Last Updated on September 9, 2025
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Tax Deed vs Tax Lien
When people stop paying property taxes, the county needs to get the money owed. One way is to sell the property. This is called a tax deed sale. The buyer pays the unpaid taxes and becomes the new owner. In large counties, many investors bid against each other, which can make prices go up. In small tax deed counties, there are fewer bidders, so prices might stay low. This guide explains how tax deed sales work and why small tax deed counties can be a good place for beginners.
Some places sell the unpaid tax debt instead of the property. This is called a tax lien. The buyer pays the taxes and earns interest, but does not become the owner.
In other places, the county sells the property itself. It’s important to know whether your state sells tax deeds, tax liens, or both. A lien gives you a claim on the unpaid taxes; a deed gives you the property.
Large vs Small Tax Deed Counties
Big counties often attract banks and hedge funds. They can accept lower returns, so they bid aggressively. In small tax deed counties, there are often only a handful of bidders. This may allow you to buy a property for close to the amount of unpaid taxes. Large investors usually prefer bigger markets, so they may not show up at smaller auctions.
Finding Tax Deed Counties
To find a promising county, check if your state sells tax deeds. Look for counties with small populations and few bidders. Review past auctions to see if winning bids were close to the taxes owed. Decide if you can travel to the county or bid online.
Risks and Precautions
Buying tax deed properties has risks. Some mortgages or other liens may still be attached to the property. Many properties need repairs. If the county does not follow the correct steps, the sale could be cancelled. Some states give the former owner time to pay back the taxes and reclaim the property.
Property values can change. To reduce risk, research the title, inspect the property, learn about the redemption period, set aside money for a quiet title action, and get help from a real estate attorney or experienced investor.
Simple Investment Plan
Here is a simple plan to invest in small tax deed counties:
- Choose a state that sells tax deeds and pick a small county.
- Register for the auction and pay any deposit.
- Download the list of properties and check each one for title issues and condition.
- Decide your maximum bid by estimating repairs and future value.
- Bid at the auction and stay within your budget. If you win, pay the amount owed, record the deed and clear the title.
Conclusion
Small tax deed counties may offer good opportunities for beginners. With careful research and smart bidding, you can find properties at low prices and avoid high competition. The key is to understand the rules and do your homework.
Frequently Asked Questions
Large counties often have many bidders and lower returns. Small tax deed counties have fewer bidders, so it’s easier to buy a property for the tax amount. Big investors tend to avoid small counties.
Look at past auction results. If winning bids are close to the market value, competition is high. If bids are near the tax amount, competition is lower.
Hidden liens, neglected property conditions, errors in the auction process, changes in real estate values, and the chance that the previous owner reclaims the property.
Yes. Some states give the owner time to pay the taxes plus fees and get the property back.
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