4 Reasons Why You Should Buy a Home in the Winter

We get it, buying a home and moving in the winter is likely not your first choice as a homebuyer, especially here in Duluth. The temperatures can be downright unbearable some days and unpredictable snowfall can make it difficult to get out your front door, let alone moving altogether. Just the thought of carrying boxes through the ice and snow gives us the heebie-jeebies. 

With that said, it is because of these environmental factors that can give you the advantage as the buyer, even in a predominantly sellers market like it has been in recent years. This applies not only here in Duluth, but across much of the nation. Many people avoid buying and selling in the winter altogether, but not everyone wants to pay top dollar to wait until the spring or summer seasons.

Here are our top 4 reasons why you should buy a home in the winter:

Reason #1: Less competition

This should be obvious, but we feel it is necessary to point out because it is one of the biggest advantages of buying in the winter. Although there is a lower supply of homes to choose from the lack of demand opens the door to potentially significant savings on purchase prices. Many buyers will punt their search efforts during the holiday season and deep winter months in favor of spending time with family, splurging on vacations to escape the cold, and/or buying gifts for loved ones. If you are serious about buying a home during this time of year, you’ll likely have to make sacrifices in one or all of these areas--a sacrifice many people simply aren’t willing to make. 

The other element that largely dampens the competition from buying in the winter are the unknowns of our unpredictable weather. If you live in the Twin Ports, or anywhere in its surrounding area, you are aware of the term “lake effect” and it’s uncanny ability to strike at the most inopportune times. You could be finishing packing boxes the evening before you are set to move into your new home, and by noon the next day, the ground could be covered in a foot of snow with little warning. This uncertainty causes many buyers to discard the thought of buying in the winter entirely. Not to mention the temperatures that can dip to -15 and lower with wind chill. If you are able to be patient and flexible with your move in date and brave the elements when the time comes, you will very likely reap the rewards of doing so. 

Here are some of the key benefits of less competition as a buyer:

• Higher likelihood of the seller paying for some of the closing costs, including:

  • Home inspections

  • Appraisal fee

  • Closing fee

  • Survey fee, and other costs

• Lower chance of multiple offer situations

• Higher likelihood of purchasing a home with a low offer.

Reason #2: Sellers are more willing to make a deal

Partially due to the reasons listed above, sellers are generally more willing to make a deal if they are selling their home in the winter. Not only is there less competition from buyers, but there are likely other external factors that have forced them to sell outside of “busy season”. It is also not uncommon for sellers to make a deal quicker and at a lower price than what they may have under different circumstances.

Seller motivation is typically increased in the winter because of:

• Fewer offers and lower chances of a bidding war. 

  • This may also cause the seller to agree to an offer lower than their asking price if they cannot wait until Spring to sell. 

  • A word to the wise: If a house is new on the market it doesn’t necessarily mean you should put a low offer on it as there may be other interested buyers. If a house has been on the market since the summer, then you can start looking at a price reduction. Sellers that drop roughly 3% of the price are indicating that they are motivated to sell. Anything less likely won’t give you the encouragement to offer something significantly lower than asking price.

• Higher utility costs to heat the home.

  • This is even more frustrating for sellers if the home is vacant and sitting on the market during the winter months, as they are essentially throwing money in the trash to keep the home heated.

• Personal reasons. 

  • As we mentioned above, there is usually a reason why someone is selling their home in the winter. The most common reason we experience is that the seller landed a new job and is forced to relocate. In these scenarios, time is on your side and you have the upper hand as the buyer.

Although sellers are more willing to make a deal during the winter months, don’t abuse your leverage when making an offer or you may risk losing the deal. Even if you will be making a low offer on the home, try to put yourself in the shoes of the seller before making an offer that might be too low. Buying and selling homes is a very emotional process for most people. You’ll never know the personal connections a family has to that particular property they’re selling and this will likely impact their decision making. It is important to remember that and be considerate of the other party when going through the negotiating process. 

Photo courtesy of State Farm

Reason #3: You can evaluate the home in extreme conditions

Duluth is well known for its winters and one of the most important questions you may have about your new home is “how well does it hold up?”  If you are buying in the spring and summer, only time will tell, but if you are buying in the winter, you will be able to evaluate homes in the most extreme conditions. Of course, you’ll be able to review past utility bills based on current homeowner usage for a general idea of heating costs and draw your conclusions from there, but they won’t tell the whole story. You’ll be able to feel if there are any drafts in the home and inspect if the windows hold heat or not.

If you are looking for a home outside of the city limits, one of your biggest concerns may be the septic system. Septic tanks are extremely susceptible in the winter and can be very expensive to fix or replace. Unless the seller has a valid certificate of compliance, the winter conditions will prevent the county from being able to complete a full inspection. Regardless, your lender will typically require the seller to hold money in case something isn’t compliant come spring. This will protect you from having to cover any unforeseen repairs and updates. Pipes can also freeze in older and poorly insulated homes so evaluating a home in the winter can help you avoid the surprise of a flooded basement on those coldest of days.

One disadvantage you may have when evaluating a home in the winter is the roof. Depending on the amount of snow present your home inspector won’t be able to fully determine its condition. On the flip side, observing how well the house holds up to ice dams is definitely a plus. A poorly insulated roof may cause excess heat to leak out and melt the snow towards the top of the roof, causing water to run down and freeze into an ice dam towards the lower edges. Water may also get trapped below the surface and leak into the home’s walls, attic and ceiling. You can save yourself significant funds and heartache by knowing this before making an offer.

Reason #4: Homes close faster

For many of the same reasons listed above, homes will typically close faster in the winter. Additionally, the quieter housing market during this time of year means that lenders, title companies and appraisers are far less busy than they are during the spring and summer. Lenders alone are on average 20-30% less busy than in the peak buying & selling seasons and they are often the determining factor for how quickly a sale will process. Home appraisals will also come back faster, inspections will be completed quicker, and sellers will be more open to negotiate especially if the home is vacant.  

Bonus Tip: Monitor interest rates

Although it is not always the case, you may be able to secure a lower interest rate on your mortgage if you choose to buy a home in the winter. This is not always the case and the market will ultimately decide what the interest rates are at any given time, but it is something to keep an eye out for as you look in the winter. When you lock in your rate is very important regarding the rate you receive. 

With that said, the recent impeachment of President Trump may cause rates to spike in the near future. Typically, political uncertainty causes lenders to be more cautious and rates tend to rise. This is why it is critical to stay up-to-date on market trends when you are looking to buy.

In The Mortgage Reports’ January 2020 mortgage rates forecast (FHA, VA, USDA, Conventional), Editor Tim Lucas writes:

“January could be a wild ride for mortgage rates. Market-moving news will leave rates different than they were in December. Forecasts for 2020 say rates will average around 3.7%. However, that doesn’t tell you how high or low rates could go throughout the year. Rates could be 4% for six months and 3.4% for the next six months and you still get an average of 3.7%. But when you lock matters a lot. Rates are hovering near 3.7% now according to Freddie Mac data, so it’s an excellent time to lock in and eliminate the risk of higher rates later.”

Photo courtesy of Tim Lucas, The Mortgage Reports Editor

We strongly recommend reading Lucas’ article if you are looking to buy in the next year or so as it will provide you invaluable insight into the mortgage rate you may receive. It will also prevent you from getting caught off guard if rates spike in the near future. 

If you are planning to buy a home this winter, we encourage you to stay patient and stay warm! If you have any questions, we’re always happy to sit down over coffee or a phone call. Feel free to drop us a line!

Cheers,

Marta Swierc, Realtor at Jordan DeCaro Real Estate Team