Holiday Home Sales Bring Added Stress

Holiday Home Sales Bring Added Stress

Buying or selling a home is the last thing most people want to think about this time of year. But for those in the holiday-season real-estate market, there are ways to avoid hassles and downsides — and maybe even profit from the timing.

Take Michael and Lea Sterling. After seeing home prices soar in the Monmouth County, N.J. area, the frustrated would-be homeowners are hoping this season’s holiday rush will keep rival buyers out of the market.

“I have a price range that is low for our area, so there’s not a lot of selection to begin with,” Mr. Sterling says. “But I think the holidays is a good time to shop for houses because there will be less competition for what’s out there.”

Unfortunately, while the competition may be less fierce, the pickings may be slim. Homeowners tend to avoid putting their homes on the market in December, unwilling to have their families’ lives disrupted by home shoppers and curious neighbors traipsing through their homes.

Others choose to wait until the traditional spring home-buying season, when a greater number of buyers means homes are likely to attract multiple offers.

The good news for buyers, though, is that the homes that are for sale usually are hitting the market because the homeowner is under pressure to sell.

“People who are selling homes at this time of year are often dealing with special circumstances — maybe they’ve recently divorced or have to relocate for their jobs,” says Bill Supple Jr., president of Picket Fence Preview, a producer of “for-sale-by-owner” publications in Burlington, Vt. “So these sellers are highly motivated, which for the buyers is half the battle.”

Despite the stresses, buyers and sellers alike can turn home shopping this month into a smart move. Here are pointers for those intrepid enough to dive into the real-estate market this season.

Keep It Bright and Simple, Sellers

Holiday home sellers not only have to contend with a smaller pool of potential buyers. They also have to deal with the stress of having strangers peeking into every nook and cranny amid the holiday din.

Real-estate experts generally advise home sellers to go with what works all year around — paint the walls neutral colors, remove all excess clutter, keep the house clean and tidy, do what you can to enhance its “curb appeal” and be willing to show the home whenever possible. But this season brings its own added nuances to each of these chestnuts.

Don’t Ignore the Holidays … Don’t forego the Christmas tree or do away with your usual Hanukkah celebration because your home’s up for sale. Just stick with the less-is-more approach. Seasonal wreaths, twinkling lights and festive home decor can all add charm and warmth to your home. But a tree worthy of Rockefeller Center or a garish light display that puts a strain on your town’s electric grid poses a distraction when you need buyers focused on your home.

Keep Gifts Out of Reach. The prospect of having strangers tour your home when you’re not around is always unsettling. But this time of year, when heirlooms, expensive holiday decorations and gifts are on display, it can be downright dangerous. “I caution sellers to be very careful about who you let into your home around the holidays because you don’t want people looting what’s under your Christmas tree,” says C.D. “Chip” Boring, owner of RE/MAX Realty Plus in Sebring, Fla. So go ahead and decorate your home, but keep gifts, cherished decorations and your best china packed away in a safe place.

Use Light to Your Benefit. It often isn’t possible to get a fresh coat of paint on the walls in the middle of the holidays. On top of that, the dark days of December don’t make things any cheerier. “People are looking to buy space and light, and in December you tend to have many more darker days,” says Myra Zollinger, a realtor with Coldwell Banker Realty in Chapel Hill, N.C.

But all is not lost. Use the festive occasion to brighten up your home. Holiday lights in the windows can be a particularly nice touch. And if you’ve got a fireplace, get it going before buyers tour your home. (Fire Marshall Bill alert! Just make sure the flames are far enough from holiday decorations to avoid fire.) “You also want to make sure the walkway is clear and that any outside lights are on,” Ms. Zollinger says.

Give Them a Sense of Smell. Heat apple cider and cinnamon on the stove to scent your home with the delicious smell of the holidays, and maybe put out a tray of baked cookies or holiday candies for buyers. The idea is to radiate the warm sense of hominess buyers are seeking. Just don’t go overboard with the aromatherapy. “Remember that a lot of people can’t even walk into stores that sell scented candles because they have allergies or their senses are just too sensitive for it,” Ms. Zollinger says.

Brace for Delays. Time may be a determining factor on whether you accept a bid, but even under the most ideal circumstances problems may crop up that delay the closing. Since a number of professionals — lawyers, realtors, home appraisers, inspectors, loan officers — may be necessary to bring the sale to its conclusion, it’s likely holiday plans and travel will make scheduling tight.

“Buyers and sellers sometimes assume that realtors and other professionals are there 24 hours a day,” says Steve Goddard, a realtor with RE/MAX Beach Cities Realty of Manhattan Beach, Calif. “But this time of year they may be not immediately available.” When possible, work with your realtor and buyer to schedule appointments before the last two weeks of the year, when many businesses are closed and workers are away on vacation.

Don’t Swing at a Low Ball. If your home is in one of the many real-estate markets that continues to see strong demand, chances are you’re likely to get offers at or near your asking price even at holiday time. But home prices have leveled off in many areas of the country, and that may embolden buyers to offer a sharply lower bid than you’d typically see during the hectic spring shopping season.

Depending on your circumstances, their offer may be right for you. But before you take the first offer tendered, evaluate the total costs involved in selling your home (realtor fees, moving costs, etc.) and decide whether you can afford to accept a price that’s lower than what you’re asking.

And Think About Taxes. If you’ve owned your home for at least two out of the last five years, you’re allowed to exclude up to $250,000 ($500,000 for those married filing jointly) of any gain on your home sale. But if you’ve owned your home for many years and live in an attractive location, you may be looking at a profit that exceeds even these generous levels. If this is the case, think carefully about setting a closing date. If you have significant losses this year, it may be wise to try and schedule the close in December to offset the gain this year. If, on the other hand, your personal income is likely to be significantly lower next year, closing in January may let you benefit from lower capital-gains rates. Consult a tax specialist for advice.

Buyers, Make the Most of Your Bid

Obviously most homebuyers would like to be in the market when there’s the largest possible inventory of homes, but that isn’t always possible. Would-be holiday homebuyers tend to be highly motivated to buy a home for personal reasons — maybe a lease is set to expire on an apartment rental or there’s a need to move a family to another location before the end of the school winter break.

Other home shoppers view the holidays as a window of opportunity, says Robert Irwin, author of “Home Closing Checklist.”

“Savvy buyers realize that sellers aren’t going to have as many offers, and sellers may be more interested in looking at offers they may have turned away other times of the year,” Mr. Irwin says.

The important thing here is to avoid letting the anxiety of home shopping during the holidays rush you into buying a house that you aren’t crazy about just for the sake of getting into a home, or push you into buying a bigger house than you can afford.

If you have found a home that fits your lifestyle and budget, there are a number of ways — some applicable all year around — to raise the odds that your offer will come up a winner.

Show You Can Pay. The must-have home-shopping document this season? A letter from your lender saying you’re preapproved for a loan, subject to the home appraisal and survey, Mr. Irwin says. “To at least be a player, you’ve got to be preapproved for the loan, and the lender has said it will loan up until a certain amount,” he says. “Prequalified just means you appear to qualify for a loan.”

Up What You Put Down. When a seller needs to have a deal done by the end of the year, money talks and promises walk. A large down payment will give the seller the confidence to take the home off the market because you have more on the line if the deal falls through. So do what it takes to claw together the biggest down payment you can afford.

The holidays offer the perfect excuse to hit up parents or grandparents for financial gifts (they can give up to $11,000 each, tax-free). Also, the fact that you’re home shopping gives you a great excuse to stick with inexpensive “it’s the thought that counts” gifts and skip pricey presents for friends and family.

Be Flexible With the Close. While it isn’t always practicable for buyers this time of year, you may win a homeowner over with a less-than-attractive bid if you allow the owner to set the closing date — whether they want to move fast or take their time until the holidays are over.

Remember to Sell Yourself. Try to make a good first impression should you get a chance to meet the seller, either at an open house or on a walk-through, says Mr. Goddard of RE/MAX Beach Cities Realty. He also suggests writing to the seller. “What I’ll do is have a buyer write a letter saying, for example, how they grew up in the area or how much they’ve always loved this house and want to raise their kids here,” he says. Sending your letter along with a holiday greeting in a seasonal, nonreligious greeting card can also help to set your offer apart.

And Don’t Fret About Taxes. Though significant tax breaks accompany homeownership, don’t rush to close a deal in December thinking you’ll reap huge benefits on your 2003 tax returns. Even if you close this year, you probably won’t make your first mortgage payment until February. As for any “points” you pay to get a lower rate, you’ll get the benefit this year or next. The difference isn’t so great that it should rush you into making a bad decision.

— Ms. Cullen writes the Fiscally Fit column for The Wall Street Journal Online.

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