Home owners and property owners are required to pay some form of property tax to their local municipality or county government office. It is through these property taxes that local and small governments are able to meet their annual budgets. If the property owners become delinquent on their property taxes, the government entity can push for a foreclosure. Instead of owning the property right out, the tax collectors will have a tax foreclosure auction where the starting bid is the delinquent tax plus any fees and interest. This is known as tax deed sale. Not to be confused with a tax lien.

The winning bidder received possession of the property and the deed. They pay off the taxes and won the property. This way of purchasing real estate is not as well known to most common investors. The return on investment or ROI in buying tax deed foreclosure properties can be enormous if you know what you are doing.