The case for tax deed investing in a sellers market is strongest precisely when traditional real estate strategies become most challenging, because the auction pipeline operates on a government timeline that is completely independent of the broader market conditions that make direct purchases and wholesale deals difficult to execute profitably.

One of the most interesting and aggressive ways of investing in real estate is through property tax auctions known as a tax deed sale.

You have heard of investors scooping up foreclosed properties for dirt cheap prices, right?

Tax deed sales offer a similar opportunity but have a specific process you need to know if you’re going to benefit from those opportunities.

In this how-to guide you’ll learn:

• What property tax deed sales are
•  How to find tax deed sale investment opportunities
•  How to navigate the tax deed sale process

So, if you have been in search of a creative way to score deeply discounted investment grade properties, or even just a way to add more inventory to your selection in a tight seller’s market. It is our hope you are going to walk away from this article a little more inspired, educated, and with some ideas to make more as an investor.

How to Find Potential Tax Deed Sale Properties?

At this point you’re probably wondering how you can find these amazing opportunities.

There are two general approaches that most investors take to find tax deed sales:

1. Old school investors typically perform extensive research through public records released by the tax collector and other public agencies for free. This approach typically takes a lot of time and costs are high since it usually requires one to 3 assistants to comb through public data and collate data on spreadsheets or a custom program.
2. Smart investors leverage paid resources like PropertyOnion.com for a small fee which provides you with all data from a curated collection of public sources that has been organized to cut down on the exhaustive legwork of finding properties.

The method that you choose to find investment opportunities will directly depend on your desire to either do a lot of tedious research versus having experts do it for you.

Regardless, you will be working off of the same information which is provided to everyone through public record by the Property Tax Collector. Here is the standard information counties release on all tax deed sales:

• Property Address
• The current owner and purchase date
• How much the current owner paid
• The appraised value of the property
• How much is owed on taxes
• Current status of the property (under lien, foreclosure, etc.)

Register to Become A Bidder at the Tax Deed Auction

One of the first things that you will need to do in order to begin investing in tax deed sales at auction is to register to become a bidder. Usually, you will do this with the Tax Collector or governing body that is conducting the auction.

It is wise to get registered upfront because many times you will have a matter of hours before finding a potential investment property and the auction itself, so it is smart to be prepared upfront.

The Tax Deed Auction

Most of the time the tax collector is going to set the starting bid for the property. Usually, that starting price bid will match the amount of back taxes owed and fees owed by the current owner. Obviously, that amount is often well below the true value of the property.

However, when you win an auction, you will be required to pay that winning bid amount on the spot or within 24 hours at the latest. So, it is important you are fully prepared to make that payment when you show up at auction.

Beware that these auctions can be very competitive and intense. You could be bidding against other individual investors just as easily as major companies and real estate developers. So, it is important to manage your emotions and expectations going into the auction. Always have a plan going in to the auction and never deviate from it to avoid over paying for a property!

Transferring the Deed

Once you have won the auction and the sale is final, the property tax collector will sign a deed. That deed grants you ownership of the property. From there, the county will need to record the sale in their public records to secure your ownership status and prove the sale took place.

Beware of The Risks of Investing in Tax Deed Sale

Investing is personal.

The investments that you choose and the method that you use to invest can have miraculous or devastating effects on your bottom line.

As a leading trusted authority for real estate investors, we always want you to understand the risks associated with an investment strategy.

Tax deed sales are no exception.

So here are three primary risks you should be aware of before you sprint to the auction site with cash-in-hand.

You’re Buying Tax Deed Sale Properties Sight Unseen

Let that one sink in for a moment.

You are not going to have the chance to tour the property, or have it inspected or do any of the things you might want to do to determine the property’s condition.

Since the property owner neglected to pay the property taxes resulting in them losing the property, it is safe to assume that there will need to be some level of repair, restoration, cleaning, etc. to these properties. The degree of how much will be needed can also vary dramatically.

You need to be prepared for what you might find when you win an auction and have a plan for these renovations and repairs.

To mitigate the risks of buying properties unseen, PropertyOnion.com has created several Ebooks for our members that give step-by-step instructions on how to figure out what’s inside the house and what you should bid. Although we can help investors avoid disasters, there is always a risk, and the smart investor knows how to account for these risks in the amount they bid.

Additional Property Liens

Many times, a property owner falls on hard times financially, resulting in multiple liens on top of the delinquent taxes. In a traditional real estate transaction, these liens are identified by the title company and the seller is required to pay those off to protect the buyer and satisfy the debtor.

When you win a property at a tax deed public auction, it could have other liens placed on it by banks, municipal utilities, etc. which you have now inherited as the new property owner.

Laws On Tax Deed Sales & Foreclosure Vary and Change

Just because you are experienced investing in properties this way in one market or county does not mean you will know how to do it in the next. The governing bodies like property tax collectors are often changing their process, rules, and laws.

They also make mistakes.

Turning a blind eye to the evolving laws and rules of each market leaves you vulnerable as an investor so never assume that everyone does everything the same way everywhere.

Always, always, always do your homework before investing your hard-earned money. It should be apparent at this point why we give our tax deed investors a wide range of research tools and educational materials when they become member’s of PropertyOnion.com’s service. From Ebooks to articles written by industry veterans and real estate attorneys, a good education is the edge you need to stay ahead of other bidders.

Tax Deed Sales Are A Lucrative Opportunity

Despite the risks, tax deed sales are a smart and savvy way for everyday people and seasoned investors to put their investment money to work.

There is a tremendous opportunity to make money as long as you align yourself with the right experts like the industry veterans and tax deed and foreclosure sale experts here at PropertyOnion.com, and always do your homework before investing!

Tax Deed Investing In A Sellers Market provides a consistent source of below-market acquisition opportunities because the auction price is driven by delinquent tax balances rather than market value, which means the disconnect between auction pricing and market pricing is often largest during the periods when market prices are at their highest. This structural dynamic is one of the key reasons tax deed investing in a sellers market attracts experienced investors who have been priced out of traditional acquisition channels.

The due diligence requirements for tax deed investing in a sellers market are more stringent than for many other investment strategies, but the thoroughness of your research is what protects your margin in a competitive market. Investors who skip critical title research steps in the rush to participate in tax deed investing in a sellers market often discover post-auction encumbrances that significantly reduce or eliminate the profit they anticipated from the deal.

Why Tax Deed Investing In A Sellers Market Works When Other Strategies Struggle

The most important aspect of tax deed investing in a sellers market is understanding exactly how florida tax deed sales research works, including the key research steps that experienced investors use to evaluate every property before the auction date arrives.

Before any tax deed investing in a sellers market bid, conduct a complete florida title search to identify all surviving liens, code enforcement violations, and encumbrances that would affect your total acquisition cost and post-purchase obligations as the new owner.

Understanding the relationship between the tax certificate tax deed system helps investors pursuing tax deed investing in a sellers market understand how properties arrive at the tax deed auction and what the certificate history reveals about the property’s tax delinquency timeline and potential redemption risk.

Investors who are active in this approach during periods of low traditional inventory should also review our guide on florida foreclosure inventory to understand how the foreclosure auction pipeline complements the tax deed market as a source of below-market acquisition opportunities.

After winning at this approach auctions, understanding the process for removing lien after county auction is essential since tax deed sales do not extinguish all encumbrances, and certain surviving liens must be resolved before the property can be resold or refinanced.