Dream, Dig, Do It: The Three Phases of Home Buying
Deciding to buy a home is not a decision for the faint of heart. It’s a commitment like no other, and the time it takes to dabble and explore reflects the importance of your next move.
Most first-time buyers don’t know exactly what to expect or how to approach the home-buying process. You have plenty of digital tools to help with each step of the way, but staying cyber won’t take you far when making the dream of owning a home a reality. Enlist the help of a trusted agent and lender along with your digital strategy, and you’ll have much greater success.
I’ve seen countless buyers gain confidence by going through three phases – dreaming, digging and doing it — all of which are natural and common stages of the home buying process.
Depending on your life circumstances, you might find yourself teetering between phases – and that’s okay. There’s no set timeline. Let’s take a closer look:
Phase 1 – Dream!
Most buyers don’t even realize when they are in this first phase, which usually goes hand-in-hand with researching and investigating. Often, the dreaming phase is induced because of a rent hike, a pay increase or a major life event, such as a new career opportunity, an addition to the family, or a child reaching school age. Or maybe it’s the desire for that fantastic chef’s kitchen, a spa-like bath or custom closet space that makes you wonder if better options are within reach. Dreamers start to think, Why not me?
Online tools like property listings, expert blogs and public tax records abound, and these are great first steps in getting a read on the market. Going to some open houses and doing research in person is also key because what you see online may surprise you in person, or vice versa. Keep in mind that the dreaming phase can be a bit of gray area when – you may not yet know what you can afford or what lifestyle you want. This is the fun phase, the time to explore all types of homes, price points, and neighborhoods – without making any big decisions.
In order to make the most of your dreaming phase, don’t pressure yourself to form a relationship with a realtor too quickly. Look for it to happen like any healthy relationship or business arrangement happens—organically and with that visceral feeling of trust and good humor. Ask yourself what you like about what you are seeing, what pleasantly surprises you, or what you would like to look out for the next time you browse homes. Use the dream phase to learn what you want in terms of home ownership. As you become more serious and more specific, you’ll know you are ready to take it up a notch.
Phase 2 – Dig!
At some point, you’ll find a home that excites you. Something will spark your curiosity, and motivate you to find out more. This is the time when working independently no longer makes sense. You’ll naturally have questions, want to understand why something is priced the way it is or want to better understand some nuance in the market, etc. There may be a home that seems like a good fit or another home that seems too good to be true.
You’ll also need to understand what you can truly afford and what your loan options are. Online mortgage calculators alone don’t usually cut it. Diggers need to know what factors determine mortgage eligibility and to consider whether a low monthly payment or a longer-term loan is more important to them. Paying off the mortgage is not at the top of the priority list for many of today’s buyers. This is the phase where you think about how long you plan to stay in the home and what type of mortgage makes sense for your life situation.
Practical, financial, and emotional implications start to collide at this point, which is why a real estate agent can be very helpful, particularly to a first-time buyer. Find a good agent who not only knows how the market works, but who is quick to understand your individual situation and put things in perspective for you.
So, how do you find the right agent for you? Try getting a referral from a friend or dig up the business card of an agent you connected with at an open house. Online reviews can also be a great resource to find your agent. At the same time as you find an agent, you also should speak to a mortgage professional and commit to your financial situation. Essentially, you’re forming your team of specialists, who will work together to advocate for you in the home-buying process.
Once you’ve found the best agent and have gotten your finances in order, you can cross the threshold to Phase 3. If the dreaming phase focuses on your wishes, then the digging phase is the slap back into reality. Use this time to crunch your numbers and really understand your complete situation. Ask yourself how your finances line up with your wish list and what you can do to make them more aligned, if they already aren’t.
Phase 3 – Do It!
When you’re ready to just do it, it means you are in the game to win. Buyers who enter Phase 3 have assembled their team, spent time seeing houses, investigated neighborhoods, gotten their credit and finances in order and done research to understand how the market works. Being in the game means that you know your top and bottom price points, have figured out and prioritized your criteria, have a target area or multiple target areas and have reconciled what you’ve seen physically with what you can afford. Get yourself prepared to make offers, review property disclosures and commit to the process.
This phase is the most exciting, but it can also be the most unsettling. If you’re a serious buyer, you might find you need to make a few offers before finding the one. You may make your first offer or two and be unable to come to terms with the seller, for whatever reason. In a strong market, a bidding war might occur.
Every move you make in the game guides you toward the winning conditions that will get you your dream home the next time. Some buyers find themselves in the market for months, learning more along the way. My main advice? Stick with your gut, and don’t feel pressure from anyone, including yourself.
Buying a home takes time and requires research and the right team of partners. It’s an extremely thoughtful process and one that shouldn’t be rushed or forced. Try to enjoy being in each phase, and use the time to learn more about yourself–what you need, want, don’t want and are willing to bend on. If you use these steps to be honest, introspective, patient and inquisitive, you will find the process rewarding, and you’ll eventually land a house you love.
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Brendon DeSimone is a Realtor, a nationally recognized real estate expert and author of the book “Next Generation Real Estate.” His practical advice is regularly sought out by consumer homebuyers and by media outlets including CNBC, FOX Business, USA Today, Bloomberg, Money and Forbes. An active investor himself, Brendon owns real estate around the U.S. and abroad and is licensed to sell in California and New York.