Auctioned Fix and Flip Condo in NJ

[David Casas]

There is an auction starting very soon on a property. I am looking to close quickly. 2 bed 2 bath condo unit. Bid starting at roughly 27k. The unit is in complete disrepair (All appliances, carpet, cabinets, kitchen, bedrooms, and bathrooms need rehab. Windows are fine, some spots need drywall patches, we will do the painting ourselves).

At the auction, they require a “Buyer’s Premium equal to 5% of the Winning Bid Amount or $2,500 (whichever is greater) will be added to all Winning Bid Amounts to determine the Total Purchase Price.”, “an Earnest Money Deposit of 5% of the total purchase price or $2,500 (whichever is greater) is required of the winner”, title fees, which typically cost between $500 and $1500 and are based on the purchase price, and escrow fees typically ranging between $850 to $1,375, paid in accordance with the applicable purchase sale agreement.

What concerned me about the listing are 2 things:

Buyer will receive a Special Warranty Deed or equivalent.

And

Property is being offered as is, where is.

I am 100% new to fix and flips, and auctions. My questions are as follows:

What is a special warranty deed? I did some research on the term, but am still unclear.

Should I contact a lawyer and request a research of the chain of title?

How do I get title insurance? Can I get title insurance on an auctioned property?

Should I have a home inspection done prior to the auction, or does the auction allow for contingencies prior to transfer of the lien in case the property is not up to par?

How much cash should I have on hand, aside from the 5% earnest money deposit, at the auction? Are they expecting cash in full on the property at auction? If so, does anyone know any good hard money lenders in the area?

I have a contractor that is a close family friend coming with me tomorrow to check the property and give me an estimate of labor costs, and my grandfather works at Home Depot, so I will be going with him to take down all material costs we will need for the full rehab, and I will then be using the bigger pockets fix and flip calculator to see what my max bid should be in order to turn a decent profit. I just need to know the ins and outs of auctions, lien disputes, and hard cash lender info in NJ to complete most of my research.

Also, is there anything else I am missing in my due diligence against this auction fix and flip? The auction is in 10 days, so I️ am looking to try and put in an offer before the auction starts to get in early.

Any and all help is welcome.

Thank you to this great community. I️ have been a Pro member for under a week and am already seeing the great benefits this community can bring!

David

[Wayne Brooks]

This is obviously an Xhome REO auction. The special warranty deed is fine as long the auction terms include title insurance, which they usually do. But buy the insurance yourself, don’t take the “free” title insurance as they typically don’t search for unrecorded items and they will be exempted in the “free” title policy.