Buying Houses at Tax Deed Auctions: Liens, Deeds, Exits

Buying houses at tax deed auctions is the easy part. The hard part is everything between the winning bid and the closing table: a two- to three-month wait for the deed in some states, liens that survive the sale, and the occasional property that turns out to be condemned before you ever see the inside of it.

Rodrigo Avanzo has bought roughly 260 properties in two years across Kansas, Arkansas and Florida — mostly lots, plus a dozen-odd houses he flips with a crew he hauls city to city in an RV. His process, his numbers and his two bad deals are the basis for what follows.

This guide covers the pre-bid research that prevents most losses, how long the deed actually takes, how federal IRS liens work after a tax sale, what to do with dead inventory, and the economics of lots versus houses.

From the Real Estate Pros Show

This article draws on an interview with Rodrigo Avanzo of Legado Business Club on the Real Estate Pros Show, hosted by Scott Bursey.

The Pre-Bid Research That Prevents Most Losses

Do the deed research yourself. Avanzo does not pay a title company to research auction parcels — he drives to the county, sits at the public computer, types the owner’s name and reads the record. Mortgages, mechanic’s liens, IRS liens and demolition liens all surface there, and it is all public information.

The demolition lien is the one that kills small-lot buyers. A house stood on the parcel, the city tore it down years ago, and the cost of that demolition attached to the land as a lien. Avanzo’s example: a lot you win for $200 or $300, worth maybe $3,000 to $5,000, carrying a $10,000 city lien. You did not buy an asset, you bought a bill.

The second piece, which he rates as equally important, is physically seeing the property. He is in the auction county a week or two before the sale, driving parcels.

That is harder than it sounds. A single Arkansas county sale can list 400, 500 or 700 properties, mostly lots. Investors who fly in two days before the auction cannot cover that, which is exactly how people end up bidding on photos.

Good research gets rid of 99% of the risks of buying a bad property and losing money.

A workable minimum before you bid on anything:

• Pull the deed and lien history at the county under the owner’s name
• Check the county appraiser’s value on the parcel
• Drive it — confirm structure, access, condition, and whether anyone is living there
• Check with the city for open code or condemnation actions
• Set a written max bid per parcel and do not move off it in the room

How Long Until You Actually Own It: Deed Timelines by State

Winning the bid does not put the deed in your hand. In Kansas, Avanzo says it typically runs two to three months from purchase to deed issuance. Arkansas moves faster. Either way, your money is committed and the asset is not yet yours to renovate, list or sell.

His 10-acre lot outside Wichita is a clean illustration of the full cycle:

1. September — won at auction for $70,000
2. December — deed issued, about three months later
3. January — title cleared
4. February — listed on the market
5. Spring — under contract, closing scheduled roughly five to six months after the bid

It sold for $350,000.

The working-capital consequence is the part most people underestimate. Capital deployed at auction is dead money for the deed period, then dead again through title clearing, then dead through marketing time. In a market where Avanzo is seeing listings sit 100 to 120 days with rates around 7%, the money-in to money-out cycle on a tax deed purchase is measured in quarters, not weeks.

Plan your buying calendar around that. If you are bidding at three or four auctions a month, you need enough capital that the lag on the first batch does not stop you bidding on the second. Avanzo’s first run stalled for exactly this reason — $100,000 in, one house and 21 lots bought, and no cash left until the house sold.

You don’t have to pay $300 for a title company to do your research on every property. It’s all public information. If you go to the county and sit at a computer, everything is there — type the owner’s name and you find the mortgages, the mechanic’s liens, the IRS liens.

— Rodrigo Avanzo, Legado Business Club

Federal Liens and the 120-Day IRS Redemption Window

A property loaded with federal tax liens can still be a buy. That Wichita-area 10-acre lot carried more than $200,000 in IRS liens when Avanzo bought it for $70,000.

The mechanic he relied on: after a tax sale, the IRS has 120 days to redeem the property. If it redeems, the purchaser is reimbursed the amount paid at the sale — you get your money back, you do not lose capital. If the 120 days pass without a redemption, the IRS loses its right to redeem, the property is no longer encumbered by that federal lien, and the underlying debt stays with the former owner.

On this deal the window closed, the liens fell away, and the parcel resold for $350,000.

Read the trade honestly. The bidder is risking the time value of the capital for 120 days, plus the deed wait, against the chance of buying a parcel that most of the room skipped because the lien total looked terrifying. That is the whole reason the price was $70,000 on a property that supported a $350,000 exit.

Two cautions. First, federal redemption procedure is specific and state tax-sale statutes vary — confirm the process and the timing with a real estate attorney in the state you are bidding in before you build a thesis on it. Second, a federal lien falling away says nothing about the other encumbrances. Mortgages, municipal liens and demolition liens are separate questions, and only the deed record will tell you which ones are sitting on your parcel.

When the Deal Is a Loss: Condemnation and the Donation Exit

Avanzo counts two real mistakes in 260 properties. The instructive one is a Kansas mobile home he bought for $2,600.

From the street it looked fine — rough, but standing, and somebody was living in it. His read was reasonable: occupied means habitable, market value around $80,000 to $85,000, spend $20,000 and make money.

Then came the three-month Kansas deed wait. While he waited, the city condemned the mobile home for demolition. When he finally got inside, the floor had holes through it, the walls were packed with trash, three dogs had been living in it, and it was uninhabitable by any standard. The city gave him 30 days to demolish.

The math was ugly. Demolition quotes came back far above what the cleared lot was worth — the land was a $5,000 to $6,000 asset and the cheapest demolition bid was a multiple of that. Spending real money to clear a lot worth less than the clearing was not a recovery plan.

His exit was the city itself. He called and offered to donate the property. The city wanted it and was explicit it would pay nothing. He pulled the county appraisal — $26,000 — wrote a donation letter at that figure, brought a quitclaim deed, transferred the property, and got the letter signed. His accountant handled the write-off from there.

Keep this in the toolkit for any dead parcel: donation to a municipality, a church or a nonprofit is a legitimate way to stop the bleeding on inventory that cannot be sold or cleared economically. Talk to your own CPA about how the deduction is valued and substantiated before you assume a number.

Lots vs Houses: Why He Moved Up the Ladder

Lots produced Avanzo’s best percentage returns and his worst liquidity. His first batch — 21 lots bought online in Arkansas for $10,000 total — sold 18 of 21 for roughly $60,000 in profit. He has bought a lot for $50 and sold it for $4,250. The percentages are absurd, and he says American investors at a Vegas wholesaler event flatly told him an 800% return on a lot was a scam.

The catch is time on market. Rural Arkansas and Kansas lots move slowly. Florida lots near Orlando or the coast move, but they are priced accordingly.

So he moved up to houses, where the dollars per deal are larger and the buyer pool is real:

• $30,000 purchase, $60,000 renovation, listed at $189,000
• The Villages, Florida: $200,000 purchase, $30,000 in kitchen and bath work on an already-pristine house, listed at $365,000
• Earlier Florida flips at roughly 20% and 35% margins

Competition is the variable to watch. Florida’s tax auctions are online and live, which pulls in bidders from across the country and overseas — lots he was buying at $9,000 now clear around $15,000 against a $25,000 market value. Live auctions are no longer a refuge either. The same Kansas and Arkansas counties that drew 30 to 50 people in the room last year drew 250 to 500 this year.

Bid discipline is the only defense. Avanzo sets a max bid per parcel before the sale and walks when it is passed, on the logic that partners would rather have their capital returned unspent than lose it on an overpaid lot.

The Contractor Bottleneck at Multi-County Scale

Buying across dozens of counties breaks renovation before it breaks acquisition. Arkansas alone has more than a hundred counties, and Avanzo buys in many of them. Every new county meant sourcing a local contractor cold — slow starts, inconsistent pricing, and houses taking two to three months to finish.

By his fifth or sixth house he stopped trying to solve it locally. He recruited a crew he already trusted from his Florida years, put them on the road with him, and housed them in his older Class C RV. When a house finishes, the rig moves to the next city and the same crew starts the next job.

Full remodels that took two to three months now take 15 to 20 days. Same scope, same people, no bidding out, no waiting for a stranger’s schedule.

The remaining constraint is Avanzo himself. He is the only person in the operation who bids. If he steps away for 30 days, renovation continues and listings continue, but buying stops entirely — and with an auction happening somewhere in the country every day, every day he cannot be in two places is a day of missed inventory. He is training three people to run auctions independently: research the parcels, drive them, and bid to a set maximum.

If you are scaling a tax deed operation, those are the two jobs that have to be duplicated first — the person who inspects and bids, and the crew that renovates. Everything else can wait.

Frequently asked questions

How long does it take to get the deed after winning a tax deed auction?

It depends on the state, and it is longer than most first-time bidders expect. In Kansas, Rodrigo Avanzo consistently sees two to three months between the auction and the deed being issued. Arkansas turns around faster.

Budget for the full cycle, not just the deed. On his 10-acre Wichita-area lot, the deed came three months after the September auction, title cleared the following month, and the property listed in February — about five to six months from winning bid to a signed contract.

Do IRS liens survive a tax deed sale?

Not indefinitely. Avanzo’s experience on a Kansas parcel carrying over $200,000 in federal liens was that the IRS has a 120-day window to redeem the property after the tax sale. If it redeems, the purchaser is repaid what they paid at auction. If the window closes without a redemption, the property is no longer subject to that federal lien and the debt remains with the former owner.

Procedure and timing vary by state statute, so confirm the specifics with a real estate attorney where you are bidding before you price a lien-heavy parcel.

What happens if a tax deed property turns out to be condemned?

You own the demolition obligation, and if the cleared lot is worth less than the demolition cost, there is no renovation path. Avanzo hit this on a $2,600 Kansas mobile home that the city condemned during his three-month deed wait. The lot was worth $5,000 to $6,000 and demolition bids came in well above that.

His exit was to quitclaim the property to the city with a donation letter written at the county’s $26,000 appraised value, signed by the city, and handed to his accountant for the write-off. A church or nonprofit can serve the same purpose. Have your CPA confirm how the deduction should be valued.

Should I pay a title company to research tax sale properties before bidding?

Avanzo does not, and his reasoning is practical: at $300 per parcel across a sale listing 400 to 700 properties, the research bill exceeds the purchase price many times over. He drives to the county, uses the public terminal, searches the owner’s name and reads the record himself.

That said, this only works if you are physically in the county before the sale and you know what you are reading. If you are bidding remotely on higher-dollar properties, professional research is cheap insurance.

Is it better to buy lots or houses at tax deed auctions?

Lots produce bigger percentage returns; houses produce bigger dollars and sell faster. Avanzo’s first 21 Arkansas lots cost $10,000 total and returned roughly $60,000 on 18 sales — but rural Kansas and Arkansas lots sit on the market a long time.

He has moved to houses for that reason. A $30,000 purchase plus $60,000 in renovation listed at $189,000, or a Villages, Florida house at $200,000 plus $30,000 of work listed at $365,000, move a lot more capital per transaction than a $200 lot does.

The bottom line

Before your next auction, build the parcel list two weeks out, pull the lien history at the county yourself, drive every property you intend to bid on, and write a max bid next to each one. The room is four to ten times more crowded than it was a year ago, and discipline set in advance is the only thing that survives contact with a live auctioneer.