Tax Sale Preparation

Transcript:
Welcome to the Tax Sale Podcast, where tax sale investing is made easy. My name is Casey Denman, I’m a tax sale veteran, the leading tax sale expert, author of The Tax Sale Playbook, founder of The Tax Sale Academy and I’m your host right here on The Tax Sale Podcast.

Thank you so much for joining me on today’s podcast episode. This is a completely free podcast and is brought to you through and because of The Tax Sale Academy. If you’re looking to learn more about investing in tax defaulted real estate, just head to TaxSaleAcademy.com. Again that’s TaxSaleAcademy.com.

On today’s episode we’re talking about last minute preparation for a tax sale.

Alright, let’s suppose you went through a tax sale list. You’ve gone through every single property, did your due diligence and have narrowed it down to the few properties you want to buy. Now what?

Preparing for the auction is a crucial part of your success equation. It’s easy to get to the one yard line and then just collapse right before you hit the endzone in this business. In today’s episode I want to provide you with the preauction process that I go through and recommend to my academy members. This is essentially a checklist of exactly what you should be doing so you don’t make any mistakes.

About a week prior to the auction I’ll double check the dates and times. Nothing is worse than spending loads of time on researching properties that sold last month. Mistakes can happen, auctions can get postponed and double checking the dates and times can be done in less than ten seconds.

Once that’s out of the way I’ll go through that list while finishing up my research. While doing that research I’ll make the decision of what I want to invest in and the max bid amounts. The time to figure out what you want to buy is NOT while the auction is happening. I’ve actually seen guys walk into an auction before carrying plat maps, surveys and large binders that they review and ponder through as they’re waiting for that property to get auctioned off. Why? Why would you wait until just a few minutes before a property is sold to determine what it is and how much to pay? Instead, do this ahead of time when you can focus and when you aren’t rushed. Use the weeks before the auction to insure you make informed decisions.

So what I’ll do is use a simple spreadsheet. The exact template I use is available to my acacdemy members – essentially the auction lot number, the parcel number, a few notes just to refresh my memory and fulfill my curiosity and my max bid amount. That’s it. By the time you get to the auction, you’re there to simply bid and complete the transaction.

And back to that max bid number. This number does not change at an auction. EVER. That number is established while doing your research based on your investment goals and your expected margins. Do NOT go to an auction and start adjusting your maximum bid amount because things aren’t going the way you think they should. If you go to an auction and realize your maximum bid amounts are all way to low, then work on adjusting how you establish those max bid amounts after the auction is over in preparation for the next auction. But NEVER attempt to adjust the max bid amounts on the fly. Those numbers that you have are used to remove all emotion from the transaction. Stick to them.

Now, once I have my final research done, which is usually finished days or even weeks before the auction, I’ll compile it onto my bid sheets and will work towards my final preparations. One of these things is look over the auction list again to see what, if any, properties have been removed from the sale. I’ll also take a look to make sure the opening bid amounts haven’t changed for some reason.

After that, I’ll do some final research. This is especially important on properties that have dilapidated structures. As we’v previously discussed, a governmental lien, for something such as a public nuisance, weeds, or trash, which commonly involve a dilapidated structure will be your responsibility upon purchase. So I’ll double check my initial research and I’ll also check to see if there have been any changes since I made that research. This includes reviewing public records, and taking a look at the demolition and condemnation lists at the very last minute. That way I know whether or not an insanely high last minute lien will become my responsibility and I can adjust my bid amount accordingly or remove that property from my selected properties altogether.

Something else I’ll do is I’ll perform a last minute driveby of the property or I’ll hire a local scout to do it for me if I’m not local to that area. This is simply a quick driveby of the property to insure the building still stands – I’ve had personal experience where homes have been burned down days before the tax sale. Obviously, a lot with a house and a lot with a pile of rubble have two different values to me and I want to insure which I’m bidding on. While I’ll perform a driveby or send a scout to do one for nearly all the properties I buy, I don’t typically perform the last minute driveby for the vacant stuff unless I suspect there could be a problem. But for structures, absolutely make sure it’s still standing as close to the auction as possible.

Another thing I’ll do both before my research and again, now, just prior to the auction is review the auction instructions. I want to make sure that I show up to the auction and know exactly what’s going on. I don’t want any surprises at the auction and reading the instructions carefully is the way to ensure that.

In those instructions, you will also find information about deposits and registration. Now, as mentioned you should’ve read the instructions before your research so you knew if you had to do anything in advance of the auction, such as preregister or wire a deposit for example. If so, hopefully you completed everything like you should’ve. But often times, especially for in person auctions, you’ll be required to have your identification, deposit and perhaps a registration form complete in order to register on site. Go ahead and get that ready now. Then do yourself a favor and put it by the door with your keys laying on top of it. There is nothing worse than doing all of this work only to get to the tax sale and realize you can’t register because you forgot your license in the pocket of the clothes you wore yesterday.

What I’ll typically do is put all of this into a binder. My max bid sheets, deposit, license, bid form, and a pen or two. I’ll even punch holes in the bid sheets and attach it into the binder. And when I say binder I’m talking about a cheap ½” three ring binder – I think you can get them for a buck or two off amazon. But I’ll use a binder for a number of reasons – it’ll keep everything together and in one place for me. It’ll help me to stay organize when it comes to my bid sheets. It’ll also keep those bid sheets confidential allowing me to cover them when I’m not reading them so nosey neighbors can’t look through all of my notes to decide what they want to invest in or how much to spend. And lastly, that binder provides me with a hard surface to work on since most auctions don’t’ provide tables or desks for you to station yourself at.

And even if this is an online auction, I still sometimes compile this same binder to keep myself organized and to follow along since I’m comfortable using it, especially if there are a large number of properties being sold.

After that, you’re pretty much prepared. My last suggestion – arrive early. I suggest this for a few reasons:
1. Some auctions have long lines. You do not want to be stuck in a registration line while you hear the very property you came for get auctioned off. Now, if you’re attending an online auction, still arrive early. Just so you have plenty of time to troubleshoot for the off chance that you have trouble connecting to the auction software.
2. Another reason to arrive early is so you can claim a good seat. It doesn’t take a rocket scientist to know that an auctioneer will hear the people closest to them to best. Sit in the front row or within a line of site to the auctioneer. Make sure you’re close enough they can see and hear you. Believe me, it helps
3. Another reason is that, on occasion, you’ll hear chatter that can help you such as house that was burned down that morning, or some other little tidbit of information that could prove valuable.
4. And lastly, nobody likes to be rushed. Especially when you need to be focused and confident making important decisions.

So there you have it. There are a few things that I do as last minute preparation for a tax sale auction. This is a business where the average person looks at it and thinks that it’s just buying and selling real estate. In reality, this is very much a front loaded type business – where we research and spend the majority of our time investment pre purchase, then we simply sell the property as one of the final steps to reap the benefits.

I truly hope that this episode has helped you when it comes to preparing for an auction. If so, do me a huge favor and leave us some positive feedback on whatever podcasting platform your’re listening to us on right now.

And if you’re looking for more help with your quest for tax sale success, don’t forget to take a look at all the helpful links in the show notes section of this episode. And for the most comprehensive step by step training we offer, just head to taxsaleacademy.com and become a member of the academy.

Take care and make it a successful day. We’ll see you next time, right here on the tax sale podcast. Byebye.