As of June 25, 2018, we’ve made some changes to the way our mortgage approvals work. You can read more about our Power Buyer ProcessTM.
Close your eyes and imagine for a moment: What does your dream home look like?
Perhaps it’s a charming country cottage surrounded by acres of wide-open spaces. Maybe it’s just a quick walk away from the busy streets of a lively city scene – or even a quaint suburb in a reputable school district.
Many people fantasize about one day turning a key and walking through the doorway of their very own perfect home, but some get stuck in the seemingly endless process of house hunting.
We’ve got insights from our partners at Rocket Homes on how to find (and purchase) your dream home.
First-Time Home Buyers vs. Transition Homeowners
A dream home can mean different things to different people.
Rosanna Rivera, a real estate broker for 14 years and a partner of Rocket Homes, defines a dream home as “something within price point but inspired by a wish list.”
The concept of a “dream home” is often applied to “transition homeowners,” according to Doug Gartley, an associate broker at Rocket Homes. These are the individuals who may have already been first-time homeowners, perhaps having purchased a starter home that they’ve now outgrown. Alternatively, they may be seeking to downsize to a smaller, more manageable home that’s a better fit for their current life situation.
“Transition homeowners are typically the buyers who are seeking dream homes,” Gartley explained. “Whatever their situation, they’re looking for a permanent home.”
First-time home buyers, on the other hand, usually seek a starter home, one that’s more affordable and ideal for their current lifestyle, whether they’re single, newly married, etc. And a dream home might not be in the budget or location they’re currently looking at.
“First-time home buyers often get hung up on a dream home, and it’s not always a reality,” said Gartley. “After all, it is a first home: You have to start somewhere.”
No matter your current life stage, there are still some aspects of a dream home that you can reasonably obtain during your house hunt. For example, you should always consider location, price point and access to amenities when looking for a home. However, you might have to make cuts and compromises on certain aspects of the home to stay within your budget.
How to Find Your Dream Home
Whether you’re a transition homeowner or a first-time home buyer, Gartley suggested a few concepts to consider before starting the hunt for your dream house:
- Get preapproved
- Find a real estate agent
- Make a list of needs versus wants
- Look through the available inventory
- Make an offer
- Be patient
By following these tips, you’ll be better equipped to find and make an offer on your dream home.
Rivera suggested that the first thing you should do before starting the house hunting process is get preapproved by your lender and discuss your budget and possible price points.
“It’s so important to have a strong preapproval letter,” Gartley added. A preapproval letter is based on bank statements, tax returns and pay stubs and provided by a reputable lender.
“Currently, market inventory is low, and when you find a house that you like, you need to be ready,” he said.
Oftentimes, potential buyers will have the dollar amount listed in their preapproval letter adjusted to match the purchase price of the property they’re considering.
“The traditional mindset is ‘I don’t want the seller to know how much I’m approved for,’” Gartley explained. “The disadvantage of this tactic is when there are multiple offers; the seller will be looking for the best-qualified potential buyer.”
For example, if you are one of many multiple offers on your desired home, you’ll want to have a strong preapproval letter so that you’re set apart from the other offers. This can often mean listing the full preapproval amount you’ve received from your lender.
“If your preapproval letter shows higher than what the seller is offering, you stand a better chance for the seller to take your offer,” he suggested.
Like Gartley said, you’ll want to have a strong preapproval letter in order to be considered a qualified potential buyer in the eyes of the seller; especially if there are multiple bids on the home.
Find a Real Estate Agent
“Consumers often underestimate the importance of real estate agents,” Gartley commented. “If the buyer is not prepared with a preapproval letter in hand or a buyer’s agent on their side, moves can potentially cost thousands of dollars more than they planned.”
The main goal of the buyer’s agent is to assist the potential buyer, protect them and help them make decisions that are in their best interests. Therefore, Rivera suggests seeking a full-time agent.
“In this market, you have to move fast,” said Rivera. “You need an agent that eats, drinks and sleeps real estate. When you’re searching for an agent, make sure you ask if they can show you a home within 24 – 36 hours, or you might miss out on a home.”
Consider finding a real estate agent who’s willing to listen and work to understand your needs. If you’re not sure where to start, check out our article on what to look for in a real estate agent.
Make a List
Before you start hitting the streets to view available homes and attending open houses in your area, Gartley suggests listing all your needs and wants.
“At the end of the day, the concepts that drive a dream home are a combination of location and the amenities available.”
Choosing a location is perhaps the most important decision you’ll make during house hunting. You’ll want to make sure you choose the right location for your needs and lifestyle.
Additionally, if your dream home might be a permanent home, you’ll want to make sure you have access to the amenities you need for your situation and lifestyle.
For example, do you want a walk-in closet in your master bedroom, a lower-level laundry room, high ceilings or a two-car garage? Consider the way you live currently in relation to the different amenities common in a house and choose the home that will work best for you.
Look Through the Available Inventory
When you begin looking for your dream home, Gartley suggests getting acclimated with the currently available housing inventory.
“Getting out and viewing inventory will give the potential buyer a realistic expectation of what’s out there,” said Gartley. “Oftentimes buyers will see homes online on Pinterest or Instagram that just aren’t available in their area. By doing homework and researching early on, you’ll discover the reality of what’s actually available to you.”
Gartley also mentioned that “dream homes” are typically synonymous with move-in-ready homes that won’t require much renovation. If you’re looking for this type of home, expect to pay a premium over a fixer-upper.
How to Make a Good Offer
Once you’ve finally found your dream home, it’s time to make an offer.
Your real estate agent will be able to work with you to structure an offer and suggest an offer price, and agents can often communicate the seller’s motivation to you as well, which could help you decide on the details of your offer.
Structuring the Offer
Gartley suggested having a clean-cut offer, which means “having a contingency to protect your interests, while still keeping it simple and straightforward.”
You’ll also want your offer and pricing to reflect the current market. The agent will have done their homework by searching through the available inventory, researching the market and coming up with a suggestion for a realistic offer price.
They will also pull “comparables,” or “comps,” for you. Comps are recently sold properties in or near the neighbor of your desired home purchase that will give you an idea on what the property is likely worth at the time in terms of price.
Additionally, some agents, like Rivera, might take it a step further to ensure your offer is accepted.
“In a multiple-offer situation, I write up an offer and I call my client’s banker and ask them to contact the listing agent on our behalf,” said Rivera.
“The banker will then communicate the client’s case to the listing agent, mentioning their preapproval and document check. Almost every time I have the banker call the listing agent, my client gets approved.”
Understanding the Seller’s Motivation
The buyer’s agent will also work with the listing agent and try to find the best offer and terms that the seller is looking for.
“Sometimes the seller can need certain concessions, like allowing them to stay in the house a few days after selling to pack, that if you’re willing to work with them, will make them more inclined to accept your offer,” explained Gartley.
Rivera suggested adding a personal touch to the offer. “Oftentimes in a multiple offer situation, clients will go above and beyond when they make an offer,” she said.
“I had a client attach a picture of her family on the offer letter, leaving a touching note about her son,” Gartley explained. “Her offer was accepted over all the other offers because of her attention to detail.”
As Gartley mentioned, the market inventory is currently low, so it might take a while to find your dream home. Be patient during your search and make sure to follow the tips above to find your perfect home and make the best possible offer.
If you’re ready to start the house hunt, reach out to a Home Loan Expert to find an option that best fits your lifestyle and needs.
Additionally, talk to a professional real estate agent about what you think your dream home might look like and your ideal price point.
Do you have tips on how to find a dream home? Let us know in the comments!
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