Tax and foreclosure auctions

Buy at county tax sales, trustee auctions or sheriff sales. Prices can be lower, but you usually pay cash, buy as-is and do all the research yourself.

How it makes money

• Buying below market value when the price leaves enough room for the extra risk: cash on the day, no inspection inside, and title or occupancy problems.
• Then reselling or renting once title is insurable and any redemption period has ended.

The honest risk

• Cash you need to start: The full price, often due in cash within a day or two, plus any deposit.
• Worst realistic outcome: You pay cash for a property with liens that survive, damage you couldn’t see, or occupants, and there’s usually no refund.
• How long a first deal takes: Learning a county’s process takes several sales. Some sales are held every month; some tax sales happen only once a year.

What goes wrong on a first deal

• Each kind of sale differs by state: what survives the sale, redemption periods, and how you pay.
• You usually can’t see inside, and occupants must be removed through the courts.
• Many title companies won’t insure right away; budget for a quiet title action.

Your first steps

• Read the lesson on buying at forced sales in your state.
• Find your county’s official sale pages: dates, deposit, payment deadline and what the deed promises.
• Have the money ready: most auctions want cash or cashier’s checks within a day or two.
• Research every property: title, liens that survive, occupants and any bankruptcy.
• Set your maximum bid before the sale, so you know when the price stops fitting your numbers.
• Plan for any redemption period and for occupants, who have legal rights.
• Practice a purchase first.
• Buy only from the official seller. Never contact homeowners facing foreclosure.