Get A Jump On 2017: Buy Real Estate In Winter

Winter is known as a slow time in the real estate business, but it doesn't have to be. While some markets wind down, others pick up -- and it's entirely possible to buck seasonal market trends if you know what you're doing. If you're a savvy investor, you'll find plenty of opportunities to build your portfolio and grow your investments during the winter months. Here are some considerations that will keep your investment portfolio warm even during the coldest time of year.

Are Winter Sales Really That Slow?

You might already be aware that real estate doesn't slow down nearly as much in warm weather climates during winter. If you're looking to buy and sell in Florida in the winter, you might have a fight on your hands! That said, November-February are the slowest four months of the year, accounting for about 27% of annual home sales. In contrast, the peak selling months of May-August account for 40%.

The traditional wisdom is that real estate lags because no one wants to move during the school year. This may or may not be true. Parents of school-aged children only account for about 1/3 of homebuyers at any given time -- though they do tend to buy larger homes to accommodate their growing families. It's more likely that the prospect of house-shopping and moving in winter is simply unattractive to the average buyer. That said, while summer might be the easiest time to sell and relocate, some situations force homeowners' hands. After all, new jobs and transfers account for 9.7% of moves in a given year. Commercial and rental properties are out there, too -- and existing tenants don't have to move just because a property changes hands. So don't write off cold weather as a reason to stop shopping.

It's Cheaper to Buy In Winter

Here's the upside of reduced sales volume in winter-- it's a buyer's market. Prices typically drop during this period of lower competition, and you're in a better position to negotiate. In fact, while everyone else is out shopping for holiday gifts, you should be shopping for real estate. The lowest housing prices of the year are generally on January closings, which means those houses go under contract between Thanksgiving and Christmas. If the owners are currently in residence, consider sweetening the pot by offering to let the sellers move out after the holidays. It's not likely to slow you down-- many professionals connected to real estate sales take vacations at the end of December, anyway.

Buy Off-Market Homes

Pocket listings, so called because realtors keep them "in their pockets" instead of listing them, are another interesting avenue to consider. Have you ever seen a property that's been sitting on the market for a long time? Let's run down the list of problems we all speculate about when we see a listing like that: foundation or roof issues, major system failures, termites, asbestos, radon...if you've got better options, that building's sinking to the bottom of your list. But appealing investment properties can sit because the market is slow, too. Owners who are trying to avoid this problem sometimes sell by word of mouth, and keep the property off the MLS listings. A good realtor will know a market well enough to have the buzz on pocket listings. And owners who never have to go to the trouble and expense of staging and showing a property are often disposed to negotiate.

On a side note, while winter home inspections present some unique challenges, such as getting a good look at the roof or foundation if they're buried under snow, you're also more likely to spot leaks or water problems in the basement. And since it's a quieter time for home inspectors, they're more likely to be able to stay if you see something that merits a closer look.

Winter's A Great Time to Remodel

Winter also offers a window of opportunity to drive down prices on renovation, for several reasons. For one thing, the slower season means it's easier to nab contractors who might be booked solid in the summer. Since suppliers are also experiencing reduced demand, your materials costs could go down. And if you're putting in new appliances, the period between Thanksgiving and Christmas is a terrific time to snap them up.

Winter weather can also be beneficial to work crews who are putting in foundations and framing buildings. Cold temperatures mean more "dry" work days, and winter precipitation can often be plowed without creating any delays. So, if you're planning an addition to an existing structure, this might be the right time to start.

Get A Jump On the Busy Buying Season

If you're buying and renovating in winter, you're ahead of the renovation game. Since the bulk of investors procure and renovate properties during the busy months, they tend to hit a lot of renovation benchmarks at the same time and are in direct competition for contractors and materials. Since you're upgrading during the off season, you won't have that problem. Instead, you'll be perfectly positioned to attract fair-weather buyers in the spring and make a tidy profit. That said, you might not need to! If you've got properties in an area that's short on listings, you can list them strategically to fill market gaps...or even create buzz around a few pocket listings of your own and see what happens.

So, let's sum things up: there's plenty out there to buy, and fewer people competing for listings. Buying in winter gets you more attention from agents and better access to contractors. You can save on materials you'll need for renovations and be ready to sell before your competitors. What's not to love about this scenario?

If you've been moping because you thought you'd be trapped in an investing lull until spring, think again. Then do a little digging. Those gems you snap up while others are napping are the most satisfying ones. Besides, won't it be fun chatting about the properties you've sold in 2017 over a beer at a Memorial Day cookout?