Secrets to Foreclosure Auctions and Tax Deed Sales

foreclosure auctions_Tax_Deed_Sales_Tax_ForeclosuresDiscover what to do (and what NOT to do) when buying real estate at Foreclosure Auctions and Tax Deed Sales (also known as Tax Foreclosures). I am going to pull back the curtain and give you an inside look at how the pros do it. Although there are many pitfalls, this video shows you how to steer clear of them as well as make wise decisions when bidding. This is a must watch for anyone considering bidding on a property at a foreclosure auction or tax deed sale (tax foreclosure).

Secrets to Foreclosure Auctions and Tax Deed Sales


Foreclosure Auction:  Mortgage foreclosure; the borrower doesn't pay their mortgage so they go through the entire legal process of a foreclosure and then the house goes to an actual county auction or parish.

Tax Deed Sale: Tax foreclosure; the property owner doesn't pay their property taxes, so a house is usually sold as a tax lien first, and then if the tax lien is not paid within a certain period of time  it then goes to an actual foreclosure.




If you have read my other blogs or seen my videos, then you know that I'm a creative real estate investor and that means that I am working directly with the seller not sourcing my deals from an agent, the MLS, or foreclosure auctions. But the truth is that there are certain circumstances where it actually makes sense to let a house go to auction.


  •  title issues
  • Extra Liens on the title
  • A death which left multiple heirs
  • The heirs didn't have the money to pay for probate and they just let it go to auction.
  • A messy title where it's better to let it go to auction, clear the whole thing out so someone can buy it there.

In this business there are procrastinators that will literally call you the day before the auction, which doesn't even give you enough time to call the lender, get an updated reinstatement, or updated payoff. .Even if the deal is a home run there's simply not enough time to get the information from the lender to actually purchase the property, even if you have the cash in your bank account.


The Sandbox


Sometimes it makes sense to do deals that go to tax or mortgage auction. These types of auctions are better then the ones you will see on or Hub Zoo because these are what they call cash on the barrel head. You have to pay the money at the time of the auction. This kicks out a lot of potential competitors, which creates a nice little barrier to entry.   If you don't have the cash you can't play in the sandbox.

Abraham Lincoln once said that, "If I have eight hours to cut down a tree, I would spend the first seven hours sharpening the ax."

The first seven hours is going to be you preparing for the auction. You have to have your act together and you have to know your stuff because the auction itself is not where you're going to play all your games. The biggest game playing moments are when you are getting all of the information and doing your due diligence.


Property Homework

The first thing you need to do in your hypothetical "first seven hours" is do your property homework.


  • Evaluate The Value

The first step in property homework is to evaluate the value.  You might not be able to ascertain the complete total value because you may not be able to get inside but when it comes to condition you'd be surprised how often there is a back door or window that might be open. Now, I'm not suggesting you do that but I know people that tend to find a way to get inside the property if it's vacant prior to the actual auction occurring.


  • Assess the Condition

You can assess condition on the exterior easily but the interior might be more difficult. The utilities won't be on so you won't know the condition of the plumbing, electrical or HVAC, but you can get some level of understanding by taking a look and looking at the age of the property.

These two come together though because in order to really understand value you have to understand condition. You want to really start at the comparable sales to understand what the property can sell for all fixed up as well as what it is worth as is. These two pieces of information will help you better understand whether or not you should even waste your time going any further down the road of these seven hours of sharpening your ax. You can compare the property worth and potential worth with the opening auction bid.



Two Types of Foreclosures in the United States


  • Non-Judicial: it's usually going to show you the opening bid amount.
  •  Judicial: they're going to show you the judgment amount.


Judgment is how much the foreclosing mortgage company is owed including all of their back payments and any interest or attorney's fees. The judgment amount is typically what the opening auction bid will end up being for the lender because is most cases the opening bid in judicial foreclosures is $100, but it's not really $100, because a representative from the bank will be present bidding the auction up until at least the judgment amount.


Opening Bid Amount


If the opening bid amount is really close to the property's value it's probably not going to be worth your time.

Here's the example. If the opening bid is going to be $100,000 and the value is  $200,000, then this is an exciting potential auction because there's a lot of room in the deal. So the bank will tap out at the judgment amount and then the only competition you are left with is other investors.

If the value is $110,000 and the opening bid is again $100,000, the problem is that the lender might go all the way up to their $100,000 judgment and then there's no real room for profit.

You might be saying, "Phil, what happens if the value is  $80,000? Is the lender going to come up to their $100,000 opening bid?" Maybe not. They might max out at 70. They typically do a drive by VPO or a drive by appraisal right before the auction if they're in a situation like this to ensure that they at least bid an amount that's reasonable. The property could go for less than opening bid amount, it sometimes depends.

Now, I'm not talking about tax appraisal value, I'm talking about the actual comparable sales on the MLS closed comps value. I've got a great video on that, Determining Property the Right Way, that'll help you better understand what I mean. If you understand that the opening bid amount is going to be well below what the value is you might have a promising deal.


 Do a Title Search

You need to know what's on the title because some liens will sometimes survive the auction, such as tax, property taxes, and even IRS tax liens. It's not just about liens either, you need to know about any remodels or builds on the property that never closed off on the building permits.  That could be a real problem, that could extend past the closing. All kinds of issues could occur.

I actually pay for a professional title search. I can do title searches through the counties that I invest in online,  but I go to the next level because I want to make sure there's no mistakes. When you do make a mistake on this it can be very troubling. You buy a property with what's called a "dirty title" which is awful, especially with tax deed sales where in many cases with a tax foreclosure you have to file what's called quiet title. You have to file it after the closing to have the ability to resell the property and give the new buyer title insurance because when you buy at an auction you're not getting title insurance.


Quiet Title

When you resell after you've bought at auction you don't always have the ability to give the new buyer title insurance, especially tax deed sales, and so sometimes you have file quiet title. It is extremely important that you understand this, which is why I get professionals involved. Even if you spend the money on the title search and the deal never comes together, it is still better safe than sorry.


Figuring Out Your Max Bid

After you have done all of the initial analysis of the property, you are now in the position to potentially consider putting together your max bid amount which is also incredibly important. You want to go into the auction with a plan on what your max bid's going to be. Before you do that we have one more piece of this seven hours, and I'm going to call it this...


Rules of the Game

My Lesson

In my beginning investor years, I decided to bid on a property at an auction. The property was in foreclosure for years and the borrower had continued to file frivolous law suits and throwing out all kinds of cockamamie schemes to keep the house from going to foreclosure. On the day of the foreclosure I won the option at $385,000, so I wired in $385,000 cash to the county. Well, in this particular situation there was a seven day period where that borrower could dispute the foreclosure sale, and he did. When he disputed, it put the property into this limbo stage where I didn't own it so I couldn't even put insurance on the property. If it burned down my $385,000 was at risk.


The Result

There were two judges in the county that were handling these disputes. One of them was on vacation for three months and the other one was way backed up with work. It took seven months to finalize the auction deal. He actually ended up winning the dispute so he got to keep the property, believe it or not, it was ridiculous. I received my money back eight months later and I didn't get any interest on it. Thank goodness I got the money back it tied up $385,000 of my cash. What the lesson there was this.  Had I been smarter I would have looked up the foreclosure case records and I would have seen that this guy had filed all these frivolous lawsuits for years and years and years. That would have told me that this was a risky one to bid on because somebody could have pulled this stunt.


Legal Help

You're going to need good legal help, either a foreclosure attorney or a real estate attorney that understands auctions and works with clients that actually buy these properties at auctions because you could make a big mistake and it could be very expensive. Now, this one ended up just costing me the fact that my money was tied up, for eight months, so it was more like an opportunity cost.


Right of Redemption

A right of redemption means that the person who was foreclosed upon has the right to redeem or buy the property back for the amount it went to auction for. An example would be New Mexico. When the property goes to foreclosure, let's say it went to foreclosure for $100,000 and you won the bid, what if you started renovating the property, started fixing it up, and then all of a sudden 30 days into it you get a knock on the door and they say, "Yeah, I still own this property, I went and redeemed it. Thanks for fixing up my property for free." It's happened, so you need to understand the right of redemption.


No Right of Redemption


Now, certain states don't have right of redemptions on mortgages because of the deed of trust or the mortgage will actually nullify that. HOA, Home Owners Association, foreclosures sometimes still have these right of redemptions as well as tax sales.  You also have to understand the property's boundaries, what's going on with the property itself in regards to laws.



A person was bidding on a tax deed sale on a vacant lot. A lot of times these tax deed sales are vacant land, not houses. The numbers seemed amazing so he won the auction and then he later learned that that particular lot had a historical overlay and it could not be built upon so the land was basically useless. It was in a residential community and he thought he could sell the lot for $100,000. He paid 10 grand for it and it turns out he couldn't build so he sat on it and he now pays the taxes on it each year.

You need to understand the rules of the game. I think an attorney could really help you  go through all the things that could go wrong, what you need to be aware of. Sometimes its situation will depend on whether it's a mortgage tax or an HOA foreclosure or what is involved in the actual auction itself.


The Auction

Now that you've done your first seven hours sharpening your ax, we can discuss the auction. The actual auction can be either in person online. When you're dealing with an auction there are a couple of rules I need you to keep in mind.


1. Max bid already determined.

There's this one particular auction where every single time that it was in session the same old Big Roy came in the room. He had his chest out and anybody who saw Big Roy, knew if he was bidding he was going to put up a fight. They thought Big Roy was making a killing around town with all the deals he was doing. Oftentimes, if he started bidding with you, you would always bid up a little more, because if Big Roy was bidding on the deal it must be good.

Well, here's what the real story turned out to be. Old Big Roy, worked for a bunch of attorneys and doctors in town that weren't very smart. He raised a bunch of money and basically had a mini "Bernie Madoff Ponzi" scheme going where he would get the money from them,  buy these properties, he'd fix them up a little bit, and he often lost money on them. New money had to keep coming in to pay off the old money and he eventually got in big trouble. All these people were thinking that Big Roy had his act together and it turned out that wasn't the game he was playing at all, he had a Ponzi scheme going.


  • You do not want to go into the auction and on the fly change your bid
  • You want to be focused, you must have your max bid already determined, and don't change it.
  • What's going to happen is when you're there, especially in person, if you see some other people bidding you might think, "Maybe they know something about the value that I missed. Maybe this thing's more valuable than I thought it was."
  • Don't think that way, you have no idea what they're up to.
  • Don't follow anybody else in the room. You have your max bid and you stick to it.


2. For When You Lose

It's okay. I understand, here in America we're very competitive. We love sports and we always want to win, win, win. You need to be okay with losing. I lose a whole lot when it comes to these auctions because I don't like paying very much. There's always some sucker out there willing to pay way too much for some of these properties. Be okay with losing, it is not a big deal. Be okay if it doesn't go to sale, you'd be surprised, how often these properties never actually go to auction.

Tax deed sales are pretty much 100%, they always go to auction. Sometimes, they'll pay it up the day before or maybe the lender will postpone the sale because of some frivolous foreclosure defense attorney's letter, all kinds of reasons to push off the sale. You may do all your work and it may not go to sale but that doesn't mean it's going to always stay in limbo. Keep an eye on those, they may come back around.


3. For When You Win

If you actually win, congratulations, make sure you get insurance bound on that property. It's easy to forget that detail but you're the owner now. If you're the owner you'd better put some insurance on there, because it's probably a vacant property at that point. Maybe there might even be some squatters in there.

If it is a tax deed sale and you have to do quiet title make sure you file for that. In a lot of cases, I know in Florida quiet title can cost $2,000 so you have to factor that into your bidding. You'll have an extra $2,000 expense when you win a tax deed sale.


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  1. Thomas Gebregergis says

    I have purchased a foreclosed house through a county clerk auction. I have paid the due and when I do a drive by the house, the property was completely burned down due to fire. I am shocked and perplexed on why a county would allow the HOA to foreclose when the house was destroyed 6 weeks before the auction date. Any advice would be appreciated?

  2. THOMAS PADIN says

    I bought a tax sale property in GA on 12/01/2020 and it has redemption right for a year. I got an HOA assessment bill for 2021 for 800$ which they issued on 12/07/2020. It means after a week HOA send me the hoA due for the coming year. DO I HAVE TO PAY THIS MONEY? AM I LIABLE TO PAY? Please help me

  3. Great article. I’m looking at Tax Deeds ideally to obtain the property as opposed to Liens to focus on interest.

    I’m really struggling to find online auctions. I wanted to watch a few before getting into it. I looked into a few counties in NC, but it seemed they were all in person and not happening due to Covid. Is there a place to obtain a list of all counties with online auctions and their details? At this stage, the only way I’ll feel comfortable with my approach is to watch a few auctions and see how the final prices compare with my estimated value

  4. Kim Nguyen says

    I lost my property from tax sale. During the transaction, I never receive any notice to know about my tax sale. Find out the title company put the wrong address file at the appraisal district. I own the property almost 5 years. Now the new investor bought the property, due to the covid 19 and the timing to redemtion my property was pass. Go back to see all the mistake from the tax sale, I pay part of the tax which is 3 kinds of tax but I never receive the accessor tax send to me ( wrong address). Can I put this matter to setting aside and have go back to court to get my property back.

  5. Brian Thacker says

    Hey Phil,

    Investor in Florida here. But in new to the area. Just moved from Indiana. About to start bidding on some properties next week, will a title company actually give me title insurance on one of these properties being auctioned? I’m having a title search done and have already checked out there property. I just don’t want to be surprised if I win the auction and then all of a sudden something shows up after thre fact. Thanks man.

  6. I bought a tax lein on a house that was 2 years behind and it’s now hud owned ? My question is why did hud not pay the taxes for 2 years now . And when they are sent the letter next year for right to redeem do they usually redeem the property or will they just let it go since I just messed up their clean and clear title .
    It’s say it’s pending on realtor for a hose sale but hud has actually removed the house from their site .
    Any thoughts


  7. Mike Guilas says

    Is it possible to redeem a property on weekend when the Office is close and the auction was already started last Friday? I’m just wonderin after seeing all those properties being withdrawn one by one until nothing left.

  8. Patrick D Campe says

    In the sale of a home that goes to auction for back taxes, how does the original homeowner get any “excess” between what was paid at auction for their house and what they owed in taxes? Does not the county they live in hold said excess and keep it unless the homeowner asks for it?

    • John Bonillas says

      In Texas this the excess proceeds will go to the previous owner, however some counties will petition for the excess proceeds for any post judgment tax years first. If anything is left over then that goes to previous owner.

      Some counties do not petition for the tax judgement years and leave that responsible to the new buyer and all excess proceeds go to previous owner.

  9. Soocela Crackel says

    Hello Phil, enjoyed your answers to those seeking your help. Your giving is much appreciated! My daughter bought a parcel of land for way way too much! Selling price is now $9000. and she paid $29000 in 2005. Big big mistake. Taxes owed is $8000. + .Tax lien. How can she save this parcel? Would selling it help in paying taxes?

    • Freedom Mentor says

      It is a painful lesson but selling for something is better than losing it to tax sale.

    • John Bonillas says

      What she hoping it would appreciate? If she was, what happened that the area did not?

      Better to let go to auction as Mentor says, it may in fact go for more than what is owed and she. would get any excess proceeds after the sale.

      She could possibly walk away with money if someone buys it for over opening bid and if the county does not petition for post judgement years.

      If someone say buys it for 29,000 again and say 9000 owed in the judgement suit, plus say another 9000 in post judgement tax years she would still walk away with 11,000.

      This is dependent on your state tax code for excess proceeds and what the tax county chooses to do with the excess proceeds first.

  10. Ms. Gipson says

    Hi, Phil

    How do I obtain a foreclosure with no money and be able to buy the foreclosure through the owner equity

    • Phil Pustejovsky says

      Don’t focus on foreclosures. Focus on sellers who are current on payments. If you target pre-foreclosures, you’ll need the cash to bring the loan current.

  11. Phil, As always, you over deliver! Two years ago I got swamped in the business trying to do a deal. Since that time I have become much more wiser to structure systems within the business which I believe will be much more successful.

  12. jeffrey ross says

    can you get home owners insurance on a tax sale home if you are the winner to protect your investment

  13. I brought a property at a tax sale. I won the property but upon waiting on the deed i discovered that there was a house fire which involved a kerosene heater in 73 degree weather. Is the occupant required to fix it?

    • Phil Pustejovsky says

      No. Although you may want to talk to the taxing authority about whether or not you can back out or reduce your bid.

  14. Jeremy Wilson says

    Phil…thanks for the great info. Quick question about the tax sale. Ex. Delinquent taxes are $1500 for a piece of land and I bid $5,000 and win the bid. What do I pay the day of the bid? I assume just the arrears and if it doesn’t get redeemed I pay the rest after the redemption period? I’m a little confused on that part and can’t find the answer anywhere.

    • Phil Pustejovsky says

      If you pay $5,000 for a $1,500 tax lien (that has turned into a tax deed sale), you pay $5,000 and the $3,500 overrage goes back to the original homeowner.

  15. Warren felder says

    I really enjoyed your presentation, I’m just getting started in real estate and I would like to get in your apprenticeship program. Thanks for the info. It was very informative.

  16. Hello,
    I have delinquent for 2011-2017 real estate property taxes due to Constable sale in August. I paid the taxes for year 2017, but the preceding years are still delinquent about 11k. Will my paying the year 2017 stop the Constable Sale? If i bid on it as a 3rd heir relative will the property be my property.?

  17. Hi Phil,

    What happens if the property went through probate and no one wants it or there are no heirs? Is there anyway it can be picked up before going to the tax or foreclosure proceedings/auction?


    • Freedom Mentor says

      When a person dies “intestate” (without a will) and has no heirs it will fall to the State to determine the distribution of the property and try to find any distant relatives. Each State has different intestacy laws.

  18. William Thomas says

    I’m planning on bidding on 2 tax sale homes soon, at a tax sale auction.
    What happens if the home has a mortgage that has not foreclosed. Does that mortgage company just lose out. What rights do they have?

    • Phil Pustejovsky says

      The mortgages would be whipped out. But almost every mortgage company pays up the back taxes before such an event was to occur.

  19. Question: if you win a tax lein or tax certificate ( not deed) sale, and the house burns down during the redemption period….are you listed as a leinholder on the title, for the amount of winning bid plus any expenses recorded post sale, able to receive recompense from the owners insurance company? Is interest per county statutes included in compensation amount?

  20. Russell Peters says

    Hi Phil

    I have bought 2 properties in Texas, Dallas County Tax property sale properties.
    After winning the bid I have been notified that I bid on the land which is the back of the property and there is no access to my property.

    I think the website is very misleading; which showed nice houses to buy.

    What can I do now to resolve this headache.


    • Freedom Mentor says

      You might start with a very good local real estate attorney. Then consider negotiating with owners of the adjacent parcels for an easement access. Watch this video.

  21. Andy Metcalf says

    Hi Phil. Great stuff as always. Quick question. What are the states that have mortgage forclosure auctions? I have found it difficult to find information on a state by state basis. Any tips on researching them would be appreciated.

  22. Hi Phil,
    I’ve bought a few Foreclosure properties at auction over the last years with good success. I took your advice, did the research and it’s worked out nicely. As the market has gotten hot, it’s getting really competitive. I’d like to widen my horizons and get in to Tax Deeds as well, but find it difficult to get clear information on the ins and outs. Couple questions.. I assume in a Tax Deed sale the buyer is responsible for all liens on the property, mortgages, HOAs, Judgements, etc.? Also, the non-marketable title scares me, is this difficult to fix through the quiet title action? What other pitfalls?
    Thanks for your time,

  23. won bid of 132, 510 on house in Michigan. this is a fannie mae property. i paid for my own title insurance. Fannie Mae still uses their own title co, Servicelink as well. I just want to be certain of having a clear title.
    ?#1: my realtor didnt; want me doing this and says she is all worried about me getting clear title. So, if my title company that I pay directly gives me full title insurance, there are no surprises and I am good, right? and if they searched title and there is nothing on it (this is already done) through reputable title company my realtor recommended……. then, regardless of fannie mae’s inserts in purchasing agreement, I get clear title and insurance? ….because it is coming from a separate entity than the bank/fannie mae?

    the realtor is driving me crazy. I now have about 7 days left from their signature on contract to back out and get my earnest deposit returned if for any reason I think I cant get clear title. the title insurance rep was a bit short with me and told me to relax, its no problem but my realtor still not confident I can get clear title because of fannie mae contract read.

    I am trying to research what I need from title company to be sure I have clear deed title. that is how I came across your site. thank you so much

    • Phil Pustejovsky says

      Read the fine print of whichever title insurance policy you purchase, whether from Servicelink or your title company. It’s like any other form of insurance; the devil is in the details

  24. thomas jackson says

    my question is if one is successful in bidding on a lot, and a year later it is not redeemed and one gets the title , what happens if the old owner was behind on HOA fees , are they wipped out in tax sale for do they follow property with new owner so he would have to catch those up?

  25. Attended a seminar recently and another several years ago regarding real estate. They both mentioned that there was document you can file to collect the over collection of moneys paid for property bought at tax deed sales from county’s. Is there such a form or document?

    • Phil Pustejovsky says

      Sure, it’s called a Deed. If you are the owner of the property, you can collect any overage that may exist.

  26. Hi I bought a house at a tax deed sale, I know certain things can survive the sale like state and federal liens however what about nuisence liens and homestead liens, which is county.

  27. Hi Phil,

    I am planing to move to Florida and would like to buy the house on Hubzu now, could you help me how to do? i am unable to check the condition, and also all things you mentioned in this video .

    Looking forward to hearing from you,
    Thank you

    • Phil Pustejovsky says

      Ask a Real Estate Agent to be your eyes and ears on the ground of where the property is located

  28. Yolanda Abelido says

    Phil I always include you in my daily devotion because you are giving hope and enlightening people who are in the edge of giving up life as a whole.Thank God for sending you to us and I thank you Phil for opening the light at the end of the long dark tunnel.I learned so much from you you have back my long lost dream that I gave up since I lost my houses I love you so much Phil the love that sent because there is God.I pray for you daily please don’t give up on us very desperate people You are God sent Phil more power to you thank you for giving back the light in my life More power and blessings protection to you Phil thank you again and again and forever

  29. Phil,

    Thanks for a great informational video.

  30. Carole Parker says

    great info Phil. Looking forward to getting started with your program. Looking at a fsbo thus afternoon

  31. Hi Phil,

    Love your videos. Tons of value. Are you able to share the state that brought you into the limbo where you got your money stucked for 8 months?

  32. Phil,
    I recently bought a house for a great deal from an auction in Polk county Florida. I did my homework on the property but it turns out I was still misguided. The property was foreclosed on by both the HOA& the Mortgage Company. The mortgage foreclosure had previously been canceled & so I thought if I bought it, all Liens, including the mortgage, would convey with the property. So I purchased it from the HOA & what I’m being told now is that the mortgage company title supersedes my title, thereby making my title nothing more than a piece of paper. Do you have any advice for me on how I may keep this property? Thanks in advance!

    • Phil Pustejovsky says

      I hope you paid close to nothing for that HOA foreclosure. Next step for you is to go to the house and explain to the seller that you are now the owner but but for just $X, they can get the house back from you. At least that way you can get the money you invested back plus some interest

  33. Phil
    Thanks for the great video on auctions
    I still feel like it was missing the funding options processes
    You mentioned you sent in a wire with the funds -how does that work?
    Do you bring cashier checks in $10k increments?
    Is there another video to get more info?

    • Phil Pustejovsky says

      Every jurisdiction is different. In Volusia County Florida, they require 5% to be wired into their account prior to the auction and then the other 95% must be wired the same day as when you win the auction.

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