Everybody knows the holidays are a great time to spend time with family, but it’s also a great time to snag some great real estate deals. And while most people believe the big savings are found standing in line outside an electronics store on Black Friday, home buying trends prove some of the best deals you can make during the holidays involve real estate, not 42-inch televisions.
But is it really worth braving the cold weather, limited inventory — and general holiday malaise — to buy a property before the end of the year? The answer, in many cases, is a resounding yes.
Whether you’re a real estate investor or simply a savvy home buyer, here are five ways to use holiday home buying trends to your advantage and secure a great deal before the apple drops in Times Square.
5 Home Buying Trends To Help You Find A Great Deal
1. Less is more (especially when it comes to inventory)
If there’s one undeniable truth about the holidays, it’s that real estate inventory is limited during the holiday months. There’s simply less real estate activity — less people selling less homes — during the holidays.
To compound this fact, there are fewer mortgage lenders, realtors and inspectors available than usual. But rather than seeing this as a major obstacle, this can add up to a huge advantage for home buyers during the holidays: less competition. If you’re able to find a property, there’ll be a lot less buyers — and the strong possibility that you’ll negotiate a favorable price that can put additional savings in your pocket.
2. The power of a motivated seller
Webster’s Dictionary defines “leverage” as the ability to “use something to maximum advantage.” And when it comes to buying real estate during the holidays, there may be no bigger form of leverage than the motivation of sellers.
If someone is selling a home during the holidays, chances are, they have a compelling reason to do so. This can be for a variety of reasons: impending job relocation, unexpected event in the family, the desire to be in that new 3,500-square foot house by Christmas.
This is doubly true if the property has been on the market for awhile, or is an “old expired listing,” in which the property was on market years ago — but did not sell on time during the length of the listing.
Private sellers are not the only entities motivated to sell during the holidays. Financial institutions are often motivated to get foreclosure properties “off the books” before the end of the calendar year (a great opportunity for both investors and buyers looking for their next residence).
3. Tax benefits
This particular advantage will, obviously, depend on your particular financial situation, and what your tax liability looks like for the current calendar year. But closing on the purchase of a property, in the waning months of a year, can give you major tax advantages heading into the following year.
If you itemize deductions, then you might be eligible, with the purchase of a home, to deduct things like points paid upon closing, property taxes and mortgage interest rates. If you’re buying the house as an investment asset, and have a business entity set up, then there are even more tax benefits available to you.
Again, this depends on your particular tax situation for that year; certainly you wouldn’t want to do a deal simply for tax benefit. The purchase of a home should take into account current real estate market trends, not just reducing the amount of money you pay the IRS. Oftentimes added tax benefits, from the purchase of real estate, can give you flexibility when it comes to coming up with your final, best offer on a property.
4. Lower interest rates
Buying real estate in the holiday months does not guarantee your purchase will be secured with a lower interest rate. As anybody with even a modicum of real estate experience knows, interest rates fluctuate and aren’t easily predicted based on the time of year.
But, historically, interest rates tend to be lower during the holidays. And not due to “Yuletide cheer,” but limited demand (there’s just less financial business being done in late November and December).
So, while lower interest rates aren’t a guarantee when buying a home during the holidays — few things in real estate are a guarantee — you can often find favorable financing (and much better real estate deal terms) during the holiday months.
5. Faster closing
Home sellers aren’t the only motivated folks involved in the home buying process during the holiday months. Lenders, brokers, realtors — even inspectors — are often motivated to get a deal done before the end of the year.
This can bring welcome focus and speed to a process that can take longer in non-holiday months. Most parties involved in a home buying transaction have incentives to finalize the deal as soon as possible. Lenders want to close their books, agents want their commission, and sellers want to, frankly, move on.
The key, as with many things in life, is communication. Speak with agents and lenders as far in advance as possible to find out exactly when individuals you depend on to complete a deal are “on the clock.” Though there are few true “off-days” during the holidays, this doesn’t mean there aren’t other internal demands folks needed to close out a real estate deal.
Respect the time constraints of the other parties involved in your real estate transaction, and you might just find a grateful (if not speedy) resolution to your deal.
The Ultimate Key to Holiday Home Buying
This isn’t to suggest buying a home, either for real estate investing or living purposes, is easy, or the best course of action for you and your financial needs.
There are extra hurdles with holiday home buying one must jump over: bad weather, slow financing, the possibility that snow could mask systemic problems with a property. But by “zigging when others are zagging” — and using holiday home buying trends as an asset, instead of an obstacle — you might just find the best real estate opportunity of the year when the weather is cold.