Last Updated on August 1, 2026
Estimated reading time: 5 minutes
Author: Jessa May Bautista
Reviewed by: Josh Blanchard
Fact Checked by: Jack Aldous
So you just won your first tax deed auction. Congrats! But now comes the part most people never talk about: what to actually do next. Skip a step here, and it could cost you thousands of dollars, or even the property itself.
This guide breaks down the exact steps to follow right after you win a bid at a tax deed auction, so you can protect your investment and set yourself up to profit.
What Is a Tax Deed?A tax deed is a county legal document that gives the county title to a property when real estate taxes stay unpaid long enough. After that, the county sells the property to recover the unpaid taxes.
Table of contents
- After A Tax Deed Auction Step 1: Correct Payment Process
- After A Tax Deed Auction Step 2: Get Vacant Property Insurance
- After A Tax Deed Auction Step 3: Record the Deed
- After A Tax Deed Auction Step 4: Secure the Property
- What is “Blue Tarp Theory” ?
- After A Tax Deed Auction Step 5: Know Your Exit Strategy
- What Happens After You Win a Tax Deed Auction?
- FAQ
Key Takeaways
- After winning a tax deed auction, follow the correct payment process unique to your county to avoid losing the property.
- Immediately get vacant property insurance to protect against potential damages, as standard home insurance may not cover auctions.
- Record the deed with accuracy and ensure the legal name is correct to confirm ownership and prevent future issues.
- Secure the property based on its situation, whether it’s vacant, occupied, or damaged, to protect your investment.
- Plan your exit strategy before bidding, to decide whether to flip, rent, or keep the property long term.
After A Tax Deed Auction Step 1: Correct Payment Process
Every county handles payment differently, so figure this out before tax deed auction day. In Texas, payment is due immediately with cash or a cashier’s check, while Philadelphia requires 10% down and gives you 14 days to pay the rest.
- In Texas, you pay right away with cash or a cashier’s check.
- In Philadelphia, you put down 10% and have 14 days to pay the rest.
- Some counties give you about an hour to pay.
If you show up without the right funds, you can lose the property and even get banned from future auctions. This is also why over-the-counter (OTC) properties can be a hidden opportunity. About 10% of winning bidders fail to pay, and those properties go back into county inventory, often at a discount.
After A Tax Deed Auction Step 2: Get Vacant Property Insurance
This step gets skipped a lot, and it can be a costly mistake.
Regular home insurance companies usually will not cover a property you just won at a tax deed auction. You need a company that specializes in vacant property insurance, especially in areas prone to flooding, storms, or hail.
Josh shared a real example: a $1,500 vacant property insurance policy once paid out $78,000 after a property was vandalized and flooded, not once, but three separate times. Without that policy, the loss would have been devastating.
After A Tax Deed Auction Step 3: Record the Deed
This confirms you are the official owner. Always keep a copy for your own records.
If the deed is recorded incorrectly, or if there is a spelling error, it can cause serious problems down the road. Dustin shared his own rookie mistake: he bought a property under an LLC name before the LLC officially existed. He later had to do a quiet title action just to fix it. Lesson learned: make sure the name on the deed is correct and already exists as a legal entity.
After A Tax Deed Auction Step 4: Secure the Property
This step protects your investment from further damage.
| Situation | What to Do |
| Property is vacant | Change the locks, add a lockbox |
| Previous owner is still living there | Start communication, offer cash for keys |
| Renter is living there | Reach out to establish a landlord relationship |
| Roof is damaged | Put a tarp on it right away to stop water damage |
| Windows are broken | Board them up |
| Grass is overgrown | Mow it to avoid city fines (grass liens) |
Dustin and Josh do not recommend selling back to the previous homeowner. If they could not pay their property taxes, they likely cannot pay rent either.
What is “Blue Tarp Theory”?
Before you even bid, check the property on Google Street View. If you spot a blue tarp on the roof from years ago, that is a red flag. It usually means long-term water damage, which can turn a simple repair into a full gut renovation.
After A Tax Deed Auction Step 5: Know Your Exit Strategy
Decide this before you even bid, not after.
- Flip it
- Rent it out
- Wholesale it
- Seller finance it
- Keep it long term
Having a clear exit strategy helps you move faster and avoid holding costs that eat into your profit.
What Happens After You Win a Tax Deed Auction?
- Pay using the correct method and timeline for that county
- Get vacant property insurance right away
- Record the deed properly, using the correct legal name
- Secure the property (locks, tarp, boards, communication)
- Check Google Street View for red flags like old blue tarps
- Choose your exit strategy before you begin work
FAQ
A tax deed auction is a public sale where a county sells a property because the owner failed to pay property taxes. The winning bidder becomes the new legal owner.
It depends on the county. Some require payment on the spot, others give you an hour, and some allow 10% down with 14 days to pay the rest.
A vacant property is more vulnerable to vandalism, fire, and weather damage. Regular home insurance usually will not cover it, so you need a policy made for vacant properties.
Based on real experience, about 25% of the time the previous owner is still there, 25% of the time a renter is there, and about 50% of the time the property is empty.
Yes, but the LLC must already exist and be officially registered before the auction. You cannot buy under a name that does not legally exist yet.
It is a warning sign. If Google Street View shows a blue tarp on a roof from years back, it likely means long-term water damage and a much bigger repair bill than expected.
Related Links
