That said, entering into the process of financing the purchase of a foreclosed home can often be a harrying and confusing thing for someone not familiar with the procedure. Many people, caught up in the excitement of a court-steps auction or an internet bid-off, have committed to buying homes the true market value of which they knew nothing. It’s not unusual for new homeowners to discover that the immaculate facade of their purchase concealed a burnt-out wreck of a home – and that, as such, your chances of being granted a loan on short notice are slim in the extreme. At the same time, there’s always the chance you’ll find yourself in possession of an architectural jewel purchased for a fraction of its real value.

The fact is, it’s a rare bank that has the manpower or the inclination to monitor the condition of its foreclosed properties. Empty and bereft of security, foreclosed homes are a magnet for vagrants only too eager to strip houses of wiring, plumbing and other such essentials. This is why buying and selling foreclosed homes is not a part-time job – your research into the state and market potential of your intended purchase must be extensive if it’s not to be a bigger gamble than it’s worth.

The best idea is to hire a property lawyer who will help you determine the viability of your purchase for you, taking into account the contract your lender has available for financing the purchase of foreclosed homes. You could also hire an independent contractor to maximize the potential for resale of your new property.

If you live in the United States, keep in mind that if you need to finance the purchase of a foreclosed home you stand to benefit from the Foreclosure Prevention Act of 2008, which grants buyers a $7000 tax credit so long as they intend to use the new home as their primary residence for at least two years. In many cases this injection of cash alone can make financing the purchase of a foreclosed home a lot less challenging. Homes in many parts of the U.S. are selling for below that amount. Instant profit is sure to be sweet music in the ears of any lender.

When trying to determine if you stand to profit from the purchase of a foreclosed home, take the long view. Are foreclosures on the rise in the area in which you plan to buy? Speak to a few estate agents to find out. If they are, prices are likely to continue dropping, as nobody wants to live in an area that has had a lot of foreclosures – such neighborhoods tend to attract large numbers of vagrants and criminals.

And remember that the only way you stand to profit from this is in the long term – think in years, not months. If you’re going to live in the home you’ve chosen, make sure you’re comfortable to continue living in and maintaining your home until reselling becomes a profitable option.