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Investing in Tax Deed Sales


Tax deed sales are a great real estate investing method for anybody to get started in the real estate industry. The main advantage is that you buy the homes at a discounted price, and then resell them or rent them to the public for a profit. Likewise, if you are buying a home to live in, tax deed sales offer great properties at low prices. You can bid on one of the tax deed sales and turn it into your primary residence.

However, many people are avoiding tax deed sales as they are not familiar with the details that go along with them. In actual fact, tax deed sales are not too difficult to understand.

What is Tax Deed Sales?

The basic definition of tax deed sales is a home being forced sale by governmental agency, Tax Collector’s office, to collect delinquent real estate taxes because the home owner failed to pay his/her taxes. Usually, each home owner is given a notice that states how much money they owe, how long is overdue and a specific period of time in which they can pay their taxes. Should the property owner decide to ignore these requests and miss the time frame; their taxes are then considered to be delinquent. In a nutshell, the home that is sold at public auction by Tax Collector’s office to collect delinquent real estate taxes is known as tax deed sales.

Downfalls of Tax Deed Sales

It is important to remember that tax deed sales are not as easy as they may seem. Before you start buying tax deed sales, you will need to know about the downfalls that are involved.

Keep in mind that not all tax deed sales are always valuable; quite often they are not worth much at all. Typically, valuable properties have a mortgage on them that would be canceled out at a tax sale. In this case, the mortgage company usually chooses to pay the taxes themselves in order to recover its losses. Subsequently, they will own the property and it is no longer for sale at auction.

In some other cases, a valuable profit that does not have a mortgage on it will reach tax deed sale status; you may not believe that there are some rich people that simply do not pay their taxes. You may think that you are going to buy these tax deed sales and make a large profit. Unfortunately, the only problem with this is that you will be competing against many other investors. If you do not have enough money, the bids will soon go out of your reach and you will be left with the lesser properties.

Tax Deed Auction

If you are interested in buying tax deed sales, you need to know the auction rules.

First of all, there is no pre-registration required in order to participate in the public auction. However, you or a representative must be physically present at the sale to bid on the tax deed sales property. You are advised to research the properties before you bid. It is important to understand what you are purchasing at the sale and whether there may be any liens remaining on the property. Remember; tax Deed sales are not for the uninformed.

The minimum bid that you can place is usually the amount of the back taxes plus any interest that has accrued, as well as any fees that go along with selling a home. Never bid more than you can afford as this is going to cause you problems down the road. If you are lucky enough to win a property at a tax deed auction, you will be required to post a small (about $200.00) non-refundable deposit at the conclusion of the bidding for the parcel on the spot. Most tax deed auctions require you to pay via cash, cashier’s check, certified bank check, or money order. You will not be able to pay with a personal check or a credit card.

But if nobody takes advantage of the public auction bidding process; in other words, bidding has ended, the property will revert back to the government agency’s "Lands Available for Taxes" list. The County may at any time within the first 90 days from the day the property is placed on the list, purchase the property for the opening base bid. And after the 90 day period is over, the property can then be sold to any public members for the base bid, accrued interest, and any taxes due, plus documentary stamps, recording and indexing fees.

In summary, tax deed sales offer great deals to the public and any investor. If you are interested in these tax deed sales, keep your eyes open and then make your move.


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