Last Updated on December 6, 2025
Table of contents
Before sharing the Top 2 Tax Deed States, let me ask you: have you ever wanted to buy a house or piece of land for just 10 cents on the dollar? This isn’t magic or a scam. It’s called tax deed investing.
When someone doesn’t pay their property taxes, the county will sell the property to recover the unpaid taxes. The starting bid at these auctions is usually just the back taxes plus any fees. Because of that, properties often sell for around 60–80 % less than their normal value. Tax deed auctions take place all over the United States, but Pennsylvania and Texas often have some of the biggest discounts. This article is based on a live training by Dustin Hahn and his team and shows why these states (and specific counties) are so good for bargain hunters.
Key Takeaways
- Tax deed investing allows you to buy properties at significant discounts, especially in the Top 2 Tax Deed States: Pennsylvania and Texas.
- In Pennsylvania, you can participate in upset and judicial sales, with the latter providing properties free of liens and no redemption period.
- In Texas, properties may have a redemption period, and you need to be aware of potential remaining liens after the auction.
- Counties like Lehigh, Luzerne, and Crawford in Pennsylvania, along with Harris and Dallas in Texas, often yield great deals for investors.
- To succeed, perform thorough research, understand local laws, and prepare adequately for the auction process.
What is a tax deed?
When property taxes aren’t paid for a long time, the county can take the property and sell it. The legal paper that gives the county the right to sell is called a tax deed. In a tax deed state, the county sells the actual property to get the tax money back. The starting bid is usually the amount of taxes owed plus any penalties or fees. The auctions are open to anyone, and the highest bidder wins. Counties often publish lists of upcoming sales ahead of time so buyers can research things like liens, zoning and market values.
Only some states use tax deed auctions. States on that list include Alabama, California, Florida, Georgia, Michigan, Pennsylvania, Texas, Washington and several others. Each state has its own rules, such as how long a former owner can redeem the property and what paperwork you need to bid. Always check the local laws before you show up at an auction.
Top 2 Tax Deed States:
Why is Pennsylvania one of the Top 2 Tax Deed States?
Pennsylvania is a true tax‑deed state. Counties there run two main types of sales:
- Upset sale: This sale happens once a year and covers properties that are at least two years behind on taxes. All existing liens stay with the property, so buyers need to check for mortgages, IRS liens or city fines. The county advertises the sale about a month in advance.
- Judicial sale: Any properties that don’t sell at the upset sale move to the judicial sale. At this auction, the county sells the properties free and clear of liens, and the minimum bid covers only the administrative costs. In Pennsylvania, there is no redemption period after these sales. Once you buy and the deed is recorded, the former owner cannot get the property back.
Best counties
We used AI to review past sale results and found counties where purchase prices were low and potential profits high. Their top picks were:
| County (PA) | Why it’s attractive | Examples (approx.) |
| Lehigh County (Allentown) | The county holds an upset sale every year. Allentown and its suburbs are growing fast, and the auction results are easy to read. Many properties are small lots or suburban homes, but remember that liens remain. | Past sales show houses selling between $2,500 and $16,500, and a nice suburban home valued over $80 k selling for about $81 k. |
| Luzerne County | There are lots of judicial sale properties and the county shares clear result sheets. Opening bids are often just a few thousand dollars and many parcels sell for less than $10 k. | Previous results include lots going for $1,300 to $6,500 and some rural acreage under $19 k. |
| Crawford County | This market is friendly to investors because buy‑ins are low. You’ll find houses, lots and small buildings selling for $8 k to $20 k, which can be flipped or rented at 10–20 cents on the dollar. | One example: a 1.26‑acre parcel with a building sold for about $19 k. Small houses went for $8 k to $14 k. |
These counties prove that you can still buy real estate for pennies on the dollar, but you must do your homework. For the upset sale, all liens stay with the property, so check the title, utilities and county lien records before bidding. Use the judicial sale if you want parcels free and clear, and remember, there is no redemption period in Pennsylvania.
Why Texas is one of the Top 2 Tax Deed States?
Texas is a hybrid state because it offers both tax deed sales and tax lien certificates. With 254 counties, there can be an auction in almost every county each month. There are plenty of chances to buy, but the rules in Texas are different, and you need to understand them:
- Redemption period: If you buy a homestead or farm property, the former owner has two years to redeem the property. They must pay you back the amount you bid, plus 25 % extra in the first year or 50 % extra in the second year. For non‑homestead properties, the redemption period is 180 days with a 25 % premium. You can’t take full possession until the redemption period ends.
- Uncleared liens: Debts like HOA fees, utility bills or IRS liens may not be removed by the sale. You could inherit these unless the auction terms say otherwise. Texas sales usually wipe out junior liens, but senior mortgages can remain, so always check the lien status and mortgage position.
- Auction lists and requirements: Some counties only release their lists a few weeks before the sale. Specialized websites or law firms sometimes post the lists earlier and let you sort properties by opening bid and appraised value. You must register to bid and provide certified funds. In most counties, you cannot owe back taxes yourself.
Best counties
There are two Texas counties that regularly offer good deals:
| County (TX) | Why it’s attractive | Examples (approx.) |
| Harris County (Houston) | This county holds a big auction every month with hundreds of properties. You can sort the list by minimum bid to find big spreads. Keep in mind that homestead properties have a two‑year redemption period, so plan for the wait if you buy one. | One recent list showed a property with a $1,734 opening bid and an appraised value around $194 k, which is a huge gap between price and value. |
| Dallas County (including Fort Worth) | Another large urban county with frequent sales. Opening bids are low but competition changes from month to month. Some properties redeem quickly, so you earn the 25 %–50 % premium instead of keeping the property. | We saw vacant lots starting at $1,362 with appraised values around $64 k, and other properties starting below $2 k. |
Remember that Texas deeds have a redemption period and that some auctions may sell HOA foreclosure properties, which do not remove mortgages. Check the case number to make sure you are bidding on a tax delinquent sale and adjust your maximum bid if there are unpaid taxes or possible redemption penalties.
How to invest in tax deed auctions?
These steps will help you get started in most tax deed states; it is also applicable in the Top 2 Tax Deed States. Adjust them based on local rules:
| Step | Action |
| 1. Choose a state and county | Decide whether you want a state with no redemption period (like Pennsylvania) or one with a redemption period (like Texas). Pick counties with a lot of sales and low starting bids. |
| 2. Get the auction list | Look up the sale list on the county’s tax claim or sheriff’s website. In Pennsylvania the list comes out about a month before the upset sale. In Texas, lists may only be public a few weeks before the auction. |
| 3. Do your homework | Find out the property’s assessed value, condition and neighborhood. Check records for mortgages, IRS liens, municipal fines and HOA fees. Make sure to check if the property is a homestead because that affects the redemption period. |
| 4. Register and bring money | You must register to bid. Bring a government ID and proof of funds. Many counties require certified checks for deposits and final payments. If you are not a resident or are bidding as a business, you might need extra paperwork. |
| 5. Bid smart | Attend the auction in person or online. Decide your maximum bid by estimating resale value and subtracting any liens, premiums or repair costs. |
| 6. After the auction | In Pennsylvania, file your deed as soon as possible and start a quiet title if necessary. In Texas, wait until the redemption period ends before spending money on repairs, and be ready to collect the 25–50 % premium if the owner redeems. Always clear up any remaining liens. |
Frequently asked questions (FAQ)
A tax lien lets an investor collect unpaid taxes plus interest while the owner keeps the property. A tax deed means the county sells the property itself and transfers ownership to the winning bidder. Because bids start near the amount of back taxes, properties can go for big discounts.
Often, a tax deed sale will remove junior liens if the lender doesn’t redeem, but senior mortgages can stay in place. HOA foreclosure sales usually don’t remove mortgages. Always research the title and lien priorities before you bid.
In Pennsylvania, there is no redemption period after the judicial sale; once you buy, you get the deed right away. In Texas, homestead and farm properties have a two‑year redemption period with a 25–50 % penalty, while other properties have a 180‑day period. You can’t take full possession until that time is up.
Costs like HOA fees, utility bills or IRS liens might not be cleared at the auction. Always check the county records for liens and read the auction terms. Include any known debts in your bid calculations.
Yes. Most counties allow out‑of‑state bidders, but you need to register, show a valid ID and sometimes prove you have the funds. Check the rules for the county where you plan to bid.
Conclusion
Buying tax deed properties can be a great way to pick up real estate at a discount.
Top 2 Tax Deed States:
Pennsylvania is attractive because judicial sales give you a clear title, and there is no redemption period. Texas has lots of auctions every month, but you must wait through the redemption period and deal with possible liens. Counties like Lehigh, Luzerne and Crawford in Pennsylvania and Harris and Dallas in Texas have produced amazing bargains. Do your homework, follow the local rules and be patient. If you plan carefully, tax deed auctions can be a profitable way to invest in real estate.
