How to buy a tax deed
Visit the county treasurer's website (or department of finance) and get a list of properties to be sold at the next auction. Here are some example websites that will give you information and links to either purchase or download their list of properties:
Again, these are just a few examples. There are hundreds of counties available for the taking.
While on the county website of your choice, get a copy of the auction procedures and the list of properties. Read over them and get familiarized with them. Each county is a little different (as well as each property). Once you've obtained both, you're ready to move on.
Pick properties that have potential. Refer to the county list you obtained in the previous step. The first thing you should look at is the minimum bid. Find something that's within your means and then look at the column that has "structure" in it. This indicates that there's a building of some kind on the property.
Then look at the address. If there's a physical address with a street number, search for that address on Google maps, earth or www.zillow.com. You can then see for yourself by zooming in or looking on Zillow to verify that there's a building on the property.
If the address doesn't have a street number, it's an empty lot or field; in other words it's useless.
By now you've probably narrowed down your list to 2 or 3 properties - which is OK - remember that this is only 1 county. If you spend a few hours each week and pick five or six counties, you're looking at 12 decent leads on potentially cheap homes.
Research. You'll basically want to research the property for the following:
• Neighborhood values
• Other liens or obligations
• Title eligibility
Use Google Earth and street views to your advantage, as well as Zillow.com and a physical inspection of the property.
To research other liens or obligations, it's best to start with what your state
law requires. Some county websites will give you a FAQ document. This can give you an idea of whether or not previous liens will remain on the property. In California, for example, the sale at a tax-deed auction conveys the title to the new owner free of all prior encumbrances, with the exception of a few (which are mentioned in the FAQ). If you can't access the information online, simply call the county treasurer or department of finance.
After that you should go to either the County Court or the Recorder's office to see if there are any special assessments or liens that won't fall off the property as specified in the FAQ or information sheet. Another option is to have a local title company do a search on the property to see if it's insurable. There may be issues that you can't find on your own that would otherwise rule out a property from your list. Chances are if there has been a resident there within the last 6 months or so, it's a safe bet, but don't rely on that alone.
Attend the auction. The FAQ document should tell you everything you need to know before going in for that particular county. The most important thing to remember is that you should never bid over what you can afford, or what might bring the price too high. Also remember that you'll need the funds available as a cashier's check before you bid. In some counties the bidder is allowed to leave the premises for an hour or so to obtain a cashier's check from the bank, but again, this should be given in the FAQ or county procedures.
Fix, sell, keep or rent the house. The property you buy will likely need some repair, or at least you should be prepared to do some sort of repair or maintenance on it before selling. If you're not good at home repairs you can hire a contractor to fix it up. Tax deed auctions are a great way to make money, so good luck!Source: ehow.com