four unexpected fees which may Hopefully everyone buying homes for sale in Philadelphia knows how important the due diligence process is. You have to protect yourself and make sure that the home is a safe and lucrative investment while you own it. Most home buyers, sometimes with the help of their lender, can quickly determine the upfront costs and common expenses associated with buying a property with reasonable accuracy but often they fail to account for some of the hidden costs that arise after settlement. Being aware of the hidden costs associated with buying a home can help protect the buyer and make the buyer feel confident he or she has considered all of the variables that go along with buying a home. 1. Increases In Monthly Condo Fee: Whenever you buy a Philadelphia Condo or Co-op you always pay a condominium fee to cover your pro-rata share of the common expenses for the maintenance and upkeep of the property. Home sellers are required to make financial disclosures to home buyers about the condominium's budget and the individual unit's annual or monthly fee so the buyer will know what is due monthly, quarterly or annually. Some buyers however fail to understand that condo fees increase over time as expenses like insurance and building staff salaries increase. All buyers should research the property's condo fee history to see what the average annual increase has been historically or budget a reasonable annual or biannual increase into your monthly mortgage cost projections. 2. Special Assessments: Special assessments are fees assessed by the condominium above and beyond the monthly condo fee. Often special assessments are used to pay for a capital improvement or major repair that the condominium does not have enough in reserves to cover. Most special assessments are for major improvements such as roofs, windows, and other exterior issues. Special assessments can range from a few thousand per property to tens of thousands per property spread out over several years. Avoid special assessments by purchasing in buildings that are in pristine condition, are well capitalized, and that carry warranties on as many systems and building elements as possible. 3. Repairs and Maintenance: Most buyers, especially first time home buyers, forget to budget for general maintenance and upkeep of their homes. Obviously whether you are buying a condo or townhome will dictate how much you should plan to budget. Buyers can be proactive during the inspection contingency by performing as many inspections as possible and reviewing the seller's disclosure prior to settlement. Prudent home buyers also purchase home warranties, which cost only a few hundred dollars, that cover all appliances and systems. 4. Real Estate Tax and Escrow Increases: Property taxes defy the laws of Physics in that they almost always up and almost never go down. This is especially true in economic environments like the one we currently find ourselves in since cities, counties and municipalities need an influx of revenue. Most investors budget for annual increases in taxes but occasionally cities, states, municipalities, or neighborhood associations change taxation structures, assessment methods or millage rates which can result in larger than normal taxes increases. Make sure the keep abreast of the local news and stay informed about what is going on in your neighborhood!
Understanding the unexpected costs that can arise after you purchase a home or Philadelphia condo will help you make a smart decision and protect you financially for the future.