When to buy a Title Search for a Foreclosure Auction
Hi guys!
I am just starting on the game of bidding on foreclosed properties at auctions.
After reading many articles and watching several videos, it was made clear to me that, if I wanted to be on the safe (or should I say "less risky") side, then I should purchase a Title Search for the properties I am interested in before going to the auction.
This week I attended my first auction, at the Sheriff's office in Newark, NJ. The place was a meeting room packed with over 50 people. I would say that over 100 properties were auctioned in that day; most of which (about 80% of them) didn't receive any bids and went back to the bank.
Now here is the interesting part:
Title searches are $200 each. Might not seem like a very big expense but, if you are interested in 5 or 6 properties it definitely adds up FAST!
Since I'm no millionaire (yet), I purchased the title searches for 2 properties only prior to going to the auction. I also printed the list of all properties being auctioned on that day and brought it with me. To my surprise tough, several people there also had over 20 properties highlighted on their list. My instant thought was "How can this be?! At $200 per title search, there is no way these people are spending over $4000 in Title Search. But there is also no way they are all "risking it" buying properties without knowing much about the title... SO WHAT'S GOING ON HERE?!"
I know people don't have to pay for a Title Company to do the search and can try to get the info by themselves, but there is another side to this story.........
I know for a fact that (at least in NJ) you can still "back out" of a foreclosure deal withing 10 days of winning the property on an auction. How do I know that? Well, the same title company that I used told me that, "in addition to the Tittle Search and the Judgments On Foreclosed Party Report, we also recommend doing a Chancery Abstract Report. But this can be done during the 10 days you get as a grace period after you buy a house at the auction".
I appreciated the information from the Title Company, since that would save me a lot, considering that each Chancery Abstract also costs $200. BUT THEN IT HIT ME:
Why can't I buy all the reports from the title company (INCLUDING THE TITLE SEARCH) AFTER winning an auction? This would keep me from spending a lot of money on properties that I don't even bid on depending on the upset amount.
What is your recommendation? Is it a sound plan to buy the title search after winning a foreclosure auction, based on the "10 day grace period" I have to back out of the deal? Is anybody here working this way?
Thank you for all the inputs!