Last Updated on September 8, 2025
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The One Rule You Must Follow Before You Buy Tax Deeds
“Wait… I bought a tax deed online without even looking at it. I should be okay, right?”
Wrong. This is one of the riskiest mistakes you can make as an investor. If you’ve ever thought about buying a tax deed without physically or virtually inspecting the property, you need to stop what you’re doing and watch today’s video.
Buying Tax Deeds: Why You Must Inspect the Property Before You Bid
Buying tax deeds can give investors a chance to buy real estate below market value. When a property owner fails to pay property taxes, local governments may sell the home at auction to recover the unpaid taxes. If you win the bid, you receive a deed and eventually own the property.
However, buying tax deeds without doing proper research is risky. The most important rule is to never buy a tax deed without verifying the property first. Why does that rule matter, what to look for, and how to make smart bids?
Why Seeing the Tax Deed Property Matters?
In buying tax deeds, you’re not just purchasing a piece of land or a building—you’re stepping into the unknown. Tax deed properties often come with hidden surprises: structural issues, unpaid liens, or even occupants who may refuse to leave. Simply relying on online descriptions or photos is a recipe for disaster.
That’s why our #1 Rule is simple yet critical: Never buy a tax deed without verifying the property first.
What is a Tax Deed?
A tax deed is a legal document that transfers ownership of a property when the owner fails to pay property taxes. After a redemption period (usually one to three years) the property can be auctioned. In a tax lien sale, investors bid on the right to collect delinquent taxes and interest, not ownership of the home. If the owner does not redeem the lien, it may convert to a tax deed and ownership transfers. In a tax deed sale, the highest bidder receives the ownership rights to the property outright.
Common Risks When Buying Tax Deeds
Several risks investors should understand:
- Outstanding liens or mortgages – Even after the auction, there may still be claims, liens or mortgages attached to the property. These can survive the tax deed sale, complicate ownership and leave the buyer responsible for settling those debts.
- Property condition issues – Tax deed homes are often distressed or abandoned. They may have vandalism, structural damage or maintenance problems that require expensive repairs. Inspection before bidding is key.
- Legal errors – Tax deed sales must follow state procedures exactly. Mistakes in notices or filings can invalidate a sale and cause ownership problems.
- Market fluctuations – After purchase, the market value may change. Investors should analyze local trends and avoid bidding more than the property is worth.
Many tax deeds involve owners who neglect their properties during the redemption period, leading to pest infestations, vandalism or severe disrepair. Buyers usually cannot legally enter the home before the auction, so they might not discover major damage until after purchase. There are no refunds after a tax deed sale, and the investor may need to spend significant money to make the house habitable.
REMEMBER: Tax deed auctions do not guarantee a clear title. Without title insurance, buyers might inherit municipal fees or unknown mortgages.
Due diligence is very important. Sometimes the market value of a tax lien property is less than the lien amount. That’s why investors need to check for other liens or debts attached to the property. It’s also smart to look closely at the property itself and stay away from homes that are badly damaged or abandoned. Properties with pollution or dangerous materials should also be avoided.
How to Evaluate a Tax Deed Property
Before bidding at a tax deed auction, follow these steps to reduce risk:
- Research the property record
Obtain the parcel number and search county tax records to confirm the amount owed and whether other liens or mortgages exist. Some counties provide this information online; others require a phone call or visit.
- Check the redemption period
Learn the state’s redemption rules and timeline. You may need to wait months or years before you can clear the title and take possession.
- Verify zoning and environmental issues
Contact the planning department to understand permitted uses and check for environmental hazards.
- Inspect the property (drive‑by or virtual)
Walk around the exterior if possible. Use satellite images or hire a local inspector if you are out of state. Look for signs of vacancy, structural damage, roof problems and trash accumulation.
- Estimate repair costs
Budget for cleaning, repairs and legal fees. Most tax deed homes need some work, and costs can be substantial.
- Set a maximum bid
Use recent sales to determine fair market value and subtract the estimated repairs and taxes. Stick to this maximum during the auction to avoid overpaying.
Tax Lien vs. Tax Deed
| Feature | Tax Lien | Tax Deed |
| What is sold? | Right to collect delinquent taxes and interest | Ownership of the property itself |
| Redemption period | Less risk because the investor doesn’t own property, but may need to foreclose | Usually none; buyer takes ownership after auction (if redemption already expired) |
| Investor’s goal | The owner can repay taxes plus interest to keep the property | Acquire property below market value |
| Risk of hidden issues | Less risk because investor doesn’t own property, but may need to foreclose | Higher risk; buyer inherits maintenance, liens and legal issues |
Tips for Maximizing Returns
Simple advice to help investors improve outcomes:
- Do your research – Check title status, liens and market value before bidding.
- Consult with professionals – Real‑estate agents, attorneys and title companies can help identify risks and navigate local laws.
- Create a plan – Develop a bidding strategy with a maximum purchase price based on research and stick to it.
- Monitor auction activity – Watch the auction in real time and adjust your strategy; make informed bids instead of emotional ones.
- Review post‑purchase requirements – After winning, ensure all legal steps (such as quiet title actions) are completed to obtain clear ownership.
Frequently Asked Questions
Yes. Properties can hide structural damage, liens or occupants. Inspecting the property or hiring a local inspector helps you avoid surprises.
Some liens survive the tax deed sale. As the new owner, you may be responsible for settling those debts. Researching the title before bidding is essential.
Use online mapping tools to view the exterior. Hire a local inspector or services offered by tax sale companies that provide drive‑by photos and condition reports.
It is the time during which the original owner can repay the taxes and reclaim the property. Redemption periods vary by state and typically last one to three years.
Tax deeds can give you high returns if you buy a good property at a low price. But to succeed, you must do your homework, plan a real budget for repairs, and know the local rules. If you skip research, you could end up with expensive repairs or legal problems.
Final Thoughts
Buying tax deeds can be a good way to get real estate at a lower price, but it is not a quick path to riches. The #1 rule is simple: never buy a tax deed without making sure the property is real. Many tax deed homes can have hidden problems.
To lower your risks, you need to do solid research, check the property, learn the local rules, and set smart bidding limits. The time you spend on due diligence will help you succeed and save you from costly mistakes.
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