Don’t believe us? Check out these surprisingly smart reasons to let everyone else hit the mall to buy half-off sweaters while you make the purchase of a lifetime: a new house to ring in the New Year.
1. Less competition from home buyers
Most buyers take the month off to celebrate the holidays, attend parties, host out-of-town guests and, quite frankly, avoid trudging around in inclement weather to look at houses. Or, maybe they’ve heard that this is a lousy time to buy a house. Whatever the reason, shopping for real estate at a time when fewer buyers are in the market can pay off big.
That’s because competing with multiple offers is one of the most stressful parts of the home-buying process, says Brian Wasson, a real estate broker with Center Coast Realty in Chicago.
2. Motivated (OK, desperate) home sellers
The December seller is likely to be serious and motivated—and therefore more open to negotiation. So what you might lack in choice of available homes could be balanced out by dealing with a more flexible seller.
Most sellers have a compelling reason for putting their house on the market during the holidays. (Let’s face it: It’s no holiday party for them to have strangers wandering through their house.) They might be facing a relocation and want to get their kids settled before the new term. Or they might just be feeling some stress if they listed their home in the fall and it’s still languishing post–Turkey Day, making them just a little more desperate and anxious to deal.
Many sellers might also want a contract in hand for tax advantages. If it’s a rental property on which they incurred a loss, they are likely to want to take the deduction this calendar year, Wasson says.
Another tax-related reason: If sellers are likely to make a hefty profit and have a salary raise set to kick in on Jan. 1, they might be subject to a higher capital gains tax on their home sale in the coming year. In this scenario, sellers may want to unload a property before the new year.
Sellers are exempt from paying capital gains tax on the first $250,000 in proceeds from a home sale for a single person, or $500,000 for a couple. After that, the capital gains tax kicks in, based on their income bracket.
3. Tax advantages
In case you weren’t aware, the tax benefits go both ways, notes Realtor® Al Cannistra with Texas Premier Realty in San Antonio. Buying now can help you save in April and beyond. Homeownership brings numerous tax perks, from deducting mortgage interest to property taxes. (Update: The House of Representatives just passed its version of the GOP proposed tax plan, which would cap the property tax deduction at $10,000. The House bill also would only allow homeowners to deduct the interest on mortgages up to $500,000, down from the current $1 million.)
Some states also might have a homeowner’s tax exemption, says Cannistra: “If your state does, closing the deal by Dec. 31 rather than waiting for the first week of the new year can make a year’s difference in whether or not you get that valuable tax savings.”
Also, many closing fees are tax-deductible if you itemize—although you should always double-check with your accountant about any tax questions.
4. A realistic picture of the house
What house doesn’t look amazing in the typical spring buying season, with newly planted flowers and plenty of sunlight streaming through the windows? Checking it out during the miserable winter season, on the other hand, might give you a more accurate idea of what you might be living with the rest of the year.
In addition to seeing the house, warts and all, you can check for issues that you’d notice only during cold weather.
“Maybe there’s a bedroom in the home that doesn’t get sufficient heat, or the front door gets jammed in icy conditions,” says Wasson. “Inspectors are less likely to catch these issues with the home when they check them out of season.”
Of course, don’t forget that issues that crop up more during summer will be less accessible—such as how well the air conditioning works or what the roof really looks like under all that snow and ice—so make sure that your home inspector does a thorough job on those fronts, too.
5. Greater accessibility to professionals
“Since December is usually a slower month all around, you will have easier access to movers, inspectors, and mortgage brokers,” says Jennifer Sommers with Sotheby’s International Realty in Boca Raton, FL.
In addition, motivated real estate agents will bend over backward to provide service with fewer client demands and will share your desire to get it done and in the books before the new year rolls around. Ditto on your mortgage broker, who is bound to speed your closing through.