Tis the Season to Buy a House

Christie Farris

With the arrival of the holiday season who has time to go looking for a house? For that reason there aren't many buyers this time of year. But there should be, because that's when you may find some incredible deals. It's understandable that owner-occupants aren't eager to buy a house at this time of year. There are too many other distractions and besides, who wants to move in January? But for investors, it's an entirely different matter. Joy Bender, a real estate agent in San Diego, Calif., says investors who sit on the sidelines in December may be passing up a profitable opportunity.

Motivated sellers

"A seller who is actively showing their property during the holidays is more motivated to sell than a seller merely testing the highs of the market," Bender said.
For example, in her market Bender says there are some builders offering unusual discounts on current phases of move in ready models in an effort to clear inventory off the books. Some sellers may be motivated for tax reasons.
“Sellers may be motivated to strategically close escrow by the end of 2013 for tax advantageous planning within regards to capital gains,” Bender said. “Buyers can also anticipate possible tax deductions for 2013 with pre-paid mortgage interest along with origination and discount points paid on closing costs.”

Buyers regaining some leverage

In some markets in the country in recent months sellers have been in the driver's seat. Inventories have been low and buying interest high. For that reason an investor seeking to buy a house well below market has often been frustrated lately. But Bender says that's changing.
"We've seen a significant shift in overall demand eliminating some of the multiple offer situations we have been struggling with all year," she said. "There has been a dramatic decrease in buyer activity especially in the high end and vacation home market."
Recent data backs that up. Sales of existing homes declined in September and October, according to the National Association of Realtors (NAR). Only a further tightening of inventories prevented overall prices from falling. The median price rose 12% year-over-year, dampening investor enthusiasm.

Cash talks

But Bender thinks the end of 2013 might provide investors with an opportunity, especially if they can make a cash offer. A seller pressured by a deadline may be inclined to accept a lower offer if it is cash, since there is little chance the deal will fall through.
The biggest downside to end-of-the-year home buying is the limited inventory. It may be hard to find a home that meets your needs. But that's only the case if you plan to live in the house.
An investor is looking at it in a completely different way. They either plan to flip it or convert it to rental property. The color of the tile in the bathroom isn't a deal-breaker.