As the cooler weather begins to creep up on us, most people start daydreaming of a winter holiday to a tropical island with a warm ocean for swimming and an refreshing cocktail in their hand. However, one significant aspect of the cold weather that many people overlook is real estate investment.
Buying a home in winter is a smart idea. You can enjoy lower mortgage rates, save money, and get a lot more value for your money.
In this post, real estate experts at Park Regency Realty - A Los Angeles based real estate company - will briefly look into the typical real estate winter trends and why the cold season is the best time to buy a house in 2021-2022. We will also point out common mistakes to avoid so you enjoy a seamless home-buying process.
Real Estate Market in the Winter
A limited inventory is among the major highlights for the winter real estate market. You will find people suspending their home listings between Thanksgiving and New Year due to potentially high buyer scarcity (low demand) during the holiday season. The majority of sellers who list in this timeframe typically want to sell fast.
Therefore, it is not surprising that January often has the lowest home median listing price, making it the best month to buy a house.
Plus, homes available for sale in January and February have likely stayed on the market the longest. As such, sellers are more adaptive to offers and will not shy from shaving a couple of dollars off their listing price to quicken the sale process. They may even try to sweeten the deal with an extra perk or two, such as appliances.
Sellers do not usually accept home offers based on FHA (Federal Housing Authority) loans, especially during the summer and spring months. Reasons vary, ranging from stringent FHA-specific appraisals to perceived costs to the seller. However, with fewer offers during winter, home sellers have no choice but to welcome FHA buyers. That is good news for many first-time buyers and individuals with poor credit scores.
Mistakes to Look Out for While Buying a House During Winter
Save yourself the aggravation and financial losses by avoiding these home-buying mistakes people make during winter.
» Not Comparing Options
It is tempting to sign the contract the moment you see the home. But this may be a bad decision because chances are you paid more attention to the property’s superficial features than to its practical benefits.
Do not rush into signing the purchase agreement. Less competition during winter should give you the luxury of compiling a shortlist of things you want from your ideal home and using that list to compare several homes for sale. If a home does not have everything on the list, perhaps you should look elsewhere. But be open to options with features that are better than you imagined.
» Skipping Complete Home Inspection
You might wonder why you should spend money on a complete home inspection, whereas you might learn the same things from the seller. But getting a house inspected before you finalize the deal can provide a great deal of peace of mind.
First, you get an insight into the condition of the piece of real estate. Is the roof leaking or windows old and drafty? Is the heating system inefficient?
Secondly, an inspection might uncover things that the seller is trying to hide, like lead paint or a leaky roof. Thirdly, it can save you from a significant repair or replacement bill. If the inspection uncovers problems, you can always back out of the deal.
A professional inspector is paid to look for problems, not make them. And because they have no motivation to exaggerate, you can be pretty sure that their report is accurate. Expect to pay around $400 for home inspections in California.
» Going Way Beyond Your Budget
A real estate deal is not just about the house itself. You also have to deal with lawyers, appraisers, inspectors, mortgage brokers, and other specialists. These costs add up, and if you are not careful, they can soon overwhelm your home purchase budget. And if you don't know how much you can comfortably afford, you risk making a regrettable choice.
The general rule of thumb to avoid stressful situations in the future is to spend no more than 30% of your income on mortgage payments. If you are making $50,000 a year, your monthly payment should lie somewhere around $1,500.
Sure, the mortgage payment devours a big chunk of your income, but you still have to pay property taxes, mortgage insurance, and other fees.
But do not just do things yourself. Consult with a reputable financial advisor or your bank to determine the amount of money you can spend on a real estate winter investment without breaking the bank or sinking into debts.
» Poor Negotiation Strategy
You will probably find the home-buying experience pretty much like buying a car at a dealership without an appointment, where the guy behind the desk is rude, the salespeople don't listen to you, and the sales pressure is relentless. Things tend to slow down in winter when sellers are more welcoming. However, poor negotiation skills could jeopardize the transaction.
One of the problems is that no one at school or college taught you how to negotiate. But it's not that hard. Seasoned real estate negotiators don't start by asking, "how much will it cost me?" They begin with, "how much is it worth to me?"
Of courses, many sellers are list-driven. They want to price their home as high as possible, so they ask their real estate agent to put the highest number possible. Again, you do not know why the seller listed their home in the first place, as well as their current financial situation. Maybe they have plans to move out of town. Perhaps the seller is a retiree who can't afford to wait a year for a buyer.
Whichever the case, always approach a real estate negotiation with an open mind. Put yourself in the shoes of the seller, and make a mutually beneficial offer.
» Not Involving a Real Estate Agent
Houses are very complicated investments, and a bad deal means a lot more than you could imagine. We agree that you want to make independent buying decisions. After all, you can obtain all the information you need about the available homes for sale within a few clicks on your PC or smartphone.
But there are incredible benefits to working with a certified local realtor:
- They are familiar with the neighborhood.
- They know the homes that are available for sale, even those not listed.
- They can find out all the information about a property.
- They can provide some financial insights.
- They have experience negotiating real estate transactions.
- They can guide you through the paperwork.
- They can leverage their network to connect you with trusted specialists, including home inspectors and mortgage brokers.
» Buying with Emotions
Most homebuyers are familiar with the price, location, size, and style concerns. But emotions have a significant impact on the decision, too. For example, a buyer may feel strongly about a particular neighborhood and even reject a better option in a nearby community.
So, how do you resolve this dilemma and prevent emotions from clouding your logic? The most recommended way is to consider your budget. Regardless of how a property’s structure catches your eye and heart, take care not to go beyond your financial capacity.
Secondly, verify whether the neighborhood checks all the boxes in your shortlist. Pay special attention to the safety levels and proximity to essential facilities (schools, healthcare centers, grocery shops, etc.). You might want the house to be near good schools, but not schools too near to your place of work. You might be looking for good schools, but not if it means having to drive a long distance every day.
If you think the neighborhood is questionable or unfit for your preferences, you can always consider a different community.
» Neglecting Your Long-Term Needs
You are making a long-term decision, and buying the right home involves thinking about more than finances. While you can't know in advance what your life will be like 5, 10 years from now, it is much safer to buy the kind of place that will suit your family several years to come.
Below are a few questions to determine if your current choice matches your long-term housing plans:
- How big is your family?
- Do you expect additions to your family?
- Will you need expansion space sometime in the future?
- Is handicap accessibility a critical consideration for your next home?
Winter is the Best Time for a Good Deal
When spring rolls around, a home-buying frenzy ensues. But we all dream about getting the best value out of a real estate deal and plunking down as little money as possible for a home. You can turn your dream into a reality without a hassle by avoiding the spring rush.
Thanks to our experienced real estate pros at Park Regency Realty, we have compiled a list of reasons we believe winter is the opportune time to begin your search for a new house.
» No Bidding Wars
One of the prominent reasons winter is the best time to buy a house in 2021 is that competition is less. As stated earlier, the real estate winter inventory is less compared to spring’s stock. According to the laws of supply and demand, this should result in high competition and exorbitant home prices. However, people are not always willing to view properties or force their kids to change schools during the mild, wet weather.
That translates into fewer chances of a home getting multiple offers, which is a welcome relief for potential homeowners discouraged by aggressive bidding wars. It also means that your offer will likely impact the seller more, giving you an upper hand during negotiations.
» Home Sellers are More Adaptive
Since the real estate market tends to transition into a buyer’s market during winter, you will find that most sellers are more lenient to their listing price and motivated to close the deal.
Check how long each property has stayed in the market. If a particular home that suits your needs has lingered in the market for several months, chances are the seller will accept a fraction of their listing price.
However, let not a seller’s eagerness to close the deal be your excuse to make unreasonable demands. They are human, too, with a valuable investment to protect and will likely back out from a deal that sabotages their interests. Find a trusted real estate agent to formulate an appropriate negotiation strategy that ensures mutual benefits for both parties.
» Homes Closer Faster
Another reason why winter is the best time of the year to buy a house is expedited closing. Homes have stayed longer in the market, and sellers are more motivated to quicken the stages. During the same time, real estate regents have fewer clients, meaning they can devote more attention to your deal.
Consider also that the mortgage industry is highly seasonal, which means that many mortgage brokers are backed up with work during the busy spring and summer months. Winter offers a much-needed reprieve because lenders and mortgage brokers have lighter workloads, which means faster loan approvals and closing.
» You Get to Know the Ideal Condition of a House
During summer, homes look at their best, but what may look ideal during this season could function entirely differently during winter.
Seeing houses up close during winter can help uncover hidden issues you may overlook during summer. You will feel how cold the rooms are or how drafty the windows get. You also get to experience firsthand how well insulated the home is and test the heating system.
Find Your Dream Home in Los Angeles
If you are looking for the best real estate winter deals in Los Angeles, Park Regency Realty can help. We are a full-service real estate company trusted by thousands to help with home-buying and selling. We strive to be a cutting-edge organization focused on catering to a plethora of real estate needs - from buying a first home to selling an existing property at any time of the year. Let us help make your home dream come true - call us today at (818) 363-6116.