It’s a commonly held belief that spring and summer are the hottest months for home-buying, and that it slows down in winter. Most people don’t want to move that time of year because of school and other family matters, but buying properties in winter can come with several advantages for real estate investors. Just ask Than Merrill; founder of Fortunebuilders – a real estate education company that teaches about real estate investment. “When the temperature drops, sellers appear more motivated than ever to rid themselves of their property; the reasons are well-documented.” And it could put them ahead of the competition. Here’s some reasons why.
Lower Interest Rates
Interest rates are usually lower as the third quarter comes to a close, especially if a real estate investor plans to sign up for a mortgage. However, the timing of the purchase can impact the rate, and it can make a difference in terms of his or her final cost. Because fewer people are on the market, the chances of getting a home for a good price are greater. So, the winter months may be a good time of year to pick up more properties.
A Strong Motivation to Sell
Many houses enter the market during the winter months, because the owner needs to sell a house quickly. It may be because the property is in foreclosure, and there is a strong motivation to sell before the end of the year. Banks may also want to get rid of properties they have repossessed because of a faulty loan, and they may want to turn over anything that’s underperforming. The added costs of maintaining a foreclosed property can put strain on the bank’s finances, so there is a strong motivation to get rid of them before the end of the year.
Banks don’t want to hold on to a property any longer than they have to because it eats into their profits, which is why short sales have become more common in recent years. Hanging on to a foreclosed property for a long period of time costs them money, so they’re strongly motivated to sell them toward the end of the year. And they can improve their financial situation by doing it before tax season begins.
Less Buyer Competition
Competition for real estate investors has gotten higher in recent years, but there are still deals to be made on hot properties. It’s just a matter of knowing where (and when) to look. Most entrepreneurs take time off during the holidays because they want to spend time with their families, but working more toward the end of the year can help real estate investors get more of an edge on the market. It’s not as active during the winter months, and sellers are aware of it. So, investors have a better chance of getting a deal on a property – one they wouldn’t have gotten if they had waited until after the new year.
Buyers may be more willing to lower their asking price during winter because their chances of selling are smaller. There aren’t as many buyers that time of year, so they may want to go lower in the hopes of gaining more interest. This could work to an investor’s advantage, and it could improve his or her profitability.
While the housing market is booming in summer, buying in winter could come with some advantages. Investors may find deals on properties that may not be available the rest of the year, and less buyers on the market could give them more options. It could also make a difference in terms of their overall cost. It may make sense for investors to put in some extra hours this holiday season, because it could pay off in the coming year.