One of the best times to buy real estate is the last six weeks of the year. Often, that will be:
1. November 1st to December 15th, in the case of residential sales,
2. November 15th to December 31st in the case of commercial real estate.
This six week period of opportunity occurs perennially, not just this year.
This is the period when buyers begin to lose interest and decide that their time is better spent with friends and relatives than looking for real estate.
Fewer buyers means an increased opportunity for those buyers who decide to stay in the market. By this time of year, many of the properties have been “on the market” for months. Whether it technically appears as a new listing or not, the properties have been available previously throughout the year. This translates into a worrisome matter for some sellers. They get anxious, upset and nervous.
Year after year, sales conducted in the last few weeks of the year are undertaken at the same values as may have been seen in the early Spring. So, you will find some of the best deals at this time of year.
Why not wait until Spring? The problem is that Spring is the busiest time for residential sales. Home builders will look at their inventory and decide whether it’s time for a price increase. As soon as the builders raise their price, the resale market moves up too. Additionally, in the Spring there will be a new influx of buyers into the market. Increased demand translates into higher prices. And, each year, the market usually peaks (from a price perspective) in the Spring. The opportunities are now!
The second peak in the market takes place usually on Halloween. After that, the market starts to drop off, somewhat. This same cycle is repeated year after year.
Let’s have a look at the market from the seller’s perspective. Your property has been “on the market” for months and it hasn’t sold. This frequently means that it was overpriced (if you had no offers), poorly marketed (if you had no showings), or poorly negotiated (if the offers did not result in a deal).
The reasons don’t matter all that much; the fact of the matter is that your property didn’t sell, you still have it, and you can’t do anything else until you move it.
Sellers should do their deals now: lower the price, step up the marketing campaign and negotiate. Oftentimes, there are two deals to get done, not just one. So, sell, then buy! That’s the safest course.
If you have a buyer, then negotiate with this particular buyer right now. Otherwise, you’ll just have to wait until next Spring. And what you get extra, you’ll have to throw into your purchase. Maybe, the deal won’t actually close until the end of June. The best time to negotiate could be right now. So, sit down, get realistic about the price, do the deal and get it closed. That allows you to move on to your next investment.
If you are the buyer in this scenario, this seller is the exact person from whom you want to buy a house: an anxious, nervous vendor who is willing to negotiate.
Other than the good price, is there any other upside for the buyer? Well actually, there might be two fairly immediate benefits. The first is that, come early in the Spring, the value of the house will move up with the market. This will represent a whole year’s price escalation in just a couple of months. The second has to do with mortgage rates. Lenders who have not placed all of their funds for the calendar year will be anxious to get the money out before year end. These same two factors will present themselves year after year.
Strictly from the commercial point of view, some buyers will want to complete any deals before the end of the calendar year. They get to deduct depreciation (although at half rates) for all of the calendar year. That’s quite a benefit. It means that the amount a commercial buyer could offer on the first of January would be less.
So, good luck and get that deal done.
Brian Madigan LL.B., Broker