Home Buying in Philadelphia>Question Details

bfriendlytod…, Home Buyer in Philadelphia, PA

Hi, I was looking at foreclosure properties. Many comments on this site warns that foreclosure homes comes with a lot of hidden fees. Is this true?

Asked by bfriendlytoday, Philadelphia, PA Sun Aug 25, 2013

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Please stop engaging with a computer for info that needs to be explaned in person call me old but when you sit down with an agent and talk and not type you then will know if you can work with each and if the agent can meet your needs. Please call me in my office so we may speak in person 215 725 5700 X49

Philip Cunningham
V.I.P. Realty Corp
7942 Bustleton Ave
Philadelphia,PA 19152
215-725-5700 X49 cell 267-934-1971
Web Reference: http://www.GreatPaRE.com
0 votes Thank Flag Link Mon Aug 26, 2013
How will you be taking Title to the property ? If it is a bargain and sale deed then all transfer fees, closing costs and settlement charges will be the same as a standard transaction. If you are accepting a Quit Claim Deed then you may be liable for additional liens against the property.
Most of the foreclosed transactions will be as a Quit Claim Deed so all liens and judgments will be satisfied. Take into consideration the AS-IS clause of any contract and perform your due diligence by having a Home Inspection performed prior to commuting yourself. Prepare for unexpected repairs and understand fully the project and estimated costs you are about to embark upon..
0 votes Thank Flag Link Mon Aug 26, 2013
Thank you. Your response has been most helpful in my understanding about buying foreclosure properties.
Flag Mon Aug 26, 2013
If I may add to my answer, all foreclosures have any and all liens cleared before a buyer goes to settlement.A shortsale property, which is not a foreclosure, can have utilites that need to be paid at settlement.Since most foreclosures are in poor shape, they would only be able to be purchased with an FHA203K mortgage which does not require any work to be done before settlement.
0 votes Thank Flag Link Sun Aug 25, 2013
There should never be any hidden fees in a transaction no matter what type of home it is. Buyers should review and sign an "Estimated Buyers Closing Cost" worksheet prior to even submitting an offer which discloses all the fees associated with the purchase. The truth is that there are many fees in which sellers would typically pay for during a transaction that get passed on to buyers when purchasing a foreclosure. Transfer taxes, unpaid property taxes, unpaid utility bills, Use and occupancy certifications and any repairs if applicable just to name a few. Furthermore if one were to use financing to purchase a foreclosure some banks and/or loan products may require certain repairs to be completed prior to settlement in or to be approved. These repairs would need to be paid for by the buyer which creates a risk of having to pay for repairs on a property that is not owned yet.

There are loans available that allow buyers to borrow funds based on the after repair value, and complete the work after settlement which would eliminate the risk I just mentioned.

With all of that said, foreclosures can also present great value for a buyer if the purchase price is low enough below fair market value (after repairs) to cover the cost of any extra fees, repairs as well as time and effort to complete the transaction AND repairs to the home. If any buyer thinks they are the only one looking to buy up foreclosures in a nice area in hopes to walk into instant equity they may have a rude awakening. With TV shows on 3 different networks showing everyday people buying, fixing, and selling foreclosures for a profit, the secret is no longer safe. Shrinking overall inventory with less and less foreclosures on the market creates a lot of competition when a great deal hits the market. So finding the right home in the right area at the right price and actually coming away the highest bidder can be a stressfull, time consuming process without help from a professional that is experienced in the foreclosure market.

Lastly, buyers who choose to purchase a foreclosure and only finance the home are left to pay out of pocket for repairs. Let's assume $20,000 in repairs and upgrades for this scenario. The next buyer chooses to buy the neighbors home, which is identical except the repairs and upgrades were completed by the sellers, it's not a foreclosure and is priced $20,000 more. The difference in the 2 buyers mortgage payment may only be about $100-$120 a month, yet the buyer with the foreclosure still has to pay for the repairs.

Which buyer would you rather be?

William Cush
RE/MAX Keystone
836 N.Easton Rd.
Glenside,PA 19038
Cell: 215.285.2011
Direct: 215.825.7720
0 votes Thank Flag Link Sun Aug 25, 2013
There are not any hidden fees.There are fees that are paid by buyer that are paid by seller during a "regular" sale.These fees are disclosed upfront.The extra fees the buyer pays in a foreclosure are the total transfer tax which in Philadelphia is 4 percent and the city certification.
I would be pleased to represent you in the purchase of a foreclosed home.
Don Sherman
Century 21 Advantage Gold
0 votes Thank Flag Link Sun Aug 25, 2013
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