid, how to pay and all sorts of other information that’ll prove helpful for you. Even if you’d already heard the same rules 50 previous times, there is a chance that they’ll change so pay attention. I remember hearing the same auctioneer read the same rules and tell the same jokes no less than 50 times. The next time, however, they tossed in something that I wasn’t expecting – they required the taxes be paid for the year that you were purchasing the property. It wasn’t that bid of a deal, but it would be an extra few thousand bucks across all the properties I wanted. So rules are important and they do change – be sure to listen.
After the rules are read, the actual auction process will begin. Typically, the auctioneer will read off the lot number of the property being sold and perhaps a brief description. It is extremely important that you follow along. It seems like every other auction someone will bid on the wrong property because they were too lazy to listen and follow along. In many cases, they’ll be able to get out of their bid, but I have seen frustrated auctioneers take bidder cards, or force them to purchase a property they didn’t want.
After the property description is read, an opening bid amount will be read. From there the floor will be open for bids. Depending on the auction the auctioneer might state the bid and you’ll hold up bidder card up, raise your hand or shout something. In other auctions, they’ll open the floor for bids and it’ll be a spoked bid process where you state your bid – for example, you’ll say $525.00.
With that said, be sure to know the bid increments used. Most auctions won’t allow you to go up in 1 cent increments, otherwise the auctions would take days. Instead they’ll require a minimum increase of some sort. This will be announced when the rules are read, so there’s another reason to pay close attention at that time.
Once you’ve won a property, it’ll be time to make a payment. Depending on how the auction is handled, you’ll either make payment directly after the property sells or it’ll be made at the conclusion of the auction. They might also only require a deposit at that time with the balance due shortly thereafter, like a day or so, or they might require the entire payment be made at the conclusion of the auction.
From there, you’re all done. You wait for the deed or redemption period and then you’ll become the owner of the property.
Pretty simple and straight forward process. I did want to also toss in a few more random tips as well:
Listen to other bidder chatter. You don’t have to be nosy, but feel free to be social. Learn what others are doing and network. While you should take anything they say with a grain of salt, they are your competition of course, you’d be surprised what you can learn from others in the room!
Another tip is on how you’ll dress. Unless you want everyone to think you’re an attorney, you might not want to wear a suit into an auction. I always dress fairly casual, but not so casual that the auctioneer suspects I can’t pay for what I bid on. If you get cold easily, consider taking a sweater with you.
Another tip is about food. I remember sitting on a courthouse bench one time for like 12 hours straight. The auction company routinely switched auctioneers, and the auction never stopped. Besides a couple trips to the bathroom, I didn’t leave for fear of missing out on a property I wanted. All I wanted was a snickers bar or something to help hold me over, but there were no vending machines around. If you suspect it’ll be a long auction, do yourself a favor and take a snack!
My last tip is something that’ll help you learn. Take notes. Write down anything you find interesting or unusual so maybe you can research it later. Did a property sell for lots of money and you don’t have any idea why? That’s a great way to learn and figure out what you potentially missed. Use every auction as a learning experience.
So that’s it. That the auction process in a nutshell!
That’s it for this episode. I really hope you’ve enjoyed it. As always for more information, you can head over to tax sale academy.com for more information on tax sale investing. While you’re there, be sure to snag your free copy of my brand new book, tax sale playbook. Just let me know where to ship it and we’ll get it out in the mail to you.
I’d also like to ask a favor. This podcast is completely free, and I love providing strategic and actionable training and strategies for you guys. If you can go ahead and rate this podcast, we would certainly appreciate it and it’ll definitely help continue to motivate us to provide the best training for you through this specific platform.
That’s it for today guys. As always, I hope you have a wonderful day and I wish you lots of success in your tax sale business.
Take care, bye bye.