Posted almost 11 years ago

Online Tax Lien Bid Analysis Example

My Tax Lien investor compadres;
In the old days, to invest in real estate tax liens you had to be in the county building where they held the auction. You had to bid against all the other people in the room.

For many counties you either bid up the dollar amount of taxes to be paid, or you bid the lowest interest rate you would accept on the lien amount.

With thousands of certificates in a county, the auction moved fast and you never had a chance to keep track of what other people bid or how many bids there were on a single certificate.

Online tax lien auctions provide you that data - but only after the auction is over. Still, you can use last year's bidding data to map out this year's online Bid strategy.

It requires a little bit of work to create the spreadsheet of last year's results, but many county auction websites post a file of the results of the winners and their winning bid.

So you can download that results file into a spreadsheet once the results file is complete (a week or so after the auction ends). I then outsource to a person who copies and pastes all the bidding information that is on the auction website, but not provided in the results file.

For example, once the auction is over, you can review on the website, how many bids there were for each tax lien certificate. In Arizona auctions, you bid the interest rate down and the lowest rate bid is the winner.

So I can look at a certificate from last year's sale online and see how many bids there were at each interest rate. I might see that there were 4 bids at 16%, none at 15%, 5 bids at 14%, no bids at 13%. 12% or 11%, then 64 bids at 10%, 72 bids at 9% and finally 1 bid at 7% (the winning bid).

Now during the current live auction period when you can place bids (several weeks) all you can see is the total number of bids on the auction - not what interest rates people bid. Like this:

But by having last year's bid numbers in a spreadsheet, I can look at what is available this year and know what to bid based on the results of similar parcels in the auction.

For example - in a hot area of the county last year there might be several hundred bids on parcels in a neighborhood. If I see any parcels in that same neighborhood this year, I can look at how many bids there were last year, what the winning bid was for those properties, and then place my bid for this year at a similar rate to what won last year.

So if I see results (see below )from last year's auction for a parcel near one in this year's auction, then I'll bid 7% for this year's parcel.

In this auction the lowest interest rate bid - wins. So I may not know where the bids are for the auction this year - but I do know where the winning bids were from last year's auction.

I'm not "flying blind" because I know what was bid the previous year for parcels in that area.