The Insider's Guide to Buying a Home During the Holidays

• Housing inventory is low during the holidays, which means fewer choices for buyers and fewer competing buyers, providing you the opportunity to avoid a bidding war on your dream home.
• While spring and summer are often a seller’s market, the holidays are a buyer’s market, which gives the buyer the upper hand in negotiating the selling price, closing costs, and contract terms.
• By purchasing a home by December 31, buyers can take advantage of deducting mortgage interest, property taxes, and loan interest costs.

Halloween is in the rearview mirror; other holidays like Thanksgiving and Christmas are taking center stage. The "For Sale" signs on homes are often sent packing as seasonal lights and mistletoe replace them. However, for those looking to buy a home without a crush of competing bidders, the holidays can be a great time to use the seasonal slowdown to your advantage.

Benefits of Buying a Home During the Holiday Season

Traditionally, the busiest time of the home-buying season is spring and summer, when the end of the school year draws to a close and the race to find a home before Labor Day begins. But starting your home search during the holidays can put you ahead of the crowd, especially if you use this pre-season to define your must-haves in a home. Let's dive into the many advantages of searching for a home during the holidays: 

1. More Time to Decide on an Offer

The one-two punch of soaring temperatures and sky-high prices during the summer can leave even the most determined buyer feeling defeated. Bidding wars and the pressure to make a snap decision mere moments after visiting a house tend to reach fever-pitch with each passing day.

In contrast, the winter months bring a welcome cooling off to prices and competition. Fewer buyers mean less pressured visits while touring homes. Less pressure will allow for more time to carefully consider the benefits and drawbacks of a house before making an offer.   

2. End-of-Year Deals

If you're buying a new-construction home, many builders have the incentive to finish the year strong as they close their books. Builder incentives can range from higher-end cabinetry to plush carpeting. For many buyers, the winter months offer the opportunity to stretch their home-buying dollar and customize their home with high-end finishes.

Recommended Read: Why Homeownership is an Important Wealth-Building Factor

3. Lower Prices

While many aspiring homebuyers trade in home shopping for holiday shopping in November and December, savvy buyers know that the best deals can be had during this off-season. The law of supply and demand says that when demand goes down, prices tend to go down with it. This means buying during the holiday season can mean that a house that was listed for $200,000 in the spring is listed for $10,000 or even $20,000 lower by year-end. By some estimates, buying in the winter versus the spring can result in savings of $1,500 per year.

4. Potential for Negotiation

While summer can feel like an endless list of concessions that buyers must make, winter puts buyers firmly in the driver's seat. Fewer competitors mean that buyers have the upper hand in negotiating prices, requesting that items such as appliances or carpets be changed, and obtaining assistance with closing costs.

5. Long-listed Houses Can Be Had for a Bargain

Ugly duckling homes that sit on the market for weeks in the summer may sit for months in the winter. If you find the wallpaper, shag carpeting, or neon paint in a home to be unappealing, if not downright ugly, use those warts to extract an even higher discount on the house or to request a replacement of the most objectionable items.

6. End-of-Year Tax Benefits from the IRS

While the IRS (Internal Revenue Service) is rarely in the gift-giving mood, the end of the year brings out a spirit of goodwill in the agency through tax write-offs. Buyers who purchase a home by December 31 are able to deduct their mortgage interest on their primary residence along with their property taxes. Other homeowner-friendly deductions, like moving expenses, may also apply depending on your state. Ho-ho-ho indeed!

How to Prepare to Buy a Home During the Holidays 

To facilitate the home-buying process and make the most of your holiday off-season advantage, put the following steps in place:

Get Pre-Qualified

Begin the pre-qualification process for a mortgage before you start house-hunting. We all know that getting our finances in order before putting in a bid is a must, but the sparkle and glitter of new homes can sometimes cause us to get ahead of ourselves and lose focus. 

Before looking at homes, meet with several mortgage brokers in person or virtually through trusted online platforms. Getting pre-qualified with two or three lenders and then choosing the most competitive among them will save you time in the long run by telling you exactly how much house you can afford. In addition, once you find a potential home, you will be many steps ahead of other bidders who have not gone through the pre-qualification process, raising your credibility in the eyes of the seller.

Loan Approval

Apply for loan approval after you complete the pre-qualification step. Loan approval doesn't have to wait until you find a home. You can start the loan approval process before making an offer on a home. Making an offer with a fully-approved loan is sure to grab the attention of a potential seller, as an underwritten loan is the next best thing to a cash offer.

Hire an Experienced Real Estate Agent

Since inventory is tight during the holiday season and the very best properties are snapped up pronto, make sure to hire an agent who's experienced in the neighborhood or type of property you're targeting and is in the know when new listings become available. In short, your agent should tell you about newly-listed homes, not the other way around.

Do Your Homework

Real estate services associated with buying and closing on a home, the home inspection, the title company, and the escrow agent, for instance, often seem immutable, with no scope for negotiation. But nothing could be further from the truth. Since inventory tends to be low during the holidays, these service providers may find themselves in the giving mood and willing to discount their prices. Therefore, consider any cost included in the closing sheet as a suggested price open for negotiation rather than a firm and final price.

Check Home Features

Be sure to check all features of the home's heating and ventilation system. For example, when viewing a home in the winter, it will be natural to notice if the furnace isn't working well or if you feel a draft when walking near a window or door. However, checking the ceiling fans or turning the air conditioner on won't be as natural. 

While your home inspector will likely assess these, it doesn't hurt to turn them on to see if the ceiling fan wobbles more than you would like or if the air conditioner makes any strange sounds when starting up.

Recommended Read: Nine Key Steps to Buying a Home

The Money Wrap-Up

Many buyers consider the spring and summer months are prime times for the home-shopping season. However, the holidays offer the opportunity to find homes radiating warmth and good cheer by negotiating with sellers, realtors, and real estate service providers willing to provide holiday discounts.