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Doug & Erin Risher, Premier Sotheby's International RealtyPhone: (239) 825-3696
Email: [email protected]

So You're Interested in Buying a Foreclosed Home

by Doug & Erin Risher 05/11/2020

Photo by Alexander Stein via Pixabay

If a home is in foreclosure, you can buy it for less. Great deal, right? It can be, but there are pitfalls, and you need even more caution than in a regular real estate transaction.

Stages of Foreclosure

Foreclosure can take months or even years depending on the regulations of the specific state, but the stages are the same:

  1. Pre-foreclosure. The owner has been given notice of pending foreclosure but for now still owns the home. In this case you negotiate with the owner.

  2. Bank-owner. The former owner has been evicted. If the bank doesn’t find a buyer the house will be put up for auction.

  3. Real-estate Owned (REO). The home did not sell at auction. A misleading name because the bank still owns it. And needs to get rid of it.

How do I find a Foreclosure?

If you haven't bought one before, your best bet is to work with a real estate agent who specializes in foreclosures. Some may have credentials: the Certified Distressed Property Expert (CDPE) or the Short Sales and Foreclosure Resource (SFR) designation. Foreclosures are listed on the same platforms as other homes, plus they may be found through banks, local city halls and courts.

Do I need cash?

Not necessarily. But if you'll use a mortgage, get it pre-approved. You’re likely to be competing with cash buyers.

What should I watch out for?

Many foreclosed properties are in poor shape. If they haven’t been inhabited, and maintenance has been neglected and air conditioning hasn’t been running, there could be mold, debris and internal damage. Distraught homeowners sometimes make off with appliances and the copper. There may be liens in addition to the defaulted mortgage. Get an inspection, have the title checked out and assume there’s going to be work to make it livable.

How much should I pay?

Your agent can run a comparative market analysis (CMA). You should pay significantly less than for an unencumbered property to make up for the risk. Professional foreclosure buyers sometimes use a formula of 80 percent of a comparable standard property less cost of known repairs. For example, a $300,000 house that needs $50,000 in repairs should be (80% * $300,000) – $50,000 or $190,000. A skilled agent can help you be competitive without putting yourself in a bind.

Is a foreclosed property right for me?

It will take more time and effort than a regular purchase but can save a pile of money. A DIYer or a person comfortable managing major rehab projects has a head start. If you have strong nerves, high risk tolerance and the ability to be flexible, a foreclosure might be the best deal you can make.

About the Author
Author

Doug & Erin Risher

Hi, Welcome To Our Website Amazing Naples Homes.Com. My name is Doug Risher, together with my wife Erin and Trish Giampaoli we are The Risher Team. We hope you find the website fast and easy to use. Please let us know if we can help you in your search. If you have specific needs or wants please let us know those. We often have additional homes, condos or land that may not be for sale on the MLS. 

A fifth generation Floridian and lifelong resident of Naples, Doug Risher has seen and been a part of the tremendous growth that defines Southwest Florida. He previously worked in the golf business for various manufacturers of hard and soft goods. Doug started out working as an independent sales representative and worked his way up the ranks to a national sales position.

In the real estate market, he has established himself in new construction and has earned two designations relating to custom home design and modern construction practices. Doug is a Certified New Home Specialist (CNHS) and is Residential Construction Certified (RCC). He believes advising buyers and sellers alike is very rewarding.

Doug enjoys creating a successful outcome, whether it's assisting a buyer to find the right community, helping find the perfect location for that custom home or marketing a home for a seller. He utilizes social media and target marketing to match qualified buyers with listings. When you work with The Risher Team, you get the double-edged sword of high-tech and high-touch.

Outside of real estate, Doug supports Take a Soldier Fishing, the Juvenile Diabetes Research Foundation and Captains for Clean Water. 

 

Erin worked for 11 years as a Case Manager for the largest personal injury law firm in the state of Florida. Erin was ranked yearly as a high fee producer, negotiating with insurance companies for her clients top compensation. Erin says, "the experience I gained while working for the law firm was invaluable and made me a great negotiator."

 "I use techniques I learned there to the benefit of my real estate clients." "I love real estate and it is my passion", says Erin Risher Broker Associate. Erin along with her husband Doug are the Risher Team, they participate and contribute to Take a Soldier Fishing and Juvenile Diabetes Foundation. 

When you work with”The Risher Team” you get the double edged sword of High Tech & High Touch in Doug & Erin Risher. Erin is passionate about our environment and supports captains for clean water and the restoring the natural flow on water through the Everglades. Erin loves her family and enjoys boating, going to the beach and visiting the keys and islands of florida. Together we help people. "Real estate is the truly our passion and it is what we love to do"