If you’re thinking about bidding on a property at auction—especially as a cash buyer—there are a few essential questions to ask before you commit. At Sherman & Phalen, we regularly handle auction closings across the Southeast and work with buyers to help them make informed decisions. Here are five key things to consider before placing your bid.

What Are the Closing Costs? Understand Your Closing Costs Upfront.

Every real estate closing comes with certain costs—attorney’s fees, filing fees, title insurance, transfer taxes, and title examination fees, among others. These can vary depending on the property, the purchase price, and the location.

If the auction company has already designated a closing attorney, you can request a quote from that office directly. When you work with Sherman & Phalen, you can request a fee quote online in minutes. Once you know the estimated closing costs, you’ll be able to make an informed decision about your bid amount.

What Protections Does a Limited Warranty Deed Provide?

Most auction properties are conveyed using a Limited Warranty Deed. This type of deed protects you against title issues that arose during the seller’s ownership, but not before.

To protect against title defects—such as unpaid liens, claims, or recording errors—you’ll want to purchase an Owner’s Title Insurance Policy at closing. The cost of this policy is usually included in the closing cost estimate.

In rare circumstances, the seller may be selling via a quitclaim deed, so check the property listing on the auction’s site. For example, if the seller acquired the property through a tax sale, the seller will re-convey using a quitclaim deed. In that case, the buyer takes the property subject to any existing liens or other matters of title, including unpaid taxes. To learn more about how to navigate this process with greater understanding and ease, reach out to the highly qualified and trusted real estate attorneys at Sherman & Phalen today.

What Do I Need to Provide as a Cash Buyer?

Auction properties are often sold to cash buyers. Unless the contract includes special requirements, here’s what you’ll typically need:

• Make your earnest money deposit using our online ACH portal or through your bank via wire transfer
• Provide the remaining funds for closing via wire transfer
• Provide a valid photo ID
• Make sure to confirm wire instructions by phone with the closing attorney’s office to avoid fraud.

One benefit of being a cash buyer is that you can electronically sign documents, making the transaction more convenient for you. We’re ready to guide you through every step of your real estate transaction, so give us a call today to get started.

Buying Through an LLC? Don’t Forget These Documents

If you’re buying property in the name of a limited liability company (LLC), the closing attorney will need to verify that the LLC has the authority to purchase the property.

You’ll need to provide:

• A copy of the Articles of Organization filed with the Secretary of State
• A copy of the Operating Agreement, which outlines ownership and signing authority

In Georgia, Articles of Organization are usually public record and you can find them on the Secretary of State’s website, but the Operating Agreement is not—make sure you have a copy ready before closing. In Georgia, a single member LLC is not required to have an Operating Agreement, but it’s not a bad idea to have one so that it’s clear who owns the company and who can sign on its behalf.

Should You Order a Title Search Before Bidding?

Some buyers choose to conduct a title search before placing a bid, especially for cash-only auctions or distressed properties. The auction purchase and sale agreement identifies the type of conveyance deed provided by the seller and any permitted exceptions to a title policy. Even for auction properties, the seller must convey insurable title, which is a title that a title insurance company is willing to insure at standard rates, even if it has some known defects. Permitted exceptions include zoning ordinances; matters of record affecting the Property such as easements; covenants and restrictions or record such as home owner’s association (HOA) covenants; matters that could be shown by a current, accurate survey; mineral reservations; taxes or special assessments not shown as existing liens in the Public Records; taxes for the year of closing and subsequent years which are liens, but are not yet due and payable.

While this means that any mortgages, other liens, or unpaid property taxes, for example, will be paid at closing by the seller, there are matters of title of which may be of interest to you as a buyer, such as covenants, restrictions, and easements, which a property is sold subject to and which are not covered by a typical title insurance policy.

In the rare circumstance that the property is being sold via a quitclaim deed, there are more potential liabilities that could be discovered with a title search, so the risk changes. And if the seller obtained their title via tax deed, title insurance may not be available when they sell.

Residential title searches typically cost around $250 and take 3 to 5 business days; a title search is not done by simply pulling a property file—multiple databases are searched, so they can’t be completed immediately. Due to their complexity, a commercial title search usually costs more, around $500, and may take more than a week to complete. If Sherman & Phalen is the designated closing attorney, and you close with us, we credit this fee back at closing.

Ready to Bid on Auction Property?

At Sherman & Phalen, we help auction buyers close with confidence—whether you’re investing, flipping, or buying for yourself. We’re happy to answer your questions, run a title search, or provide a customized quote.