Finding Your Secret Dream Home

Tips to finding a real estate hidden treasure in a neighborhood you thought you couldn't afford.
2:42 | 07/23/14

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Transcript for Finding Your Secret Dream Home
Next here tonight, some real answers about buying and selling your home. All week, we've been telling you about the red hot housing market. The median sale price now for an existing home increased to more than $223,000. In June. And tonight, ABC's Rebecca Jarvis shows us how to find a hidden treasure in a neighborhood you love. Reporter: First-time home buyers Alison hardy and her husband, David, had their heart set on their dream neighborhood -- grant park in Atlanta. The homes are beautiful and it also has this really great charter school system that we want to be a part of. Reporter: Their wishlist -- three bedrooms, two baths and enough space for their growing family. Plus, a price tag under $300,000. This is a pretty house. We looked at this one. But it was out of our price range. Reporter: They were getting priced out. This similar home going for $350,000 and this one for $319,000. We were going to have to leave the neighborhood we had really fallen in love with. Reporter: But experts estimate there are about 1.7 million undervalued homes on the market today. So, they went looking for a hidden gem. You should never shy away from the house that looks terrible. You have to go in and see what's so terrible about it. Reporter: Rob smith has helped countless families like Alison and David. A good rule of thumb is try to buy the cheapest house or the worst house on the best street. Reporter: The worst house on the best street. Yes. Reporter: And then fix it up. Absolutely. Reporter: He says if the structure is sound and you like the layout, look past outdated interiors. The storage space in the kitchen was something I initially was not in love with. Lots of people are afraid of the wrong things. If the big structural items check out, don't be afraid of a bad kitchen or a bathroom or poor carpeting or weird colors. That's all the easy stuff that you can change quickly and make a fortune. Reporter: But how do you even spot that gem? And how do you get there first? Ask your agent to show you so-called pocket listings. Homes that haven't even hit the market. You get the right school district. You get the right neighbors. You get your future retirement fund. You've got to take that chance if you really want to make a killing. Reporter: Alison and David did, landing this diamond in the rough for $283,000. Tonight, just two months later, agents telling us their house is now worth $42,000 more. Encouraging to everyone on the hunt for that dream home. But there are a few deal breakers. Termites, cracks in the foundation and water problems. These you should never compromise on. And, of course, Diane, you always want to get a thorough inspection before you ever buy a home. Right, but that happened in two months, it went that much? Reporter: $325,000 tonight. Wow. Rebecca, thank you so much.

This transcript has been automatically generated and may not be 100% accurate.

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