A recession provides a great opportunity to purchase a house at a bargain price. Sellers are desperate to sell, mortgage rates are low and housing inventory is higher than ever. Here's how you can make the best of an upcoming recession.

1. Prepare your finances

As the signs of a recession loom, you should start preparing your finances for a house purchase. You should move your liquid cash to a low risk account (savings or checking), one which is not subject to market volatility. If you wish to go for a mortgage, you may contact your bank and get pre-approved for one.

Make sure you calculate how much you can afford to pay for a house. You should calculate how much down payment you can afford, and how much monthly mortgage payments you can reasonably pay. Under no circumstance, should you go over this number, no matter how enticing the deal sounds.

Also keep in mind that a recession may get some unwelcome changes to your life. You may lose your job and your investments may crash. This may decrease your budget for the house purchase.

In some cases, you may be eligible for government grants. You should explore your local government website to check if you are eligible for any such programs.

2. Timing

It is important to get the timing of purchasing (or selling) the house right. Unlike stock prices, house prices are stickier and take a while to come down. Getting the timing right is key to a good deal.

Since a downturn may last a while, flipping the house may not possible. You should plan to either live in the house, rent it out or just sit on it for an extended time period.

3. Locating bargain properties

When it comes to real estate, location is key. You need to research on which locations offer you the best deals. You may look up public records for house sales or pending inventory to make an informed guess about any particular location.

Online real estate listing sites offer a lot of information about any property. A house, that has been listed for more than 30 days, will see a significant drop in asking price.

Other houses may require minor renovations. Such properties are priced lower and could be good value for money.

A recession causes a lot of houses to first go into a foreclosure and later get auctioned off. You may scan such publicly listed auctions for good deals. Such foreclosed properties could offer a great deal for buyers

Once you have zeroed in on a location or property, it will be wise to hire professionals to help you make an offer. You may hire a local realtor with good knowledge of the area. You may also hire a lawyer and home inspector to help you with the deal.

4. Making an offer

A recession causes a lot of houses to be listed for sale, as the owners are unable to keep up with mortgage payments. They may not have holding power and may wish to dispose off the property as soon as possible.

This gives the buyer the upper hand. You may be able to negotiate a lower price or request the seller to cover transaction costs.

An all cash offer is significantly faster than a deal involving credit. If you can make that option work, you could close the deal a lot faster.

5. Prepare for an auction

If you make it to an auction, you need to prepare yourself mentally and emotionally for the event.

There will be other bargain chasers in the market, competing for the same properties you wish to purchase. Your competitors may have higher budgets, less patience or worse judgement than you do. So it is best not to get drawn into a bidding war with them.

You should also know when to cut losses and walk away. It is good to remind yourself that there are plenty of houses on the market, and it is best to not fall in love with any one particular property.

This mindset will help you get the best deals in your budget.