Tax deeds are some of the best deals in real estate

Are you looking to acquire some property for pennies on the dollar? You probably won’t get the house of your dreams, but you can definitely find great deals that can be quickly turned around if you attend the tax deed sales.

A tax deed sale is simply when the county forecloses on the property owner for non-payment of property taxes. The process for managing tax deed sales varies widely by state and even by county. In Ohio, for example, tax deed sales are done as Sheriff Sales, which is the exact same department that does foreclosures. In Arkansas, there is a state office called the State Land Commissioner that handles all tax deed sales. In other states, tax deed sales are conducted at the county level and are handled by the treasurer, circuit clerk, or auditor. As you can imagine, it is very important to understand the local regulations.

The tax deed bidding process is determined by local regulations: some jurisdictions require that the minimum bid at auction be the appraised value or a fraction of the property’s appraised value. Other jurisdictions use the taxes due as the minimum bid.

This is where it really gets interesting. If the property does not sell at the initial sale, some jurisdictions allow the state or county to sell the property without a minimum offer no matter what is owed. For example, in Arkansas, I bought property from the State Land Commissioner for as little as $25. Read that again. It is not a misprint. Not $2,500, not $250, but $25! I sold the property a month later for several hundred dollars. Does that kind of deal happen every day? Of course not! But it happens.

So how do you find these kinds of deals? If you don’t know the regulation in your state, call the person in charge of money in your county, either the Treasurer or the Tax Collector, and ask what the procedure is for back taxes. They should be able to tell you when the next tax sale is. Then call the appropriate department and find out what the procedure is for properties that don’t sell at the initial auction. Are they being sold at another auction? Are they listed somewhere where you can buy direct? Be persistent and you will soon find the pot of gold.

In short, tax deeds can be super lucrative if you know where to look and what to ask. So, as Nike says, “Just do it!”