Investor · Yucaipa, CA · Member since 2011 · 162 posts · 232 votes
I was wondering if anyone had any experience at buying at auction more specifically in California, but any state will do. How would you know if you were bidding on a second deed of trust at an auction? I have heard of this happening to investors even after they have a title company check title, someone makes a mistake and they get screwed bidding on the second and not the first. How true is this? Have your heard of this happening to people? Also is there a way to get title insurance when purchasing at an auction? Is there anyway to protect your self besides having or title company follow the chain of title or making sure the title is good somehow? Would love to hear your story about buying at auction along with any other advice you have about the process. Thanks.
Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes
6y
I think many investors will tell you to buy a title report. The problem I have with that is the limitation of liability if something, like a first deed of trust, is missed, it happens. I do my own title searches and exams but have thirty years doing it and fixing title problems, that's not something I recommend you do. You can contact a title company and see if they'll issue you a title commitment in advance of the sale. If you don't belong to a local real estate investing group I recommend you join one and learn all you can. Attend some Trustee's sales and see how it works, you might even meet someone to teach you the ropes. Buying at an auction is tough, it's generally attended by investors with experience though they all started out like you. With little or no experience but a desire to learn.
I was wondering if anyone had any experience at buying at auction more specifically in California, but any state will do. How would you know if you were bidding on a second deed of trust at an auction? I have heard of this happening to investors even after they have a title company check title, someone makes a mistake and they get screwed bidding on the second and not the first. How true is this? Have your heard of this happening to people? Also is there a way to get title insurance when purchasing at an auction? Is there anyway to protect your self besides having or title company follow the chain of title or making sure the title is good somehow? Would love to hear your story about buying at auction along with any other advice you have about the process. Thanks.
Yes there are cases where a 3rd party purchasesd what they thought was a 1st, only to have it overturned later and end up being a 2nd. The issue was the title company (or county, I can't remember which) recorded the 1st and 2nd in the wrong order even though were on the same day . There was no subordination agreement either. When the 1st holder was made aware they filed a suit, and long story short they won and overturned the foreclosure.
This is an outlier example but strange things happen all the time. It's the old adage in this business, if something seems to be too to be true, it usually is.