Want a new home at a steep discount? Spend your holidays devouring listings instead of ham.
Winter traditionally is a quiet season for residential home sales for all parties. But even in a tough Eastside market, homebuyers might be surprised that there are bargains to be had during winter months — especially in December.
That’s the conclusion of a 2014 report by the Seattle Homes Group at Coldwell Banker Danforth, which analyzed more than 36,000 winter home sales in the Puget Sound region from 2011 through 2014. The analysis, based on data collected from the Northwest Multiple Listing Service, found that homes’ median sales prices routinely dipped in winter months, despite steadily rising year-over-year.
The report showed median prices hitting nadirs in December or January, when median original listing prices were 10 to 20 percent lower than maximum listing prices in the same year.
What’s more, winter buyers were able to negotiate better discounts — 1 to 2 extra percentage points off the listing price — than they could in the best month for sellers (typically April). Coupled with lower prices, those winter negotiations basically doubled buyers’ discounts.
There are other factors that favor winter purchases too, especially if buyers are ready to pay and willing to tackle bad weather, snarled traffic, and holiday distractions.
Sellers might be motivated to make a deal before the end of the year for a variety of reasons. Maybe they want to deduct closing costs from their taxes, or perhaps they have been transferred to a new job and are on a deadline to move. Buyers, on the other hand, may want to lock in a loan before interest rates rise, which is predicted to happen early in 2016.
“The houses on the market in winter are the ones that need to sell,” said Aaron Soderlund, a real estate broker with Windermere East in Bellevue. “No seller loves having a home on the market in that season.”
Area housing inventory remains low, and buyers ready to purchase shouldn’t wait until warmer months, says Britt Wibmer, a broker at Windermere’s Yarrow Bay office.
“I always recommend as a buyer, you want to buy in winter,” Wibmer said. “It’s such an opportunistic time.”
Here are some tips from real estate agents for those considering a home purchase in winter:
Get your finances in order.
Make sure you are secure in your job. Know what you can afford to pay, how much you can put down, and how you’re going to secure funds for a down payment. Review your FICO score and credit reports; if you spot any errors, fix them.
If you’re going to finance, get pre-approved for a home loan.
If you’re paying cash, be sure to present a financial statement showing your ability to fund. In a competitive market, the spoils usually go to the most transparent, best-prepared bids.
Seek professional advice.
Find a real estate agent who can maximize your house-hunting efforts and help you prioritize your values. Consult a financial advisor to be sure you understand potential tax implications.
Pay attention to interest rates.
Though interest rates have been historically low the past few years, they are set to rise soon. When calculating financing scenarios, change the interest rate a half-point and see how it affects your monthly payment.
Track property taxes.
Look not only at the most recent property taxes assessed for a potential new home, but also property taxes for the previous three to five years. Have they risen? Are they likely to rise? If the answers are yes, so will your mortgage payments.
The legalities of foreclosures are complex, so it’s a risky path to tread alone. But with the help of an experienced agent, you might wind up with an uber-bargain.
Use your imagination.
Homes shown in winter aren’t always presented in their best light. Look past leaf-covered yards and dark interiors, and envision what the home will look like in spring and summer.
Puget Sound homebuyers have the most leverage in the offseason. Prioritize your spending beforehand, and decide in which areas you’re willing to compromise. How high are you willing to bid over asking price? Is it worth the savings to waive inspection? It’s low season for agents, too. Could you possibly negotiate a deal on commission points? Negotiating any extra discount is whipped cream on the latte. Though sellers should, logically, hold firm on winter prices, reality has shown they don’t. Winter sellers “could be fearful of having less potential to sell their house, so they start thinking, ‘Maybe we should start being more flexible in price,’” Wibmer said. “Sellers just get intimidated by wintertime.”
Buy in December.
Well, that’s what the statistics say.
A potential 10- to 20-percent off what you would pay for the same house if it hit the market in spring is nothing to sneeze at, especially in a market where inventory is historically tight and prices hover near prerecession highs.
Refuse to be pressured.
As with ellers, many winter buyers are looking to close deals quickly for various reasons. Unless you’re one of these, or have found your dream house, be prepared to walk away. Yes, you’ll have to pay a higher price for a similar house in spring or summer, but at least you gave winter house hunting your best shot.
Focus on the positive.
Sam DeBord, 2016 president of Seattle-King County Realtors and a managing broker with Coldwell Banker Danforth, said if you’re able to buy a home during the winter months, “you can take advantage of being that lonely buyer with sellers tripping over themselves to get you under contract. That’s a nice trade-off for braving a little bit of cold and rain.”