Important terms to know:
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Closing The final steps in a transaction after winning a property at auction—AKA you're close to the finish line! This process typically takes 15 business days for cash deals and 30 business days for financed deals and includes things like negotiating closing costs, signing the contract, and getting title insurance.
Title Policy An insurance policy for a title that ensures the owner of the property is transferring the ownership rights to the buyer. |
Congratulations, you’ve just won a property at auction! As part of the closing costs, you’ll need to pay for expenses associated with the property’s title. Not only does this include paying off any liens, judgements, or encumbrances on the title, but you will need to purchase a title policy from a title company.
What is a title policy?
A title policy is an insurance policy that ensures the owner of the property is transferring the ownership rights to you. Title policies are usually state mandated and depend on the sales price of the property, but usually range from $250 to $1,500.
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Here’s an example of what a state-mandated policy might cost: Let’s say that for any house sold for $100,000 in the state of Texas, the title policy would be $1,000. A title policy in the state of California might cost more or less than the one in Texas, but any house sold in California for $100,000 would have a title policy fee based on the state pricing. |
Property title fees and expenses, including the title policy purchase, are included in the closing costs. They vary by closing or title company, but on average you can expect them to be around 3% of the purchase price.
When you’re viewing property information on the property’s page, you will find a section that outlines the different fees associated with this property. This helps give you a good idea of what you will need to pay at closing for title expenses.
Do I ever have to repurchase a title policy?
While a title policy is usually a one-time purchase at closing, there are a few scenarios where a new policy must be purchased. These include:
Refinancing
If you refinance your mortgage, get a second mortgage, or open a line of credit, you need to purchase a new title policy.
Selling your home
If you sell your home, a new title policy must be purchased to ensure that there hasn’t been a transfer of ownership between you and another buyer. Luckily, the new buyer is responsible for purchasing this policy!
For more on specific title and closing costs by property type, check out our FAQs:
- Second Chance CWCOT Title / Closing
- Bank-Owned (REO) Title / Closing
- Short Sale Title / Closing