When searching for a house to buy, most people overlook foreclosure homes as an option. These transactions have a few caveats that can make them riskier to buy, but they’re often sold well below market value and the sales process is typically faster, which can make them an excellent investment for the right buyer. If you want to end up with a great deal on a foreclosed home, here are some do’s and don’ts to consider first.

Do:

Work with a professional.

Though the process can be relatively fast, buying foreclosure homes is usually not an easy task for most people and will require the assistance of an expert. Hire a real estate agent specializing in foreclosed properties to help you sort through the listings and find the best deals on the market. For legal advice on foreclosure laws and regulations, it’s best to consult with a real estate attorney.

Research the area.

Even if you have professionals on board, do your research on the neighborhood you’re eyeing. If you have children, look for homes that are in great school districts. Think about your daily commute and consider how far you’re willing to drive for work. Also, check out crime statistics to get a better feel for the neighborhood and ensure it’s a place where you’ll feel safe and comfortable. Don’t limit your choices to a particular area, and consider suggestions made by your agent.

Know your financing options.

If you don’t have enough cash to pay upfront, think about how you’ll finance the transaction. Banks that sell foreclosure homes won’t necessarily finance them, too. Work out your financing first and get a preapproval letter before bidding on a property.       

Don’t:

Forego inspections and viewing.

Foreclosure homes are sold as-is. To avoid buyer’s remorse, visit the house in-person to see what needs to be fixed. To be safe, hire an inspector to conduct a thorough home examination. While some renovations and repairs are expected, there might be others that aren’t worth your investment. Think about how much work you’re willing to put into a house and keep that in mind while you’re touring.

Overshoot expectations.

As with any investment, keep your expectations to a minimum. Never assume that every foreclosure home you’ll encounter is a great deal, so listen to what your real estate agent tells you about it, including how long it’s been listed for sale. Prices can often be negotiated with the bank — especially if the house has been on the market for a while. However, you don’t want to lowball a property that’s only been on the market for a few days.

Expect to make a profit.

Some foreclosure homes are put on the market with dirt-cheap prices, but it doesn’t mean they’re worth it. You might be spending more on repairs and renovations to make the house livable and fully functional. If you’re buying it to flip and turn a profit, proceed with caution and prepare to be in it for the long haul. While it may resell quickly for more than you bought it for, there’s also a chance it could take a few years to get a good return.

If you’re interested in buying a foreclosure home, contact the agents at Gilbert Realty. Based in Mountain Home, AR, these professionals have helped clients throughout north central Arkansas and south-central Missouri buy and sell all types of real estate, including lakefront properties, foreclosures, and mountain homes. Browse their listings online or call (870) 425-6282 to start the house-hunting process today.