Opportunities and Pitfalls of buying over Christmas
By Justin Eslick
This is an article we update and release at this time each year, as a reminder of some of the considerations of buying through the Christmas period.
Christmas is a time of many indulgences, from excesses in food and drink, to large gatherings of friends and families, to time in the sun and sunburn. It is easy to see why some people may not be thinking clearly when it comes to property at this time of the year and why many people find it easy to put it on the back-burner. But this shouldn’t be the case as this time of the year should spell OPPORTUNITY for investors. Providing they think it through. Let’s explore.
No doubt the major hurdle is the timing and everything that this brings. Have you ever tried to get anything renovated or repaired the day before Christmas? How about a building inspector before the New Year? It is never easy. Not to mention all the soldiers that make up your army that close their doors at this time of year – accountants, solicitors, financiers, inspectors, real estate agents, property managers, handymen, town planners, etc. etc.
The list goes on...
Never the less this should not be an excuse for avoiding the purchase of property. You just need to take these things into account and be up to speed on who is available and who isn’t.
The easiest approach is to make the agent aware that there are likely time delays. They are more willing to accept longer conditions as a result. Don’t forget also that they themselves might be planning on a little bit of Christmas time-off and may even appreciate the delays. Real estate agents take very few holidays, so when they do go away it can be very difficult to reach them!
Further supporting the potential for lengthier conditions is the fact that there are generally less people looking to buy at this time - regardless of the state of the market. This enables greater freedom for negotiation and who knows, as a result you may pick up a bargain!
The question must be asked also, "What if they won't accept lengthier conditions?" You have three options.
- Have everything in place so that the timing is not going to be an issue (can be very hard!).
- Minimise the appearance of these delays. The term ‘business days’ in contracts is well known, but it takes on a whole new meaning during the Christmas/New Year period. For example, the term ’14 business days’ on a contract signed on the 23rd December 2015 actually equates to a total of 28 days!
- Walk away. As mentioned there are less people looking at this time of the year, so the chances of the agent coming back to you are greater than usual.
You will have already picked up on a couple of the positives of buying just prior to Christmas. The first obvious one is less people looking equals less competition, which means greater flexibility in negotiations and a better chance at securing deals.
The other obvious positive is in the potential to increase timeframes and the longer you control a property (in a rising market) without actually owning it the better.
Another great outcome of buying at this time of year is that settlement will often be in January to early February – peak rental time!
To fully appreciate some of the potential this time of year can bring, you need to understand the selling and marketing process for a property.
Traditionally and in a normal market a property is listed with a four week advertising campaign and a 90 day exclusive agency (in QLD). Naturally as a result there are less properties listed from around the end of November and start of December, which makes you wonder why someone would list after this period in time. In most cases it is because people either don’t have a choice (one of the dreaded ‘D’s’ – desperate) or they don’t quite realise the ramifications. It is not a good time to be a ‘D’ either. What if you list two weeks before Christmas and there is very little interest in the first of those weeks? All of a sudden you are looking down the barrel of three or four weeks of inactivity. That hurts.
Get into the mind of the agent also. They have 90 days of exclusivity, after that there is no certainty. But they can very easily lose 1-3 weeks of that due to Christmas and the New Year. This prospect, plus the attraction of selling ‘one last property’ before Christmas can really get them working in the buyer’s favour.
One last tip for those looking at traveling over the break. Do not buy any property while on holidays in a market you do not know! There are so many stories out there of people who return from holidays, having placed under contract a beach shack or holiday apartment. In most cases, they are in locations where they do not know the market intimately. Generally it is the euphoria of being on holidays that makes any holiday purchase look good. For those of you who can't help yourselves, by all means look, but make sure you come home, do your research and investigate the market before buying that holiday home. It is amazing how different things can look once the holiday is over.
Merry Christmas and I hope that after reading this article there are a number of people who look towards Christmas with a slightly different mindset.
If you would like help in buying property in Brisbane - at any time of the year - then click here to read about our Property Source membership.