Conventional wisdom suggests that spring and summer are the times to get out there and find investment properties. The weather is nice, more sellers are listing, the real estate market is more active- but that doesn’t mean that when winter comes real estate investors should go into hibernation. Winter can bring fantastic opportunities for your next deal.
Pros of Winter Buying
Because the idea that winter is real estate’s off season is so prevalent, there is less competition. The low demand will work in your favor. With an abundance of potential customers, there’s a greater chance of being outbid or finding yourself in a bidding war. In a hot market, you could miss opportunity to make an offer, as in demand locations and properties with great prices go quickly.
Sellers may be more motivated.
Sellers will be seeing fewer potential buyers, which could translate to greater motivation to negotiate a better price. If the property has been on the market for a while, the sellers are more likely to be open to accepting a lower offer. For investors looking to find a good deal, winter can be a great time to save some cash on purchase prices.
Banks are more motivated, too.
If you are looking at a short sale or to buy a bank foreclosed property, banks are often looking to get the loans off their books before the end of the year.
A chance to see how a property fares in winter.
In some regions, winter is the toughest season on a home, harsher conditions can highlight problems that may not be as apparent during temperate weather. If the insulation is no good, for example, you are more likely to notice if you tour the home when cold, wind and moisture from snow are in effect. This sort of knowledge can be useful in your decision making and in your negotiations about the final price of the property.
Better Availability of Agents, Contractors and Lenders.
In the off-season, real estate agents, contractors and lenders will have more time to invest in your project. You may be able to work with in-demand pros who would be otherwise unavailable. You may be able to negotiate a deal on labor and materials with contractors and supplies who are looking to fill gaps in their schedules or clear out the summer’s unsold materials.
Cons of Winter Buying
Fewer available properties.
Fewer properties are listed in the winter and some sellers will take an unsold house off the market once summer ends.
It’s difficult to determine exterior conditions and make exterior repairs.
In regions where winter means snow, it’s hard to judge the condition of some exterior features once the snow has started falling. A couple inches can obscure things like roof shingles, poor grading around the building and the condition of the lawn. It’s difficult to test air conditioning or to inspect a pool. If exterior repairs are needed, they’ll likely need to be delayed until the start of spring, which could lead to unexpected delays and postponing getting your renovated property on the market.
It’s difficult to get a complete inspection.
Winter weather also limits the scope of a home inspection. An inspector won’t go on an icy, dangerous roof (who can blame them!) and snow and frozen ground limits inspection of foundations, septic tanks and other exterior features. That makes the buyer’s due diligence even more important. Most states require a certain level of seller disclosure to give the buyer an idea of the age and condition of elements such as the furnace and the roof. But you can also ask specific questions and request building permits or receipts to show, for example, when the roof was last replaced. You can also ask the seller for a home warranty, which costs between $300 and $500 and covers systems like heating and cooling, plumbing and electrical, and certain appliances. Or, have the seller include a closing affidavit indicating that certain items are in good working order.
Holidays travel and financial obligations may disrupt your cashflow.
The costs of holiday cheer, like travel and gifts can add up and unexpected expenses can crop up at any time of the year. If you are looking to pick up a new property around the holiday season, take extra care with your personal and project budgets, and leave plenty of room for unexpected costs in both!
Be aware of the additional considerations and challenges that come with finding your next investment property during the winter months and keep your eyes open. With a smart strategy and a little luck, you could be dashing through the snow and laughing all the way to the bank.