Looking for a great deal on a home? Consider a foreclosure. But, before you start looking at foreclosure properties, there’s some important information you must know. Banks, Fannie Mae and HUD reclaim homes when the owners can no longer make payments. Typically, the prices are below market value—and if the home is in decent condition, you can get quite a bargain. On HUD homes, a potential buyer submits a bid and waits to learn if she’s selected. With Fannie Mae or a bank, the home-buying process is similar to buying from an individual seller. But in all instances, there is one key difference from purchasing a home the traditional way: The sellers of foreclosure homes are not required to disclose a home’s past or present problems. 

That’s why it’s essential you have the property thoroughly checked over by a reputable home inspector. It will cost you a couple hundred dollars. But it could ultimately save you thousands. Another smart move: Ask your Realtor to pull up recent selling prices of similar homes in the neighborhood. Calculate their price per square foot and compare that to the home you want. Be sure to subtract the estimated cost of any repairs, as there will likely be several. Find out about foreclosure properties from Realtors, local banks, the local offices of Fannie Mae or HUD, or—in many cities—on the Internet. Most foreclosures need quite a bit of work. So, be prepared to roll up your sleeves—or hire some professionals. But if you get a home at an excellent price, the work can really be worth your while.