This is the time of year when we eat too much, throw another log on the fire, then gaze into the flames as we reconnect with our primordial roots.
Our primitive ancestors desired shelter from the beginning. A cozy cave has always trumped a leaky lean-to “down by the river.”
So if you’ve been thinking about finding a new cave, I’m here to suggest that our coldest months may be the best time of year to find one. In fact, buying residential real estate during the cold months may be a good idea for you on several fronts.
— First, you know that any seller who has a home on the market in December and January is motivated to sell. Far fewer buyers are active this time of year. Flowers aren’t blooming, steps can be slippery, and fewer hours of daylight make showing a home at its best almost impossible.
And because the available pool of prospective buyers is smaller, each offer is considered serious. This is not a good time to just test the market.
— Second, the weather is nasty, and that is exactly what you, as a buyer, want to see.
You’ll get to see the heating, plumbing, insulation, roof and gutters in action. These are important systems in your home, and winter is a good time to find out if everything works. If the house won’t stay warm or if there is a deficiency of insulation, you want to know now.
— Third, agents, lenders, inspectors and attorneys all have more time to spend on you. By the middle of spring, that will have changed. I am predicting a strong spring selling season, and while that spells good news for sellers, it’s exactly the opposite for buyers.
— Finally, the long-expected rise in long term home loan rates has yet to materialize. My crystal ball is cloudy, but my guess is that we will see higher rates sooner rather than later. More important, Fed Chair Janet Yellen says the same thing — in public. If you can swallow the higher monthly payments, consider a 15 year fixed rate loan at just over 3 percent. You will build solid equity beginning with payment number one, and your overall cost of financing will be dramatically lessened.
— One additional thought about winter home shopping:
Try to schedule all your visits during daylight hours. I understand that morning or afternoon showings may be challenging, but seeing a house in the dark robs you of a fair viewing of the home’s assets. Also, remember that it rains a lot in January and February, so make sure to look closely at the basement and ceilings for signs of water penetration. You don’t want to buy into a moisture problem that needs repair now.
TIPS FOR ANY SEASON
— Get pre-approved by a lender before you ever start looking at homes. This gives you a distinct advantage over prospective buyers who have not taken the time to provide a lender the financial information they need to make a decision. Sellers want to know up front that you are qualified to buy their home. In addition, a larger than average earnest money deposit is music to the ears of any seller. While a deposit of one percent of purchase price is typical, a deposit of three times that amount shows the seller you are a serious buyer.
— My advice is to work with an experienced real estate professional. Yes, you can approach the home buying process on your own, but I don’t think it’s smart. Maybe this is a bad analogy, but you probably wouldn’t try to fix your own toothache. You’d go to a dentist trained to give you the best treatment available. Likewise, agents keep up-to-date on all the latest changes in financing, housing styles, valuations, and a million other details that you don’t want (or need) to know about.
— Finally, look for the least expensive home in a more expensive neighborhood. Avoid the most expensive home in a less expensive neighborhood. And don’t lose a hundred thousand dollar deal over the cost of something as inexpensive as a refrigerator. Look to your real estate professional for advice and direction in terms of valuation and negotiation. I believe you’ll be glad you did.
Native Atlantan John Adams is a real estate broker, investor, and author. He answers real estate questions every Sunday at 3 pm on WGKA-am(920). He welcomes your questions and comments at Money99.com, where you will find an expanded version of this column.
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