What are IRS Real Estate Auctions

In our previous articles, we had discussed and understood the mechanics of Tax Lien on real estates, which basically, involves two types. The tax lien certificates where a bidder/buyer bought the unpaid or delinquent taxes of a foreclosed property as investment. The other is the Tax Deed Sale where the winning bidder or buyer practically, bought and paid for the property itself by paying the delinquent taxes plus some penalties and value on the property imposed by the taxing authority. Basically, a bigger sum of money is needed in a Tax Deed sale.

Now, regarding the IRS Real Estate Auctions, just like in tax liens, it also has two kinds of auctions.

THE PUBLIC AUCTION:

• As the name suggests it’s open to the public as long as you have enough money to bid, you can participate. Unlike in tax liens, the IRS does not conduct online auction.
• You have to be there at the venue or if you can’t attend, send someone to represent you. It is also a must that you secure a copy of the “Notice of Public Auction” as mail-in bid could have been allowed without your knowledge. In other word, you should know the rules for every auction
• Since you are bidding with other bidders the final bid could be much higher than your bid.
• Set a budget for your bid and stick to it. Anyway, the IRS frequently conducts public auctions.

THE SEALED BID AUCTION:

• Sealed bids are no different from mail-in bids. It is also open to the public.
• You write your bid, put it inside an envelope, seal it and send to a certain address set by the IRS.
• The difference with the Public Auction Bid is nobody will know how much you bid, neither will you know the bids of the other participants.
• Just like the first one you should also secure the “Notice of Sealed Bids” to know the rules. Again, the highest bid wins.
• Set a budget also and do not over bid. If you did not get the property, try your luck again on the next bidding as there a more biddings in the offing.

It is also worthy of note that an IRS AUCTION does not set aside a mortgage in a property which is very much different from tax lien and tax deed sales. This simply means that the IRS won’t sell a property with delinquent taxes if the proceeds from the sale are not enough to cover the mortgage on the property.

Because of some possible awkward scenarios that may arise from an IRS Auction, Tax Lien Seminars would love to give a piece of an unsolicited advice to potential bidders/buyers. Please do some homework before participating in any auction sale. It pays to know the rules for every auction to be successful and to have no regrets afterwards.