How do you guys do due diligence before bidding at tax deed / foreclosure auctions?

Question

Hi everyone,

I’ve been spending more time looking at tax deed and foreclosure auctions, and one thing that always worries me is making sure I’m not missing something during due diligence.

Before bidding on a property, I usually try to check as much as possible, such as:

• unpaid property taxes
• liens (IRS, municipal, HOA, utility, etc.)
• code violations
• open permits
• judgments or court records tied to the owner
• potential mortgages that might survive the sale
• city fines or special assessments
• anything else that could become my responsibility after purchase

The challenge is that this process can be pretty time-consuming, especially when every county website is different and information is spread across multiple places.

I’ve seen some investors outsource this to lien search companies or hire people to research properties before auctions, while others seem to do everything themselves.

So I’m curious how other investors here handle it.

A few questions for those of you who regularly buy at auctions:

• What is your standard due diligence checklist before bidding?
• How long does it usually take you to verify everything on a property?
• Do you use any tools or software, or is it mostly manual research?
• Do you ever hire lien search companies, and if so, what do they typically charge per property?
• What are the most common hidden issues you’ve seen people miss before bidding?

I’d love to hear how experienced investors approach this so I can improve my process and avoid expensive mistakes.

Thanks in advance for sharing your workflow.

Jay Park · Answer

@Simone Owens, totally agree on leading with the assessor record. The side-yard example is exactly the kind of thing that can look fine on a listing app and fall apart the second you pull the actual card. I also like your point about the separate federal lien check. I don't like relying on the county index alone for that either, especially when the downside is finding out after the sale. Good reminder that when you're remote, the order you run the DD in matters almost as much as the steps themselves.

Brett Sanborn · Answer

Great question — this is something I've spent a lot of time systematizing. Here's what my pre-auction workflow looks like now:

Step 1: Legal Description scan (15 minutes for a 500-parcel list) Before anything else, I scan the Legal Description column for red-flag keywords: drainage, easement, common area, HOA, sliver, non-buildable, right-of-way, retention. Anything that hits gets flagged immediately. Usually eliminates 10-30% of a list without any further research.

Step 2: Assessed value vs. lien ratio If the lien is more than 15-20% of assessed value, I get cautious — that's a high redemption risk AND it suggests the county may have inflated the assessment. I want cheap liens on undervalued real property.

Step 3: County GIS + satellite check For anything that survived Step 1 and 2, I pull it up on the county GIS portal. I want to see: actual structure on the property, road frontage, no obvious environmental issues (standing water, wetland markers), and a usable lot shape.

Step 4: Ownership history If the county allows it (many do), I look at the ownership chain. A parcel that's been bouncing between banks or has been tax-delinquent for 5+ years usually has a reason.

Step 5: Flood zone check FEMA flood map zone AE or VE = pass unless you have a plan. Zone X = generally fine. This is a 30-second check on FEMA's flood map service.

This process takes me about 2-3 minutes per parcel after the initial cull. For a 200-parcel list I'm targeting, I can get through serious due diligence in an afternoon.

What state are you working in? Some county portals are dramatically better than others.

Don McAlpine · Answer

Your list is fine, but you can probably save yourself some research time.

The auction rules will spell out what liens have been extinguished, and I always call the county to confirm both what is extinguished and what will remain.  Doing so will cut down the number of things you have to look out for.

I use Parcel Fair to dissect the list into what properties I would like to bid on, and it provides links to the county tax records, GIS, owner info, comps and more.  This saves a ton of time.  If municipal liens remain I check in with code enforcement and court records for those.  A property with a long list of liens, even if they are extinguished, will require a longer period of time to clear the title.

IRS liens should be embraced rather than avoided.  The IRS is not in the real estate business and unless the property is high-value, it's highly unlikely they are interested in taking the property.  They have 120 days to decide and if they take the property they will refund what you paid, but more likely you can reach out to them in advance and determine their interest and know how you will proceed.  Properties with IRS liens get fewer bidders.

I once won the bid on a property that had a $130k lien attached from the state for hospice care (the owner was deceased with no relatives).  This apparently scared many bidders off, but the county confirmed to me that the lien was wiped out and only eligible to collect on the overbid amount.  There were two bidders for the property, me and a guy who owned the property behind the subject property.

He eventually dropped out so I approached him after the auction to discuss.  He said he wanted to use the land for parking for the building he owned (it was commercial), and I ended up selling it to him on a seller-finance arrangement.  He provided a hefty down payment and I'm still collecting monthly payments.

Jay Toluganti · Answer

I did try to buy tax sale properties back in 2021-2022 in Atlanta and surrounding counties. I had similar checklist. I also used to drive down to Atlanta to make sure I check the properties and neighborhoods physically. Because, sometimes the property might be burned down. Other times the property is in bad neighborhood even though zillow shows good ARV. I was taught that I need to woory only about IRS liens. Mortgages and all are wiped out. But a good investor will always check everything. I typically would end up with 3-5 properties shortlisted but other investors would overbid. That worked that time because the market is raising and most of them are flippers. Things are different now.

But before you go any further, whats your end goal? Are you trying to wholesale these (most tax sales are bought sight unseen) or trying to build a portfolio?

As you observed, tax sale is like you are going in blind, unlike a flip where you have due deligence period where you can back out. So, figure out whats your strategy is and then decide which route to take. Every route will take you to your destination. Challange is, figuring out which route takes you fastest.

Below are my book recommendations for you to read/listen to:

Strategy:

Rich man in Babylon

Robert Kiosaki

• Rich Dad Poor Dad
• Cashflow Quadrant
• Guide to investing
• Real book of Real Estate

Real Estate Journey:

Ken McKelroy

• ABCs of Real Estate Investing
• Advanced book of Real Estate Investing
• ABC of Property management

Simone Owens · Answer

Appreciate that, Jay . You caught the part most people skip. When you're remote, the order you run DD in is the whole game.

The way I sequence it comes straight from my underwriting years. You order your checks by what kills the deal, not by what's easy to pull. Cheapest deal-killers first. Federal and municipal liens, open bankruptcy, any environmental flag, all of that runs before I ever touch comps or ARV. No point modeling upside on a property a senior lien or the IRS can claw back.

On the federal piece, that's exactly why the county index alone makes me nervous too. A clean index doesn't stop the IRS from exercising its redemption right after the sale. There's a window where a federal tax lien can outlive the deed, and people find that out the expensive way. I'd rather know before I wire than after.

What does your stack look like when you're buying out of state? Are you pulling the lien records yourself or leaning on a title company for that part?

@Jay Park

Simone Owens · Answer

@Jay Park yes, exactly. The service piece is where I have seen things go sideways. Just because a lienholder was on record does not mean they were actually brought into the process, and if they were not, their interest does not disappear just because money changed hands at the auction. I always verify that before I get comfortable.

On the remote research question, I start with the town assessor card before anything else. Not Zillow, not Street View, the actual assessor record. It tells me whether there is a structure on the land at all, which sounds basic until you almost bid on someone’s side yard because the listing app showed a hot zip code and you skipped that step. After that, GIS for the lot shape and access, code enforcement for open violations, and a separate federal lien check because the county index does not always catch IRS liens cleanly. Street View is last, just a sanity check on what the record already told me.

Qlegahcy Data Co

Jay Park · Answer

One thing I've seen trip up out-of-state buyers is assuming a junior lien is automatically gone just because a tax sale happened. Not a legal advice, but in TX I don't really assume a junior lien is wiped until I've looked at the actual tax suit/judgement. What I want to know is whether the lienholder was actually named and served. if they weren't, I'm not comfortable assuming that lien is gone just because it sat behind the tax lien on paper. So for me, the useful DD is less about making a generic list of lien types and more about pulling the suit file and checking who was actually brought into the case. if something looks questionable, I'd rather confirm it with a title company or attorney before bidding than try to clean it up after the fact. A few things I personally keep an extra eye on are IRS liens, since there can be a post-sale redemption issue, and municipal/code-related liens like weed, demo, paving, nuisance abatement, or special assessments. Those seem to be very local, so I don’t assume they’re wiped without checking.I mostly look at TX redeemable deeds, so I'm also thinking about redemption risk or penalty more than just ARV, but that's a whole separate rabbit hole. Curious how others here handle it: do you actually pull the suit file and check service, or do you mostly treat junior liens as gone? And if you can’t physically get to the parcel, what do you lean on — boots on the ground, code records, Street View, title/lien search companies, or something else?

Simone Owens · Answer

CT-based investor here with 15+ years in mortgage underwriting and QC compliance. The due diligence framework I use before bidding on any CT tax deed property:

First pass — public records only, takes 15-20 minutes per property:

• County grantor/grantee index for the full lien stack, not just the delinquent tax amount
• Years delinquent as a proxy for how messy the title likely is — one year behind is different from four
• Assessed value vs actual market value, CT towns frequently assess above market on distressed properties which distorts your bid math

Second pass — for properties that survive the first filter:

• Separate IRS federal lien search, bulk data providers don't carry federal lien data reliably and IRS liens can survive a tax sale if proper notice wasn't given before the auction
• Redemption period math, CT is a redeemable tax deed state so the original owner has a window to reclaim after you win, every dollar you spend during that window is at risk
• Title chain review for anything that looks rushed, released liens that were never properly recorded still show up as red flags in an FHA or conventional underwriting review if you're planning to sell or refinance later

The last point is where most auction checklists stop too early. Winning the bid is step one. Getting to a clean, financeable title is the actual exit.

Happy to go deeper on any of these steps.

Mark Dusseau · Answer

Marcelo — Good question, and your checklist is solid. The challenge you're describing — every county website is different, information spread across multiple places — is the exact reason most auction investors either (a) limit themselves to 1-2 counties they know well, or (b) hire someone to do the legwork and hope nothing gets missed.

A few things I'd add from the operations side:

Title search depth matters more than breadth. Rather than checking every possible lien type manually, I'd prioritize a full title search on your top 3-5 targets per auction. The cost ($150-300 per property depending on the county) is worth it compared to the risk of inheriting a surprise federal tax lien or a surviving mortgage. For the rest of your list, a quick county records check is usually enough to decide if it's worth the deeper dive.

Systematize your checklist. If you're bidding regularly, build a simple tracker (even a spreadsheet works) where each property gets a row and each diligence item gets a column with a status: not started, in progress, clear, flagged. The biggest risk in auction DD isn't missing a single item — it's losing track of where you are across 10-15 properties when the auction is 3 days away.

On the speed vs. depth tradeoff: The investors I've seen do this well batch their DD in two passes. Pass 1 is a 15-minute screen per property (county records, Zillow/Redfin comps, Google Street View, quick lien check). That eliminates 60-70% of properties. Pass 2 is the deep dive on survivors — title search, code violation check, attorney review if needed.

The county-by-county variation is real and frustrating. If you're working across multiple counties, documenting each county's process once (where to find tax records, who to call for lien info, turnaround times) saves massive time on repeat auctions.

How do you guys do due diligence before bidding at tax deed / foreclosure auctions?

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