How Do Tax Deed Auctions Work? The Process Explained

How Do Tax Deed Auctions Work?

I’m Ted Thomas, and I’ve been involved in the tax deed and tax lien business for over 30 years. I started as an investor and became a coach, mentor and guide to thousands of people over the last 25 years.

Today, I’ll be answering your question, “How do tax deed auctions work?”

What immediately comes to mind is that a tax deed auction is a method of earning a generous profit when you know how. This is a little-known but highly lucrative business where the small or large investor can make big profits. I’ll share the secrets with you, and you’ll find it astonishing.

How Do Tax Deed Auctions Work?

What is a Tax Deed Auction?

The auctions are plentiful. Over 5,000 auctions are scheduled each year in more than 3,000 different counties, and the county treasurer is responsible for the tax deed auction.

What is a tax deed property? Simply stated, tax defaulted property will be seized by the local government and resold at a tax deed auction to pay the delinquent taxes.

How to Find Tax Deed Properties

Auctions are public affairs, and anyone can attend. The auctioneer could be a county employee, or the county could hire an outside private auctioneer.

In either case, the auction will be announced in the newspaper and on the county website and possibly brochures at the auction.

The auction rules, auction times and places will be explained on the website.

In small population counties, 12 to 25 properties may be available. Meanwhile, large population counties may have hundreds of properties available.

From the buyer’s perspective, a tax deed auction requires research and understanding of the auction process and rules.

Bargains at Tax Deed Auctions

At tax deed auctions, properties are sold for huge discounts of 60%, 70%, and 80% below the tax assessed value.

I even have many students who actually purchased at 90% below the tax assessed value.

Tax deed auctions sell to the highest bidder, and multiple properties could be on the tax delinquent properties for sale list. The starting price at the auction is usually slightly above the delinquent back taxes plus late fees.

Mortgages, Liens and Encumbrances

Additionally, these properties are sold with no mortgage, trust deed or security deed.

The county will delete the mortgage from the property files. Many of the liens are also deleted from the property records.

Investors should be cautious and not assume all of the liens are cleared and ask many questions. Research will go a long way to giving you confidence.

The Power Of The Treasurer

The auction process is not complex. Alert investors will listen closely and watch the treasurer who has the authority to change rules and prices instantly.

This could mean dropping the price by many thousands of dollars.

My point is, the treasurer has power and may stop the process of the auction at any time. Keep in mind, the treasurer needs money to fund the many needs of the county government.

How Do Tax Deed Auctions Work?

Be Prepared

The tax deed auction moves quickly. This is no time to be learning how. Before buying a tax deed property, you must know what you want to do before the auction starts.

If you are not prepared, do not raise your hand. If you have not made financial arrangements, don’t raise your hand. The auction day is too late.

The auctioneer will expect you to follow protocol. The county government will use the full power of the law to restrain bidders who violate the rules or fail to pay for a property they have bid upon.

If you haven’t been to an auction, attend one and watch only. Many auctions are conducted online, so they are easy to observe.

The Auction Process

The auctioneer will announce each property by tax number. This could be called a different name like folio number or tax assessed property number. Basically, it’s the social security number of the property.

What are the risks of buying tax deed properties? I have personally watched many bidders lose thousands of dollars, overbidding or bidding on wasted and destroyed properties because they didn’t do their homework.

My point is tax deed auctions are no place for guess work. The auction process is serious business. This is no time for distractions or social business. Big money is changing hands.

Big Profits

Newcomers with the proper guidance have the ability to make $25,000, $50,000 and $100,000. I have dozens of documented cases histories of people doing exactly that.

Tax deed auctions can be outrageously profitable. The most important point I can make is that you make your money when you buy, not when you sell.

Tax deed auctions can be hugely lucrative if you know how.

If you’d like to know more about tax-delinquent property investing, Ted Thomas hosts a one-day virtual workshop once a month! To get more information about the Retire Rich From Home Virtual Workshop click here:

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