Guess the Unexpected Best Time to Buy a Home
NEW YORK (MainStreet)— Hunting for a new home during the holidays can have many hidden advantages for buyers, despite conventional wisdom.
While there is less inventory to choose from in the fall, house hunting in November and December also means there is less competition with other buyers out there. Sellers might also be willing to strike a better deal for potential home owners.
Home buyers can take advantage of sellers who are eager to sell. The end of the year is a great time to look above your price range and negotiate for a lower price, said Alison Bernstein, president of The Suburban Jungle Realty Group.
"Sellers want to clear inventory before the spring and will be open to price adjustments to make the sale," she said.
Consumers can find the best prices after Thanksgiving and before the Super Bowl because most home owners do not want to wait until the winter months when the bulk of potential buyers disappear, Bernstein said.
Seeing a home during the winter months shows both the house and the neighborhood in its "true colors" she said.
Many sellers could also have tax reasons to sell by the end of the year, said David Reiss, a professor at the Brooklyn Law School who teachers a course that covers residential real estate transactions. However, this could prove to be a double-edged sword for buyers.
It might motivate sellers to get a deal done quickly and to compromise easily on price or other terms. On the other hand, sellers may insist on draconian penalties if the buyer fails to close by the end of the year, he said.
"Buyers must treat very carefully in such circumstances, be confident that their lender will come through by the drop dead date and certain that they will not be held liable for the delays caused by others, such as sellers themselves or escrow agents," Reiss said.
Home owners should have an easier time to sell their home this year, because there is less inventory compared to previous years, said Bruce Taylor, president of ERA Key Realty Services in Whitinsville, Mass.
"I have been watching the trend of our company's sales for the past 11 years," he said. "While there is a definite seasonality to our numbers and they are typically lower in the fall, this year our September closings and new pending contracts are the highest in the company's history."
Homebuyers who shop toward the end of the year tend to be serious buyers, which bode well for sellers, said Taylor.
"Holiday buyers are usually very serious buyers with an immediate need," he said. "They are often motivated by a job move or a change in family situation, so a quick closing is typically required."
Another advantage of purchasing a home at the end of the year is that consumers can capture some of the last minute eligible write-offs from the IRS, said Colby Sambrotto, CEO of USRealty.com, a real estate website. Movers and painters tend to offer lower prices since there is less demand, he said.
The end of the year tends to provide a better picture for mortgage companies looking at consumers with an inconsistent income and many employees have a "clearer picture" of what the structure of their bonus will be, said Hale Walker, the co-founder and senior vice president of Michigan Mutual, Inc.
With the economy improving, there is now pent up demand in the real estate market, he said.
"So far for 2012 and 2013, the answer has been the buyer," Walker said. "We have buyers willing to purchase, but sellers have yet to come to the conclusion that the time is right to sell. This has led to the market willing to buy as soon as or as late as the right opportunity presents itself. We have seen multiple examples of homes selling in a day or two and some examples of bidding wars."
Consumers might also get approved faster for mortgages during the end of the year because lenders typically have less volume, said Jennifer Schneider, owner of AMSI Real Esate.
"If a seller is willing to open their house to strangers walking through during the Thanksgiving holiday and then during Christmas and New Year's, they are motivated to sell," she said. "The bottom line is buying a home during the winter months is not for the timid. If a good deal is what a buyer is looking for, and they can stomach the ride, then they can potentially find a great home at a great price."
Written by Craig Donofrio for MainStreet
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