In addition to enjoying good cheer and time together with loved ones, the holidays also present an opportunity for eagle-eyed real estate investors to pick up quality properties at agreeable prices. Here are a few reasons why buying real estate during the holidays, besides regular presents.
Holiday-Affected Purchase Factors
Reduced Market Activity
The holidays stir up a wide range of work, family, and school-related activities which, combined with inclement weather in many places, often significantly reduces real estate transactions across the board. With fewer people out there actively looking for a new home to purchase, when you come upon a property you are interested in, competition is reduced, and your leverage will increase. Increased leverage, in turn, makes dealing with sellers much easier, especially when you are one of the few people out there ready to take their home off their hands with little delay.
Highly Motivated Sellers
Due to the previously-mentioned market slowdown, sellers are highly motivated during the holidays to close a sale as judiciously as possible. This urgency is possibly caused by factors like job relocation, moving into a new home themselves, or very often, seeing their property listed on the market for a significant amount of time already. With the year closing fast, many sellers are prepared to do whatever it takes within reason to finally close on a buyer and speed the process along. In such cases, they are often flexible with selling price or other factors, such as closing costs. For an experienced real estate investor, a motivated seller’s willingness to negotiate is a blessing in disguise.
Again, because of timing and motivation, everyone involved in the sales process wants to close transactions as quickly as possible. Sellers want to shed their old home and settle into a new one in time to enjoy the holidays, real estate agents want to be able to collect their commissions before the year ends, and lenders want to be able to close their books for the year too. Since everyone wants to sew everything up before the year is over, all parties involved will usually expedite the process rather than dragging it out. However, as a buyer, it is still incumbent upon you to make sure the process is still correctly followed. Saving days and thousands of dollars is negligible if it leads to cutting corners that could negatively affect your investment long-term, such as home inspection.
Favorable Interest Rates
Buying a property near year’s end also provides an opportunity to exert leverage on lenders too. The general pattern of interest rates holds that rates tend to be noticeably lower during the holidays than other times. This adjustment does not occur because of sudden generosity from the lenders, but rather a more practical reason that’s already covered – reduced market activity. Once business overall slows down, all the players will do everything necessary to keep things busy. In lenders’ case, it is lowering rates to appear more attractive to buyers looking for financing. With fewer buyers around during the season, lenders need to do what they can to lure them away from the competition.
If you’re a real estate investor who also itemizes for taxes, then buying during the holidays could help you. It may be possible to deduct points you end up paying upon closing, as well as other costs such as mortgage interest and property tax. However, many variables come into play here, so it is always recommended to speak with a tax professional before making any moves. Tax breaks alone should not govern buying real estate during the holidays, but it’s also good to investigate if you can use that purchase to reduce your overall tax burden.
As you can see, buying real estate during the holidays isn’t a bad idea if you are looking for new investment to add to your overall portfolio. Reduced competition, easier negotiations, and potentially better-than-normal financing all work in your favor as the buyer. However, once purchased, are you doing everything you can to make sure that property is protected legally from liability? Are you confident that you won’t be overly taxed on the financial gains that investment generates? If you cannot answer those questions with 100 percent certainty, then the time and work you put into buying that home could be all for nothing.
Thankfully, Anderson understands these concerns; helping real estate investors like yourself with asset protection and tax strategy is the cornerstone of our practice. Don’t let the government or some other party lay claim on your income because you aren’t protecting properly. We can assess your current situation, create a sound blueprint to address it, and then execute with precision. Put those worries to rest by contacting us today for a free 30-minute strategy session with one of our advisors.