Home Buying in East Flatbush>Question Details

Broker_andre, Home Buyer in East Flatbush, Brook...

hey when someone buys a foreclosure for 22k. what does that mean. how much do i pay in all?

Asked by Broker_andre, East Flatbush, Brooklyn, NY Wed Jan 12, 2011

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It depends on who the seller is and how well you do your due diligence. If you buy it from a bank directly, usually they deliver it with clear title but there still may be violations and other unrecorded liens outstanding. Do a title search, usually $100-$250 depending on title company. If you buy it at auction, there may be numerous liens, violations, mechanic liens outstanding, again title search will uncover. Next is a prior inspection, or write in the offer "purchase subject to inspection" (this cannot be done at an auction) this provides you an exit if there are structural issues, termites, or major work required. Foreclosures can be great, if you do your homework well, Good Luck.
0 votes Thank Flag Link Thu Jan 13, 2011
First of all, let's assume that when you say, "buys a foreclosure for $22,000," what you mean is, buying a bank-owned property (buying from a bank), also called an REO.

For starters you're going to pay $22,000 plus closing costs, which include your attorney's fees, transfer taxes, and other charges. The bank pays the broker (could be a flat fee.) You will get that information from the bank's/seller's broker.

But there's more. I have purchased an REO property, I've been through it personally, and one thing you must realize is that the building or apartment is going to need work---and maybe more work than you can ascertain just by looking. It's also possible that there are liens on the title that need to be taken care of; that happened to me.

So, to buy an REO, you will need: $Purchase Price + $Your Closing Costs + $Unknown Amount to Cover Problems. So if you buy one of these, make sure you have a $$$ cushion after closing, you are almost certainly going to need it.

Karla Harby
Rutenberg Realty New York City
0 votes Thank Flag Link Thu Jan 13, 2011
Dear Broker_andre:

The amount you will pay varies depending on the verbiage in the contract. The purchase price is $22,000 regardless, the question becomes how much are your closing costs. As a general rule of thumb you will pay up to 6% of the loan amount if you are getting a mortgage. If you are not getting a mortgage then you simply have to pay for a title report, attorney and some other incidental fees. The seller also may request that you pay the transfer taxes ( for $22K that would be about $308.00).

Hence, if your getting a mortgage your closing costs would be about $2500.00, if your buying all cash your probably looking at about $1500.00. Most of that cost will be the attorney fee. Make sure you have a good real estate attorney helping you.

If I can be of further assistance please let me know. Good luck!

Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes Thank Flag Link Thu Jan 13, 2011
I believe it means that you own a foreclosure that you paid $22k for.
How much you pay will be itemized on the HUD-1 settlement statement which you will receive.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Thu Jan 13, 2011
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