Getting your Trinity Audio player ready...

A tax sale auction is a high-risk, high-reward environment where how you bid will make or break you. There are many strategies for winning bids at tax sale auctions, including knowing when to stop bidding to avoid overbidding.

With fierce competition for tax-sale homes, it’s important to be smart about where you put your money. Discover how you can structure your budget for the occasion.

Attend At Least One Tax Sale Before You Bid

To understand how tax sales works, attend a public auction in person. This gives you a sense of their work, what to expect, and the emotions involved.

Understand the Auction Rules Beforehand

This is the value of attending a prior auction. You know the rules. To win a tax sale property, it’s key to understand auction rules before bidding. This way, you are informed of everything or accidentally lose out on a sale.

Target Tax Sale Property with a Built-In Return

A valueless tax-sale home or parcel of land is not worth investing in. Target tax-sale properties that earn money on the back end. Profitability is crucial to a winning bid.

What to Look for in a Tax Sale House

Focus on properties in desirable locations with historical data or current trends, noting a strong likelihood of appreciation. Even if the house itself needs repairs, if the land is worth enough, there will be many ways to derive income or a return from it.

Arrive Early to Grab a Strong Seat

Ensure you arrive early and select a spot in the room with a clear view of the crowd. This way, you can monitor other bidders for signs of distress, hesitation, or resignation and bid accordingly.

Start Low and Never Bid the Minimum Amount

It’s a sure thing in an auction that a tax sale house won’t be sold for the minimum bid amount. Be ready to bid upwards and big. That said, start low and build from there. This way, you only spend a dollar to secure a property.

Have a Budget and Set Bid Increments

Not only do you want to walk into a tax sale with a set maximum budget, but you also want to know your bid increments. Inch up on your budget so you spend only what you need to secure a tax-sale house.

Price Out Each Property You Intend to Bid On

Before you bid on any property in a tax sale auction, you should research each one carefully. There are three key prices to think about during the bidding.

First, find the lowest price. This is the smallest amount you believe the property will sell for at auction. Next, figure out a realistic price. This is what you think the property will cost. Finally, set a maximum price. If the bidding exceeds this amount, it’s time to walk away because the property isn’t worth more.

Bid Often and Authoritatively

When you bid often, you give the impression that you will keep bidding and have deeper pockets than you may think. Consistent and confident bidding is a more optimized strategy than a ‘knockout bid.’’

Wait to Bid If There Are Other Interested Parties

Don’t be the first to bid. There are different schools of thought but wait until you can bid with conviction and set your own pace. You will have better control of the moment’s pressure and won’t be in the same emotional state as others who may have bid from the start.

Stick to Your Numbers and Never Emotions

Keep your emotions elsewhere. Step out if bids soar and you can only afford what you’ve already bid on. This is winning at a tax sale auction because you aren’t putting yourself at unnecessary financial risk—no emotional bidding.

Know the Risks of Buying a Tax Sale House

As you bid at auction, remember that risks are involved. The property could have Crown interests, though a title search will tell you that. Property is also bought as-is, so you only know the full extent of what you’re dealing with once you own it. Risks are always present as you strategize how much you’re comfortable putting towards a property.

Have a Contingency Plan

Have a contingency plan if you need to secure the winning bid for the tax sale property you want. It may involve bidding on other properties within your budget and desires or waiting for the next tax sale auction.

Consider More Tax Sale Auctions

Many tax sale investors attend multiple tax sale auctions in neighbouring municipalities and some even further away. Instead of waiting another year or however long for the next auction, consider what’s close by. This way, you’re as close as possible to winning.