In this week’s quick tip video we’ll be discussing the upset bid auction process. This process is used in a few states and can be quite confusing if you’re not familiar with it. Hopefully this video helps to break it down and simplify it for you!
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Transcript:
4/17/2020
Hey there, it’s Casey Denman here from TaxSaleAcademy.com. Thanks so much for joining me on today’s video. I’ve got a quick video for you today so we can talk go over the upset bid process.
The upset bid process is an auction process that is used in just a few states and if you’re an inpatient person, well, this probably isn’t the type of auction you’ll want to attend!
In a traditional auction setting the last bidder before the property is declared sold is going to be the automatic winning bidder. This is what most people are familiar with. Go to the auction, bid the most amount of money and you win. Pretty simple.
With an upset bid period you have an overtime. But unlike sports where there is an overtime in the case of a tie, with an upset bid setting you have overtime, every single time there’s a bid.
A property will get auctioned off. Multiple people might even place bids. And then we have the last person to bid who’s the winner . . . temporarily at least. Once the highest bid is received, the upset period will start. This period can last anywhere from 18 to a couple of weeks depending on the auction, so be sure to check the rules.
During this time, anyone can come in and place a bid as long as it is for more money than the previous bid. So, if you win a property on the 1st of the month and there is a 10 day upset bid period, I can come in on the 10th of the month and bid more than you. Now, you are no longer the high bidder and the upset bid period clock restarts again.
But guess what? Now you can come in 9 or 10 days later and bid more than I did, and we’ll go another ten days. The idea from the seller’s standpoint or from the county’s standpoint is anyone who wants to bid will have plenty of time to do so. It’s a way to have an extended auction period, with no last minute bids in an effort to get as much money as possible for the property.
This certainly sounds like a bad setting for the investor, but the fact is that many people, including students and even myself who have invested in areas that utilize an upset bid period.
If you’re looking for instant gratification, this probably won’t work for you. But hopefully the next time you see an upset bid process used to sell tax defaulted real estate you’ll know exactly how the system works.
For more information on Tax Sale Investing, just head on over to TaxSaleAcademy.com. There’s also a number of helpful links down below in the description.
Take Care,
Bye bye.