A tax deed auction can be incredibly fun to attend, and a highly-profitable venture for a real estate investor looking to purchase property for pennies on the dollar. But beware, buying a property at a tax deed auction comes with far more challenges than buying one through traditional real estate channels.

Unfortunately, investors aren’t granted the opportunity to view properties prior to a tax deed auction, therefore the risks that come with investing in tax deeds are significant, but easily sidestepped by asking (and answering) the right questions before you ever set foot in the auction. 

As you assemble the list of properties you want to bid on, here are the 5 most important questions you need to research and ask about each one:

  1. What is My Minimum/Maximum Bid?

Auction fever is a real thing, and can be the #1 reason you lose money on your investment at a tax deed auction. If you don’t want to catch it, then you have to know your budget. Is the minimum bid (also known as the minimum tender amount) for the property within your budget? Look at this first because all the other information will be a moot point if it isn’t.

Your maximum bid should be set early on, but be aware this number will fluctuate as you continue your research.

  1. What is the Property Value?

There are four values to know on each of the properties you want to bid on at a tax deed auction, because it will determine your maximum bid:

  1. Total value (land and building): This is the government assessed value and the value that property taxes are based on.
  2. Land value alone: If you come to find out there is no longer a structure on the land, is the land value worth the bidding price?
  3. Value of renovations and repairs: This can impact your resale value.
  4. Market value relative to similar sales in the neighborhood (aka “comps”): This is perhaps the most important value to determine (Zillow is one of the tools for this). Factors that can help determine this are: 
    1. Condition of the property;
    2. Improvements recently made to the property;
    3. Current market value of similar homes in the surrounding area; and
    4. Last retail sale (this is only applicable if it was recent).
  1. Are There Other Taxes, Assessments, or Liens
    on the Property?

The minimum bid – or minimum tender amount – is the back-taxes owing, plus penalties, interest and reasonable costs incurred. The mortgage is even wiped out. What may be missing, however, are other liens or fines imposed by the local government. 

For example, if the property was in a dangerously bad condition, the city might have torn it down (this would incur a fine which could be as high as $20,000), which may show up as a lien, but it would not be part of the tax deed sale. You would inherit this cost along with the property.

This may not prevent you from purchasing the property at a tax deed auction, but remember when we said your maximum bid would fluctuate with your research? This is one of those instances. In this situation, would the land value alone – along with the cost of paying this lien – still allow enough of a profit margin when you sell?

  1. Are There Land Issues: i.e. Environmental, Use Limits?

Regardless of how little you buy a property for at a tax deed auction, your money is wasted if the property turns out to be worthless. Look for environmental or zoning concerns for starters. This is especially true if you are buying raw land for resale to a developer.

Is the property in a flood zone? On a steep slope? Is it swamp land? Is it close to a waterway? Will current zoning limit the use for what the developer intends to build?

  1. What Recent Permits Have Been Filed?

Why would pulling recent permits for properties you are interested in be an important part of your research before attending a tax deed auction?

Keep in mind that you are not afforded the opportunity to view the properties as you would in traditional real estate investing. Recent permits can therefore present valuable information on your property.

For instance, it may show that the roof was redone, or other significant improvements. Or, perhaps there was a demolition permit, which would be a strong indication that the building on the property no longer exists.

These will all factor into what your maximum bid will be at the tax deed auction.

Bonus: The 1 Thing You Must Do, No Matter What

No matter how much confidence you have in your research, no matter how tempting it feels to give in to auction fever, never bid on a property that you haven’t seen yet, or have a trusted party to do due diligence. 

Yes, we mentioned twice that you are not given the opportunity to view the property before the auction through a traditional, formal appointment, but nothing prevents you from driving to the property and viewing it carefully from the outside, within legal limits (or having someone do so on your behalf).

Take a walk around the property if possible, and take as many pictures as you can. Look for any damage or renovations, and see what general condition the property is in and the level of care that has been taken to maintain it. If the property has been cared for on the outside, chances are the same level of care (or lack thereof) has been taken on the inside.

If you are bidding at a tax deed auction from out-of-state, then assign someone you know and trust (or enlist the help of a local real estate agent) to view the property for you and take pictures.


Yes, investing in real estate through tax deed auctions does come with a measure of risk. Unlike other traditional investments however, it is almost entirely in your control to mitigate these risks. Answering the questions outlined above is an excellent start. There are of course other factors to consider so that you make the best decision possible at a tax deed auction. 

We strongly recommend that you invest in a mentor or course to fully prepare you for maximizing your profits while navigating the potential pitfalls.

To that end, as a free gift to George’s loyal readers, we would like to gift you a free Insiders Report, which will start you on your journey to investing in tax-defaulted property. 


Blog Credit: 

The Ted Thomas Team


Ted Thomas is a Florida-based educator, author and leading authority on tax-defaulted property investing. For over 30 years, Ted has dedicated his life to educating people about this low-risk, high-yield investment strategy through online courses and coaching.