Tax Deed Auctions Explained

In the US if a property owner does not pay his property taxes the government will take that property away from him either through a Tax Lien Sale and subsequent foreclosure of the lien or through a Tax Deed Sale.

Tax Deed Sales are a common way in many states for counties to get their Property Tax Dollars released to them. And it is a great way for Investors to get a property with a huge discount (sometimes as much as 60-80% below market value).

How do Tax Deed Sales work:

About 4 weeks prior to a scheduled auction by law the county (or in some cases the state) needs to publish a list in one newspaper of common circulation of all properties scheduled to come up for auction. Nowadays this list is usually also available online for free.

Anyone can obtain the list by either going online to the county webpage, or by getting a copy of that day's edition of that newspaper, or by asking the county for a copy of the list in form of CD (for which there is usually a small fee of a few dollars).

The public now has 4 weeks to do the proper research on these properties and decide which one to bid on.

In order to bid, the bidder needs to usually fill out a form and get a bidder number. Some counties require this to happen a few days in advance but some allow you to do this on auction day.

In many cases also proof of funds needs to be submitted on auction day or a few days in advance. Requirements vary by county but it is not uncommon to have the county require all bidders to bring at least $2500 in cash or cashier's check (or money order) and submit them to the county prior to auction. If the bidder does not win any property then the monies are refunded promptly by the county.

But then again in some other counties you just need to show upon registration that you have the cash with you and then you are allowed to bid. Please make sure to call the county of your choice prior to such an auction to make sure you know what you need to bring.

Once registered you receive a Bidder card with a number on it which you use to bid on any parcel you would like to.

Once the auction begins it works pretty much like any other auction. The bidding usually starts at the amount being owed in taxes (and fees and penalties) to the county and goes up from there.

The highest bidder wins and receives within a few weeks a "Treasurer's Deed" or a "Sherriff's Deed" from the respective county department.

Now the winning bidder is the new official owner of that property and can take possession of such property or proceed to sell it or do whatever he wants with it.