What is a Tax Deed Auction? It’s a little-known way to get mortgage-free properties at deep discount prices.
This highly lucrative, 200-year-old program is one of the investment world’s best kept secrets, but now Ted Thomas is sharing it with you.
So before you’re finished today, you’ll know the answer to what is a tax deed auction and how it can benefit you.
In “What Is a Tax Deed Auction?” the topics I’m going to cover are:
- The Lucrative Business of Tax Deed Investing
- How Often Are Tax Deed Auctions Held?
- How to Find a Tax Sale Properties List
- Why Buy a Property at a Tax Deed Sale?
- How Does a Tax Sale Work?
- What is the Starting Price at a Tax Deed Auction?
- Why Counties Sell Tax Delinquent Property
- Is a Tax Deed Sale a Complex Auction?
- Are Tax Deed Properties for Sale Now?
- What is a Los Angeles County Tax Sale Like?
- Tax Deeds Are Big Business and Hugely Profitable!
- Common Mistakes Made at Tax Deed Auctions
The Lucrative Business of Tax Deed Investing
Today I’m going to answer your question “What is a tax deed auction?” and while you’re here, you can get a free gift that will give you a big head start.
My name is Ted Thomas, and since 1970, I’ve been involved in real estate, but over the past 30 years, I’ve specialized in tax liens and tax deeds.
Why did I do that? It’s a nice stable market with plenty of profit and not a lot of competition. There’s no recession in this market.
This is a little-known, but highly lucrative business. You can do big deals, or you can do little deals. I’m going to definitely give you some secrets on how to do those in this particular article.
I’m also going to tell you about 2 mistakes that auction buyers continuously make, and I want you to be able to avoid those mistakes. I don’t want you to get involved in that. I don’t want it to happen to you.
Today I’m going to share with you some inside tips that only the professionals use. A lot of big mistakes happen at these auctions, and I’ll cover those later.
Right now let’s get into some of the nitty-gritty where you can make some real money for yourself.
How Often Are Tax Deed Auctions Held?
What is a tax deed auction and how often are they held? There are over 5,000 tax auctions every year. These are tax defaulted property auctions, and they’re usually done annually. Although in some states, like Georgia and Texas, they do them every month.
If you live in a county with a large population, you can expect hundreds of properties at these tax defaulted auctions.
If you live in a rural county with a small population, expect a few dozen, or it could be up to 50 or 75.
Those auctions will be regularly done. At least annually, every county in the United States is authorized to do that.
The County Treasurer is responsible for a lot of things, and one of the things that the County Treasurer has to do is try to get the revenue into the county to pay all the bills.
So the County Treasurer is authorized to levy the taxes and to collect the taxes.
If they can’t collect the taxes, well, that’s when you’re going to hear about the tax deed auction because they’re going to confiscate the property.
How to Find a Tax Sale Properties List
After that, they’re going to put it on a list, and they’re going to publish that list. It’s called a tax deed auction list. It’s going to be on their website, and it’s also going to be in the local newspapers.
Now they’re going to sell that property. They do not want the property. They’re going to sell that property for somewhere very close to the amount that they seized it. In other words, for the back taxes.
So they’re going to sell it for close to the back taxes maybe plus or minus some small fees.
Property taxes are due for every property. Why? Because all properties by law have to contribute their fair share into paying for the county’s bills, except for churches and schools, which don’t pay any taxes.
All of these tax auctions are going to be published in a local newspaper.
Now, where will you learn the rules for the auction? You’ll find those on the county website. They’ll always be there.
Why Buy a Property at a Tax Deed Sale?
Why would you want to buy a property at a tax defaulted auction? Well, I’ll tell you why.
First of all, the discounts are going to be 60%, 70%, 80%, and I’ve even seen 90% discounts at these auctions.
If you can buy a property at a 70% or 80% discount, and it has no mortgage; I know you’re surprised, but they have no mortgage. The county has deleted the mortgage. It’s wiped out. It’s no longer on the records for that property.
So if you can buy a property, at a 70% or 80% discount, and not have a mortgage, that’s your chance to start making money.
It doesn’t matter whether you’re in a deed of trust state or a security deed state, whatever that mortgage on that property was, whatever that loan on the property is, it’s wiped out.
The treasurer wipes out all those mortgages and deeds of trust; they’re just off the property.
How Does a Tax Sale Work?
What is a tax deed auction and how does a tax sale work? These properties are sold at auction to the highest bidder.
The auctioneer in the rural counties, and not the big auctions, is probably going to be a county employee that just gets up from their desk, comes out there, and auctions the property.
Some of those are online. Some of them are live and online, and some of them are just online. You’ll have to see what your county is doing on that particular auction.
If you’re going to a big auction, like in Dade County or Harris County or a county that’s going to have literally thousands of properties, like Los Angeles, and I’ll talk about that later on.
In Los Angeles they might have 1,500 or 2,000 properties to auction, and the auction goes fast.
What is the Starting Price at a Tax Deed Auction?
Today, we’re talking about what is a tax deed auction and auction properties. So what’s the starting price at an auction?
The starting price generally is very close to the amount they seized the property for. It’s going to be the back taxes, plus some fees.
If an auction starts that low, and you could buy property for 70% or 80% discounts, you’re really going to be in pretty good shape. Especially, even if you’re surprised about it, because there’s no mortgage on that property.
When you buy a property at auction the mortgage has basically been deleted. It’s been wiped out from the property records. What a great deal that is. You’d love to own a property without a mortgage.
Think about that. You’re buying mortgage-free property for pennies on the dollar, 70%, 80%, 90% discounts!
After you buy it, what are you going to do with it? You’re going to sell it.
Many of the other liens that are on the property are also wiped out. So you need to study this just a little bit, and you’ll learn it.
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Why Counties Sell Tax Delinquent Property
So what is a tax deed auction? It’s an auction that takes place after the county has seized the property, and now what they want to do is return that property to the tax roll.
So it’s a delinquent property. It’s off the tax roll. It’s not generating money for the county.
The county wants regular payments from every property owner in the county. It’s the law of the land, and everybody owes it except for schools and churches.
They’re trying to get that property back on the regular tax roll, so they can get regular money. So they’re auctioning this property as low as possible.
Is a Tax Deed Sale a Complex Auction?
What is a tax deed auction like? Is this a complex auction? No. It starts at a low price. the highest bidder gets it, and you receive a property with no mortgage on it.
Can anybody go to the auction? Yes, anybody can go.
Can you buy for cash? Well, most people question cash today, but the equivalent of cash could be a cashier’s check or something like that. So you want to know all the rules of what you’re going to pay before you go to the auction.
Let me repeat, in a county that has a small population, they’ll have dozens to hundreds of properties.
In a county that has a large population, you can find hundreds to a thousand tax defaulted properties.
There are 5,000 auctions every year, and they take place in 3,000 counties.
Are Tax Deed Properties for Sale Now?
Someone asked me, “Can you show proof that there are still properties available today?”
Well, that’s a good question. Someone asking, can I show proof? Well, why don’t I just do that? So I’m going to reach over here to an auction brochure, and I’ll show you multiple brochures here in the next few minutes.
This auction brochure is from the state of New York, and it says, Franklin County. Looks like they’ve got about 86 properties there in Franklin County. They actually give me pictures of these properties.
This is just one auction of many, and keep in mind a state like New York will have maybe 60 or 70 counties.
Again, let’s look at another one. This is Sullivan County in New York.
Now I know for a fact, because I bought there myself, Sullivan County has 355 properties scheduled for this auction. This is a brochure that I just downloaded from the internet.
Guess what? It shows me all these properties. I can pick any one I want. I can buy those, and the starting bid is going to be the back taxes.
Here, let me find one of these and see what kind of pricing we’ve got there. This is one of many properties. There are 355. This particular one that I circled has a value of $151,000. It’s a two-story ranch style house built in 1997.
So we’re not talking about old junkers. We’re talking about properties that are just 20 or 25 years old, and now it’s going for auction.
What if it goes for 10 cents on the dollar, and the value was $151,000? Wouldn’t you like to be in on that deal?
What is a Los Angeles County Tax Sale Like?
Let me find one more. What is a tax deed auction like in Los Angeles County? This is an auction brochure from Los Angeles. Each page has about eight properties on it. So I estimate in this one here, there are about 1,500 properties just at this one auction in Los Angeles.
That’s what I call a really big auction when they have 1,500 to 2,000 properties.
All of these properties will have a starting bid of the back taxes. So that’ll give you some idea, and this works in every County in America. You just have to learn how.
Let me go a little more in-depth about my experience in L.A.
I’ve been at the Los Angeles auction at least 5 times in the 30 years that I’ve been doing this. Each time I went to that auction, it was really busy.
They have a requirement that you pay $5,000, or you can’t enter the auction room. You have to do that 3 weeks in advance.
They only charge you that money to keep people from coming, because too many people come. A lot of people think auctions are just entertaining, so they go there.
The auction had over 1,000 people in attendance. If I snapped my fingers in quick succession like this, every time I snapped my fingers, they sold a property.
This auction I’m showing you here has 1,500 properties. If they start at 9 AM, by the time 5 PM rolls around, they will have sold the majority of these properties.
People that know and understand this understand there are a lot of bargains in this book.
You don’t want to go to that auction without having done your homework. If you haven’t done your homework, you’ll really be entertained, but you won’t know what’s going on.
It happens fast, and you must follow the rule. They’ll have plenty of sheriffs in the room, and you will follow the rules or they’ll escort you out of the room.
Tax Deeds Are Big Business and Hugely Profitable!
What is a tax deed auction? This is serious business. It’s a big business. It’s hugely profitable.
I promised you I’d tell you about two mistakes. These two mistakes are happening all the time at auction. I see this happening with newcomers, and I also see it happening with experienced investors.
Let me tell you what I see going on, and I hope you’ll be able to avoid these mistakes.
Common Mistakes Made at Tax Deed Auctions
The #1 mistake is people show up at the auction, and they’re excited. They want to make money, so they start bidding. Well, if you haven’t looked at the property, you should not start bidding.
How do you know what’s actually there? Is that property next to a chicken farm that might have a lot of odors? Or has that property burned down? Could there have been a hurricane this past week?
Who knows if you’re just buying a number on a sheet of paper, so you need to look at the property. Boots on the ground, eyes on the property are very important.
You don’t necessarily have to be there yourself, but you darned sure better have somebody check that property before you buy. That’s mistake #1.
Mistake #2 is similar. I see this happening on a regular basis. Again, people show up at the auction, and they’re all excited. But someone beats them out of a property because they bid higher.
Well, that’s nothing to worry about. There are always plenty of auction properties.
However, you don’t want to start bidding without having an exit strategy. Now what’s an exit strategy? Well, you have to know what you’re going to sell it for before you start bidding.
You don’t want to bid just so that you’ll be the winning bidder. That isn’t important. The winning bidder can bid too much money, and that’s what they do. Then they can’t sell it because they’re into the property at too high a price.
So those are two things you really need to be thinking about.
- Look at the property.
- Have an exit strategy.
Conclusion
What is a tax deed auction? It’s an excellent way to get a mortgage-free property for pennies on the dollar at a 70%, 80%, or even 90% discount.
These auctions can be large or small, and they take place in counties all across the USA. Auctions can be online or in person. Usually, they’re held annually, but some states hold them monthly.
The county will publish a list of tax defaulted properties up for auction on their website and in the newspaper.
Many will provide a brochure with photos and descriptions of the properties, but it’s still important to look at a property before you buy it. It’s also important to know your exit strategy before you start bidding.
Anyone can buy a property at a tax deed auction. You don’t have to be a US citizen. However, you do need to know the rules and do your homework, and Ted Thomas can teach you how.
Ted has over 30 years of experience buying tax defaulted properties, and he’s been educating people how to successfully do this for over 25 years.
He’s developed a top-notch training system that includes manuals, video tutorials, and live intensive training workshops. This includes live daily training webinars and weekly live Group Coaching Q&A webinars with experienced certified coaches.
Ted’s amazing support system sets him miles apart from anyone else – Ted Thomas is the only one with the complete training, guidance and support package, and Ted wants to help you.
Get started today by taking advantage of this Free Gift from Ted. Act now, it costs you nothing and will give you a big head start!
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.
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