Halloween is the Witching Hour for Real Estate Sales

 Every year at this time I repost the same advice:  If you are looking to buy real estate, we are now approaching the very best time of the year to do so.  Buyers will get the lowest prices, and the lowest interest rates, between Halloween and Thanksgiving.

It's not rocket science.  Sellers who have had their homes on the market are more likely to do the expedient thing and accept an offer before the holiday season.  Often, that offer is lower than it would have been in the spring, where there is more competition for buyers.  When considering that lower offer, people who already have another home, be it a vacation/winter home or a relocation move, start factoring in the cost of keeping their current house through the winter.  Heating and plowing are two big concerns, and they both can take mental energy as well.  With the end of the tax year looming, they may also decide to take either their gains or their losses; as we know, any deadline will do, when someone is making a decision they find difficult.  December 31st is a clear finish line for many things, and home sales are no different.

Because the volume of unit sales is lower, and because most businesses plan for down time at the holidays, the closing process can progress more quickly at the end of the year, so don't be discouraged if you haven't bought yet.  There is still time!  But don't delay--not every offer goes through, not every inspection turns out well, and other obstacles can arise.  It helps to think of early November as the deadline for signing a contract.

Will COVID change this traditional pattern?  I doubt it.  With more time this year, due to fewer family gatherings and virtually no parties (that aren't virtual--pun intended), sellers can do what's necessary to close, more easily than in prior years. There are even homeowners who have used this pandemic to do major clearing out and decluttering--sadly for me, I am not among them, but I do have clean house envy.  In a telecommuting world, it's important to be able to work from your home, and you are certainly spending more time in it. 

And that's the final factor for this year's prediction--people will be willing to do more work on purchased homes, so that they can nest comfortably going forward.  Their biggest selection criterion will remain location, but that will include open space and distancing.  If a home has those elements, potential drawbacks may matter less. Plus, supply is lower, increasing the likelihood that inspections may loosen up.  All of this should convince possible sellers to go for it.  There's no time like the present!  

Handling Inspections

We have come to think of the inspection period in the housebuying continuum as the second negotiation.  If professionals do thorough inspections of homes, they can almost always find things that are wrong, or that could go wrong in the future. In fact, when we bought our home 25 years ago, so many things were given a "D" condition rating that it's a wonder we could live there--and some of them have never needed further attention.  On the other hand, many things needed fixing, some right away, that weren't found in the inspection.

So, let's say that you are the buyer, and you have ten days to get all the tests you want.  You should get a non-relative professional to check the property, and you will then receive a written report.  Keep careful track of the dates, because your right to withdraw without penalty expires at a certain time, if you do not give written notice.  Obtain estimates for fixing the more serious items mentioned, and think about what you really want to ask for from the seller.  In today's tight market, there could very well be a backup buyer, and you are going to lose the house, if you ask for too much.  Remember that you are looking for defects, not aesthetic choices.  The fact that you'd prefer different appliances does not make that an item for the seller to address.

Ok, now you have a list, with costs.  Put the things you feel strongly about into a list, that you keep as short as possible, and send it to the seller's agent before the date of expiration.  Write it so that you are excused from the contract unless agreement on these items is reached.  In our company's contract, we put a limit on that time, and say that the entire contract is null and void, if agreement on the inspection items is not achieved with seven days of the end of the period.  That limits the chances that negotiations will drag on, and that one party can feel that there is still a contract, while the other is ready to move on.

The sellers will often counter with a list of what they will do, and what they will not.  At this point, you should consider the urgency of any repairs, the structural nature (or not) of those repairs for safety purposes, and any work you plan to do, which might make those fixes moot or cheaper.  Consider other ways to resolve the differences, from having the seller throw in furniture or equipment instead, or giving a lump sum of cash, with you assuming the repairs yourself (which will guarantee that they are done in the way that you prefer).  At the end of the day, it's a gut call about what you can live with, and how much you want the house.  Again, pay close attention to the time remaining to decide.  You may have time for another round of negotiations, or you may not.  Don't insist on things that you will later say you could have given up, unless you are sure that you are prepared to walk away, if you get a negative response from the sellers.

The same is true of the sellers, with the additional caveat that you should agree to any repairs that you will have to make in order to sell the house to any buyer, meaning that you will have to do it for the next person, if you don't do it now.  Remember that you will have to disclose any flaws to other buyers, if they are indeed problems.  Don't let a few repairs stop you from selling to a good buyer.  Time is money, and you will have to start the whole process over.  Don't get fixed on a number that you want to receive, because this is a business decision at this point.

To both parties:  Keep your eye on the closing!

Are you ready for 2015?

I know it sounds ridiculous, in the waning days of summer (hot and humid, to boot!), to be talking about the beginning of a new year.  But we in the real estate industry know the time cycles of our profession, and we know that someone who wants to be in a new home by the end of the year needs to get on the stick right now. 

Labor Day is the traditional start of the fall market--that brief two months when people rush to do what they didn't do in the spring--and we're ready for it.  Buyers suddenly wake up from the dog days of summer to rush into action, and sellers get serious about getting to closing on properties that they want to sell, especially if there are tax reasons for finishing the transaction this year.

Although these two groups can be a very motivated lot, there still needs to be some urgency in the process, since financing issues seem to take an ever-increasing amount of time, and the very end of the year can be tricky for inspections, closings, and other things.  While the first snow may seem very far away, it's just around the corner, and will throw a wrench into dates seemingly fixed in stone. 

So don't be left out in the cold--act now to achieve your 2014 goals!

Last Call

The Wall Street Journal had an article about buying a house for your child for Christmas. I guess it's appropriate that such an article would be in the WSJ, but it's an interesting idea and deserves some thought!

However, for the average person, it's time to think about buying a property as a holiday gift for yourself. If you hurry, and really move on the mortgage and the inspections, you might even get in for the New Year's celebration. We bought our current house that way. We signed the contract around Thanksgiving, and moved in the weekend before New Year's Day. We even thought of the purchase as a present to ourselves, since, at the time, it was our second home. Many people now do that--buying a vacation home now, with the idea that you might retire to it, is increasingly common with baby boomers. After all, how many socks and sweaters do you need? Putting all the gift money together, and doing something big with it, is likely to be the present that you remember--and enjoy--longest of all.

Tough to the Finish

We had a buyer panel a couple of weeks ago, with people who'd bought their houses from us recently. I was surprised at the number of problems that came up right before, or even during, the closing. Two of the three were packed and ready to move before they knew whether or not the other party would be able to perform.

While we in the business all know that the transaction doesn't end with the signing of the contract, even we didn't quite realize that the obstacles in a sale are moving farther and farther down the pipeline. It used to be that the big hurdle was getting the contract signed. Then it was the inspection, and renegotiations after that. Next came the appraisal. Now it's the financing, which is often so problematic that the contingencies last right up until the closing day.

The good news is that all the transactions went through, even though one poor buyer started with six weeks to move and ended with two days. It was also good news that no one thought that his or her Realtor was to blame. It shows, however, that moving (no matter what we tell you) is hard to make easy. Leave plenty of time; expect things to go wrong; don't sweat the small stuff; and keep a sense of humor!

Holding Things Together

Well, activity in the real estate market has certainly picked up, but it's very hard to keep the transactions together until the closing. Agents are reporting that people are looking, they're coming to open houses, they're making offers, and they're even signing contracts. After that point, it gets iffy. Inspections are problematic, but at this point the financing clause is proving the most difficult. Sometimes the buyers don't know how much they'll be asked to put down, and they don't have the cash they need. Sometimes the appraisals don't support the sales price, particularly in neighborhoods where demand is highest. Sometimes the rates or mortgage programs have changed, or the buyers don't have the qualifications they need to get the rate they thought they could. Even when the mortgage is approved, buyers can get cold feet if they know that the bank appraised the property for less than they are paying.

All in all, it proves the old adage: It isn't over til the fat lady sings.