Identification

• Tax auction bids can go two ways--participants can bid an amount up or they can bid an amount down. Amounts can be anything from a payment for the lien, an interest rate or a percentage of ownership in a property.
  
  

Types

• There are four types of tax auctions: highest bidder wins, bidding down the interest, bidder willing to pay the highest premium wins and bidding down a percentage of ownership on the property.
  
  

Considerations

• On tax auctions where an interest rate is bid down, a bidder can risk getting virtually nothing for the lien if they bid it down too low and the lien is paid quickly; however, some states have a minimum interest payment that must be paid on tax liens, which will help guarantee the bidder some profit.