@Brandon Malone how it works is slightly different from state to state. In MD you are bidding how much you will pay for the house in the event you are able to foreclose. In other states you are biding down the interest rate. Generally the states set the laws how it works and the counties run the auctions. In MD each county is a different interest rate.
Many area do online auctions. Some auctions are still live and you raise your paddle to bid. The auctions can be quite competitive and you are often bidding against big money that is happy with a much smaller return than you or I would be,
There are a lot of threads here on BP about tax liens and many specifically about MD.
The main risk is bidding to much. The property is security for your lien. If the owner doesn't pay, the property must be valuable enough to cover you costs, not just of the lien, but also foreclosure costs, new taxes that come due, misc costs to record your deed and in MD the amount of your bid.
The other big risk is not knowing the laws and rules. Many people bid not knowing the rules. I had a guy call me and I told him all his liens were worthless because he hadn't taken action to foreclose soon enough (2 years in MD)
Other risks include IRS liens that are superior to yours. This is more of a hassle than a real problem. It has only been an issue for me on 1 out of well over 1,000 liens. Fire is another risk. I have probably walked away from 4 or 5 liens because of fire. another risk is bankruptcy. I don't think I have ever lost money directly due to bankruptcy. However this will slow down your foreclosure case. the extra time can add to the foreclosure costs and the new taxes can add up. If your margin is slim, those additional costs can cause you to lose money.
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