Can I Get a Better Deal on Real Estate During the Holidays?

22 Nov Can I Get a Better Deal on Real Estate During the Holidays?

The holidays are upon us, and Black Friday sales can happen in real estate too. How much more of a deal can you get if you go under contract during the holidays? According to National Association of Realtors Chief Economist Lawrence Yun in this Forbes report, closings in January sell for 0.51% less than in other months of the year. It doesn’t sound like much, yet on a $500,000 purchase it adds up to $2,550 in savings.

Here are the dynamics of the market during the holidays and the winter months:

• Fewer properties are on the market. Many occupants don’t want to be bothered with showings during the holidays.
• Fewer buyers are active. Many move-in homebuyers (who may compete with investors) and even some investors opt not to search for real estate during the busy holiday season.
• Inclement weather in many areas hinders showings. Some prospective buyers cannot physically make it to showings or don’t want to risk it with travel. Fewer showings means sellers may be more desperate, or it may mean less competition from other buyers.
• Given the slowdown in buyer activity, some sellers may be more open to accepting an offer below the asking price.
• Some sellers may price their property lower to begin with. Sometimes the asking price represents a hot deal and you don’t need to bid under the ask.
• With fewer buyers, there is a lower potential for a multiple-offer scenario.
• With fewer multiple-offer situations, you don’t have to waive a home inspection to compete against other buyers. With an inspection report, you are better equipped to negotiate concessions.
• Some motivated sellers may be willing to accept an offer if the closing happens on or before December 31st. Capital gains taxes and losses can be a factor. We know a seller right now who accepted a low offer provided that the buyer holds the settlement by the end of the year. That seller has a large capital gain on a sale of another property this year, and the loss on the house they’re selling lowers their tax liability. In other words, instead of a paying huge capital gains taxes for 2022 on the sale of the first property, they’ll pay far less in taxes for 2022 since the sale of the second house for a loss offsets the prior gain.
• Psychologically, some sellers may want to close before Thanksgiving, or Christmas, or New Year’s Day, so giving them what they want can result in a better price. Some sellers want the relief of knowing that their chapter with the current property is ending, so they can begin fresh somewhere else. Real estate negotiations are not just about price, but terms too. If you give a seller the terms they want, they may concede a bit on price.

My wife and I have gone shopping for investment properties during the holidays and in the dead of winter. We’ve been highly successful in negotiating deals. All that being said, we go shopping year-round and have been successful with our negotiations. The truth is that you can find a real estate deal any time of the year. You shouldn’t wait until the winter to search for an investment property since you can miss out on so many other opportunities the rest of the year.

Regardless of whether you’re shopping now for a deal, enjoy the holidays! Of course, putting a hot deal under contract may make the holiday experience even better!

Tai DeSa is a graduate of The Wharton School of the University of Pennsylvania.  He became a full-time real estate investor in 2004 after serving in the U.S. Navy.  Tai has made colossal mistakes in investing (and learned some things along the way).  He has helped hundreds of homeowners avoid foreclosure through successful short sales. Check out Tai’s books on Amazon.com. Tai may be available for coaching and speaking engagements on a variety of real estate topics.  Send an email to tai@investandtransform.com.