01-23-2013 11:55 AM
An owner search or a title search is done by physically searching through years worth of files and databases while tracing ownership history on land or property rights such as timber or from farming. A chain of title traces ownership history from the current owner all the way to the original owner of record. These records are generally kept at your local county or government office. Making a trip there leaves a lot to be desired as employees are often spread thin and overwhelmed. Be prepared to wait in long, slow lines and do not be surprised if one document is one place, but you search for that document on the third floor and if you want a copy of the map, you’ll need to walk across the street, to another building, through security, and in the basement, where you wait in another line. Good luck trying to learn how to find any of these records as staff simply can not spend the time helping and generally aren’t very friendly. Most people use title insurance companies although they’re very expensive and not really set up to handle requests for basic information very quickly when you’re trying to make time sensitive decisions. Another option is to use an insured document retrieval company with a lot of years in the industry and has people on the ground to help you retrieve documents and information about the property or search for liens and judgments fast. These companies can prove to be very valuable and give you an edge over your competition as you’ll have a much more accurate understanding of the true position of the property and what it is going to cost to put you in a position to make money. Time is money right!
An owner search can help you see if there are any clouds on the title or anything that might delay the transfer of the property. Sometimes owners sell partial interests, grant easement rights, allow people to cut timber or harvest crops. Others have tax liens, criminal or courthouse judgments, or other encumbrances. Know before you buy. After all, G.I. Joe, says “knowing is half the battle!” Whatever you do, research, research, research. Win the day!
01-24-2013 06:29 PM - edited 01-24-2013 06:31 PM
Generally that was good advice but let me add to it. Searching just the title for the property is only going to show liens specifically attached to that property.
It won't show some liens (such as judgment liens) which are not specifically attached to the property address (or which mistakenly list the wrong address).
You have to take the search one step further. Not only do you search the title history for the property, you also have to search by the name(s) of the current title owners if you want to be more confident there are no liens out there.
Realistically speaking, whether it makes sense to spend the time (or money) to do this in advance depends how many properties you plan to submit offers on. Searching one property/owner one time will only cost you a few hours or a small fee. Searching multiples will cost a lot more time or money.
While it does happen, the majority of properties are lien free. As long as there is equity in the property to cover the lien, it's no skin off the buyer's back to close escrow.
Here's another tip. Doing a title search will also let you know how much the current owner paid, what their down payment was, and whether they re-financed cash out or took a HELOC...which can give you a good idea how much equity is there. Use that to figure out your offer price. For example, if the house has been sitting on the market for awhile and there is a lot of equity, a lower offer might get it done. On the contrary, if there is hardly any equity, you know they need to get close to what they are asking for it.