auction.com Earnest deposit

21 Replies

So ive been following a property on Auction.com. It didn't sell at courthouse and then it came on Auction.com for sale. I bidded up to the price I was willing to pay and I lost the bid. It went over like almost 5k and reserve was not met.
I received an email that day from the website stating that I had a second chance to purchase property. That if I wanted to they would present my last bid to the seller for consideration because my bid fell in the consideration range. I'm guessing I was the highest live bidder.

The guy I spoke with yesterday says that I need to wire the Earnest Money to the seller( wells fargo) with all paperwork to show that I am serious. But that it may take up to 15 days to get an answer from Wells Fargo. I told him I wanted to use my own closing company and he said that was possible but that the deposit would still need to be wired to the seller. I wanted to deposit the earnest money with my title company. What do you all suggest I do? Send the money and use the sellers closing company? Or is this a bunch of B.S from Auction.com?

Having purchased a property with auction.com, they were in control when I purchased in 2013. I have seen others post that they have been able to use their own local title firm, so that is good news, as the auction.com title office for my deal was out of Pittsburgh and I am in Florida so there was calling and emails to get status.

When I first did my deal, I had to show I had the funds and send an earnest deposit which was used to help fund the deal. I think I had a 25k house, where I had to put down 3800 or something like that, and I wired it from my source to the title company for Auction.com. All Auction.com is, for the banks, is an intermediary, so they get a cut from the process. If the deal is good enough, go for it, but be prepared to have another party in the transaction (Auction.com)

Thank you for the response @Jack Bobeck . Yes that is the same deal with me and pretty much the same price. They want me to wire them 2500 to Wells Fargo's title  company supposedly. Ive read other posts on here the the company Servicelink is no good and is Partially owned by Auction.com so ill see what title company they tell me.

If you want the property wire the funds to their title company. 

Yes, you need to wire the money to their title co. And yes, for title insurance you definitely want to use Your title co.

I just went on their website and see that the property is up for sale again in like 2 or 3 days. That's crazy. Im over here trying to purchase per their instructions and they are still auctioning it off.

Originally posted by @Maugno Mora :

I just went on their website and see that the property is up for sale again in like 2 or 3 days. That's crazy. Im over here trying to purchase per their instructions and they are still auctioning it off.

In the auction business until the auctioneer says "Sold" anything can happen.

Originally posted by @Wayne Brooks :

Yes, you need to wire the money to their title co. And yes, for title insurance you definitely want to use Your title co.

Could you expand a bit about why you'd want to use your own title co for the title insurance (vs the one the auction houses suggest)?   Any horror stories or big differences in how the closing companies write that insurance?  

@Tom Gimer They just called me and told me they are removing it. we'll see.

@Nicky Reader I would like to know as well. And how much more would it cost me to use my own title company. I saw another thread on here that says they took 9 months to close using the seller's title company(Servicelink) I want the fastest closing possible so if that means using my own title company so be it. But if it wont make a difference i'll just use theirs.

Originally posted by @Nicky Reader :
Originally posted by @Wayne Brooks:

Yes, you need to wire the money to their title co. And yes, for title insurance you definitely want to use Your title co.

Could you expand a bit about why you'd want to use your own title co for the title insurance (vs the one the auction houses suggest)?   Any horror stories or big differences in how the closing companies write that insurance?  

 The title companies that the auction sites and many banks (when dealing with REOs) use will basically do a poor job of clearing the title, essentially putting exclusions into the title policy to cover anything they are too lazy to clear in the chain of title. They work for the auction site or bank and don't have your interest in mind. 

Much better to use your own title company that will do a proper title clearing and be on your side. Can make a big difference if/when you go to resell the property in the future. 

@Ryan K. @Tom Gimer When you say exlusions to the title policy you mean exceptions right? If i was to get a title policy with an exception, would that allow me to back out the deal because to me that is not clean clear title. To my understanding a bank wont let people borrow money on houses that have exceptions. My first flip ever was a tax forclosure. When i went to sell it, the title company said they would give buyer a title policy but with an exception on Heirs. The buyer was using their own funds, if not, i dont think a bank would of let them borrow money on it with an exception. The buyer still took it with the exception.

 I dont think i would accept a property with exceptions. 

Originally posted by @Maugno Mora :

@Ryan K. @Tom Gimer When you say exlusions to the title policy you mean exceptions right? If i was to get a title policy with an exception, would that allow me to back out the deal because to me that is not clean clear title. To my understanding a bank wont let people borrow money on houses that have exceptions. My first flip ever was a tax forclosure. When i went to sell it, the title company said they would give buyer a title policy but with an exception on Heirs. The buyer was using their own funds, if not, i dont think a bank would of let them borrow money on it with an exception. The buyer still took it with the exception.

 I dont think i would accept a property with exceptions. 

A couple things...

1) It shouldn't cost you a dime more to use your own title company unless, of course, your title company's fees are higher. 

2) If the proposed exceptions include judgments, mortgages or other liens, then that would be a reason for you to refuse to close. Other exceptions (CCRs, easements, R/W, etc.) would likely be permissible as they would not affect marketability.

@Tom Gimer Thank you for the responses that def. clears some questions i have about the exceptions. But with the title policy thing, the contract has it checked
" Use servicelink as a closing coordination office only, purchasing title insurance through a local office: Settlement fee, owners policy and recording fees TBD by local Office and  are in addtion to the below fees"

But they are still charging me
Document management fee $200
Uninsured title Report fee $300
Closing coordination fee $250

Originally posted by @Maugno Mora :

@Tom Gimer Thank you for the responses that def. clears some questions i have about the exceptions. But with the title policy thing, the contract has it checked
" Use servicelink as a closing coordination office only, purchasing title insurance through a local office: Settlement fee, owners policy and recording fees TBD by local Office and  are in addtion to the below fees"

But they are still charging me
Document management fee $200
Uninsured title Report fee $300
Closing coordination fee $250 

Did you agree to use ServiceLink as a "closing coordination office"? 

Sounds like nothing but a $750 penalty for choosing another title/settlement provider to me.

This issue usually all boils down to relationships.  With VERY FEW exceptions, most of the title companies have the same offerings and are able to do the same things.  In fact, MOST of them are underwritten by the same companies (fidelity first american, to name a couple of the big ones that underwrite alot of them).

The benefit for the auction company and/or bank is that they probably get a discounted rate because of the volume they do there.  This is often times why banks will work with 1 in particular.

NOW, that being said, many states (AZ being one of them) prohibit a seller from requiring the Buyer to use a specific title company unless they (the Seller) are willing to pay the title fees associated with the forced choice.  So, the way Seller's get around this is similar to how utility companies get around the word "monopoly"....by allowing certain services to be shopped by other title companies.  So, that is why you were given the suggestion to use your title company for the insurance.  It is an option afforded to you.  However, in the grand scheme of things, the title policy at the Seller's title company will probably be just fine (and again, it may even be underwritten by the same company).  I wouldn't split the services.  

The Earnest money is a separate matter.  It sounds like Wells Fargo wants to hold your Earnest money, which would also tell me that they are probably considering it non-refundable.  You may want to check the terms to confirm that you can get it back if you decide not to purchase. Most likely, the bank isn't going to budge on their policies.  They rarely do.  So, making demands about using your title company or having your earnest go somewhere else may eliminate your offer from consideration.  

When dealing with big banks (Wells Fargo is among the biggest), just think David v Goliath.  Good luck David!  LOL

Best of Luck to you!!

@Tom Gimer I called and they said i have to use them for "closing coordination office" So the sellers title company will still get $750 either way i guess plus the title company i choose will still charge me their fees.

I called my title company and they said they need to review contract first, and then make sure Wells Fargo will cooperate with them in closing ? I kind of feel like just using the sellers closing company(servicelink) sounds like it might be the same thing.

@Cara Lonsdale I was thinking the same thing. Maybe i should just go with them and shoot for the best. Alot of people on these forums warn against doing so though.Thats why i wanted to use my own title company. I also wanted to start building a relationship with a local title company so that was also a reason i wanted to use my own.
Seems like either way, if i choose to use my own, Servicelink will still charge me $750. Sucks. Not sure what way to go.

@Maugno Mora What a joke. 

I'm surprised ServiceLink even has 1.9 stars for Google rating.

Originally posted by :


@Cara Lonsdale I was thinking the same thing. Maybe i should just go with them and shoot for the best. Alot of people on these forums warn against doing so though.Thats why i wanted to use my own title company. I also wanted to start building a relationship with a local title company so that was also a reason i wanted to use my own.
Seems like either way, if i choose to use my own, Servicelink will still charge me $750. Sucks. Not sure what way to go.

 Honestly, it just isn't a battle worth taking on.  Save your energy.  There are plenty more worthy battles out there.  LOL.

On a side note, you can still establish a relationship with a local title company for other deals.  Make sure you make them aware that you plan on doing multiple deals and want a volume discount.  Also, check in with their marketing rep.  They always have cool resources from open house registries to "How To" packets for various subjects, to sample contracts and so forth.  These services are usually reserved for Realtors, but I don't see why you couldn't request them if you are looking for deals and want the resources too.  Home warranty companies have marketing reps too.  They can provide you with cool marketing materials for going door to door or mailing prospects.  It gives you a warmer approach and save you on printing them up yourself.  You may just need to invest in a pre-inked stamp with your contact info on it, and postage if mailing.  

Just a little tip.   

I've closed about 10 with auction.com over the past 12 months. For me it is easier to just use their title company, I've never had them try to make me close on one with exceptions or had one not come with a clear title. I have one now where I happened to use my title company and they haven't been able to clear the title for 4 months. I had one that was a 90 day process last fall using auction .com's title company. Not sure that helps. But yes, wire the money the way they say if you want it. 

Account Closed Yes sir great advice. Thank you for sharing your experience it just makes me a bit more confident in the process. i think im doing just that and hope for the best.

What I have found for my area is the quality of the homes on Auction.com are D- to an F-.  They are in bad shape.  I've taken a vow to stay away but maybe the 3 homes I went to look at where the worst of the worst for my area.

What type of Experiences are you all having with Auction.com 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.