How exactly do foreclosures work? Is the asking price what you end up paying? Any hidden fees?

Asked by Shannon, Philadelphia, PA Wed Nov 12, 2008

I am interested in purchasing a foreclosure, but am clueless and would like more information before I dive into it.

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Renee Porsia, Agent, Newtown, PA
Thu Nov 13, 2008
Hi Shannon,

Great question. Since I work with many banks and often get listings from them, I am really very familiar with the process. I would say that in general no, the asking price usually isn't what the buyer ends up paying. However, it really does depend if the home was priced accurately when first listed by the bank. Banks are willing to work with a buyer but if they have a certain number that they want they will be stern with their price. I once had a buyer put in 4 offers and all were declined by the bank. But, when the home didn't sell, it actually sold for less than my buyer's 4 offers. My buyers did ask for money back from the banks for things that needed repair and the banks did give them to the buyers. I always ask for money back from the bank. Sometimes the banks do ask that the buyer pay for all of the transfer taxes or to get the home's Use & Occupancy from the city which states that the city doesn't have any issues with the home that need to be taken care of. Your Realtor should make sure there are no "hidden" fees on your settlement sheet.

I hope this helps and if you are looking for an investment property let me know and I would love to teach you everything you need to know.

Renee Porsia
Associate Broker
(215) 669-0589 Direct
(215) 358-1100 Office Ask for Renee Where you can get your FREE market snapshot of your home. Try it right now.
2 votes
Dawn Fussell, Agent, Phila, PA
Wed Nov 12, 2008
Hi Shannon
I am not a pro on foreclosures,but I found some info it. Please read below.

Pennsylvania Foreclosure Laws

In the state of Pennsylvania, all foreclosures must be pursued through judicial proceedings. Before the lender can begin the process of foreclosure, the borrower (homeowner) has to have been in default on a payment for at least 60 days. Once these 60 days have passed, the lender can mail the homeowner a Letter of Intent, detailing the amount owed in default and the lender's intention to foreclose. If the lender does not receive the defaulted payment within 30 days after serving the homeowner with the Letter of Intent, the lender may pursue a court order to foreclose by filing a suit (known in this case as a Lis Pendens).

At this point, the homeowner is notified of the Lis Pendens by mail, and is granted an additional thirty days in which to respond to it by either contesting it in court or paying the amount due. If neither of these instances occur, the court may rule against the homeowner and order that their property be sold. The homeowner retains the right to halt the foreclosure at any point up until one hour before the scheduled sale by paying off the default amount and any additional fees incurred.

At least 30 days before the sale, the county Sheriff delivers a Notice of Sale and delivers a copy of the notice to the homeowner. The Notice of Sale must also be listed weekly in two local newspapers for three weeks before the sale occurs. The sale may be postponed only once, and for a period not to exceed 100 days. The court must approve any other postponements.

The Sheriff conducts the style, which works like a public auction. The property is awarded to the highest bidder and upon receiving payment, the Sheriff transfers ownership to the winning bidder. Under Pennsylvania foreclosure law, the original homeowner retains no right to redemption once the sale is complete.
2 votes
Judi Wolfson, Agent, Margate, PA
Wed Nov 12, 2008
Not all situations are the same. Usually the bank owns the property, which means that it has already been foreclosed upon by the bank and then they it is usually put on the MLS for all Realtors to access. This is a REO property. In this case you will receive the property 'free and clear' of any liens and there are no additional costs other than the normal closing costs. The asking price is not much of an indication as to what you end up paying. I have seen properties sell at "higher than asking" (not usual), but it has happened, when a bank priced the home below market and there were not any other REO properties in that area. And I have seen others sell for 20-30% less than asking price. This may depend not only on the market conditions and comps in the area, but also how much of a "loss" is the bank willing to take. This can vary with each bank.

There are other situations where a property is auctioned and in that case, you must be VERY CAREFUL not to purchase a home with outstanding liens against the property. These properties do not necessarily guarantee clear title. You may need to accept the property and be responsible for the existing liens.

The very best thing to do is find an experienced agent in the area that you are searching and let them help you. It cost you nothing to get a Buyer's agent and this is what you want. A certified ABR is best, they are specifically trained in working for the buyer.

Feel free to give me a call Judi Wolfson, ABR, CRS, ePro500
2 votes
Chris & Step…, Agent, Philadelphia, PA
Wed Nov 12, 2008

It depends on the situation. I would recommend you have a strong buyers agent from the beginning. Basically I think what you are asking is where you find a deal ? Am I right ? Not all the best deals are foreclosures... there are HUD houses, pre-foreclosures, distress sales, estate sales, short sales, bank owned properties, real estate owned...etc. There are sheriff sales and many homes have already been foreclosed on.

A good buyers agent (like ourselves) can help you navigate through what is available and based on your goals, help you find what you are looking for. Keep in mind that many of these properties it is difficult to procure financing. Also, for HUD properties and some bank owned properties, buyer pays both side of the transfer tax (4 percent)... and properties are sold as-is of course.

Some of these properties can be found on the investor site below:

as well as .

We just listed over 40 lots in various sections of Philadelphia so if you are intersted in vacant land, let us know.

We can be reached at .

Chris and Stephanie
Web Reference:
1 vote
Tyeshaolga, Home Buyer, Valley Springs, CA
Tue Aug 18, 2015
I find the foreclosure purchase process easier than buying a home from an owner as there is typically less emotion involved and the bank / lender / fannie mae, etc, have no attachment to the property it is merely a financial transaction and every situation or issue that arises can usually be easily resolved. They typically do have pretty detailed addendums for you to sign but they basically are just protecting themselves and giving them an out if they are unable or unwilling to resolve an issue. Whatever you do ask your Realtor how many foreclosures they have closed and make sure you are working with someone that is experienced in that area.
0 votes
Sma11punch, Home Buyer, ,
Thu Jul 5, 2012
If a house is forecloses, how long does it take foe the bank to list it for the public to view it? Also, how soon can a interested buyer submit a bid on a house when it is released to the market? Does the bank have to disclose any previous issues such as sewage or water issues???
0 votes
This is a great question as we are going thru with this right now. Wish I new but will sure post once I have an answer for you. I was told it can take up to 3 to 5 days to list and there may be another 5 days before you can submit quotes.
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