The couple originally listed the home, built in 2003, for $1.2 million during the spring, but then they encountered an unexpected disruption that dampened potential buyer interest.
“Fairfax County began digging a new sewer line with a trench up the middle of the street,” says Bill Cummings, a consultant to ExxonMobil. “The impact on the access to the house was pretty substantial.”
By September, with no offers pending, the Cummingses took the house off the market. Then as the sewer project wound down, they listed it in November and lowered the price. “There is less buying activity at the end of the year, but that doesn’t mean people aren’t looking,” says Bill Cummings.
Like other homeowners trying to sell during the holiday season, the pair is facing a slow market as people put their home-buying plans on hold to enjoy festivities and family visits.
But December’s real estate picture isn’t completely gloomy. The dwindling inventory of homes for sale inside the Beltway is helping to drive prices up, while mortgage interest rates continue to remain historically low.
“That’s a really a good reason for selling right now,” says mortgage banker Cody Kessler with the Real Estate Mortgage Network in Rockville. “Homes are staying on the market for a shorter period of time, and you are seeing multiple contracts because there isn’t much inventory.”
Part of the reason for the reduced number of properties for sale is that sellers don’t want to list in December when fewer buyers are on the hunt. “It isn’t a pleasant time to look at houses unless you are super-motivated,” says District-based Remax Gateway real estate agent Morgan Knull. “It’s cold and dreary, and you can’t see pools or landscaping. It gets dark early, and that can hamper home inspections.”
As a result, January is one of the slowest months of the year for closings on sales, says spokesman Walter Molony of the National Association of Realtors. He points to the association’s statistics showing that home sales across the country this year were highest during August at 476,000 and lowest during January at 260,000.
Home sales in the District reflect the same general pattern. According to monthly market data compiled by Metropolitan Regional Information Systems or MRIS, the dollar volume of home sales in Washington totaled about $203 million in January 2012, compared with about $339 million in August and $266 million in December 2011.
Home shoppers are fewer in number during December than in spring and summer, but the good news is that they are more likely to buy. “You have very motivated buyers looking at holiday time,” says Bowie agent Selma Jager of Long and Foster. “They are not tire-kickers.”
Adds realty agent Alyssa Cannon of McEnearney Associates’ Goodhart Group in Alexandria: “As a seller, you will probably have less offers but more serious buyers. You are not going to be competing with as many properties on the market as in other times of the year.”
With buyers facing fewer homes to consider, there’s a greater chance that your house will attract more traffic. “If you have a great or unique house, it’s going to stand out in the market and show like a gem,” says Kessler.
Because there aren’t a lot of properties for sale in closer-in neighborhoods, Kessler says, “There are a lot of good real estate agents who are looking for business right now. It’s possible you could negotiate a reduced commission.” More importantly, he says, “You stand a better chance of getting a great agent who really knows what they are doing. Now you’ll get their attention since they aren’t spread so thin.”
Since some sellers are eager to unload their properties by the end of the year, buyers are often in a better position to snag a deal. “The hurry to sell means you could have the possibility of a seller more willing to negotiate on the price,” says Kimberly Cestari, a Chevy Chase-based agent with W.C. & A.N. Miller. She recalls ratifying an offer on Christmas Eve in 2009.
Agent Doris Leadbetter of Keller Williams Realty in Reston is selling the Cummingses’ house and says the holiday season attracts out-of-town buyers who are planning to relocate to the Washington area and spend their vacations shopping for houses. “They can use their days off and bring their children with them. Our market is active with government contractors and tech jobs, and many look to buy when they are here interviewing.”
The slowdown at year’s end can also work to a seller’s advantage. “A lot of people are at home surfing the Web and planning New Year’s resolutions,” says real estate agent Michelle Morris of Remax Gateway in Fairfax. “Part of that may be focused on buying a new home.”
With the uptick in the residential market over the past year, Monica Murphy of Preferred Staging in Potomac Falls says she prepared several properties for sale last January that became the subjects of bidding wars. “If your home is already on the market in December, you’ve got a head start,” Murphy says. “The holidays are just a hiccup between the fall and spring markets, and not as big of a gap as in the past.”
A tax break, for now
Selling this month rather than waiting until next year offers tax advantages for some homeowners expecting a windfall after they close the deal. Beginning Jan. 1, a 3.8 percent tax on some real estate transactions will take effect as the result of funding provisions in the 2010 Affordable Care Act.
The new tax does not affect the current tax-free threshold of $250,000 (single filers) and $500,000 (joint filers) of profit from the sale of your principal home.
But you will have to pay the tax if you sell your home for a substantial profit and your adjusted gross income is more than $200,000 as an individual or $250,000 for a couple filing a joint return. That increase could affect “older people who have paid off their mortgages and are now going to sell, not just the wealthy,” says Kessler.
For military veterans and active-duty service members, closing a home purchase before year’s end may offer mortgage financing advantages, according to Debbie Polcyn of First Savings Mortgage Corp. in Bethesda. She says the maximum temporary Veterans Administration loan limit for the D.C. metro area of $838,750 will expire on Dec. 31 unless the VA acts to renew it. That amount is the maximum of 100 percent financing guaranteed by the VA to those veterans and service members with full entitlement.
To speed up end-of-the-year deals, some experts recommend that sellers offer financial incentives, such as paying bonuses to real estate agents who bring a buyer to the table, or covering closing costs. “Tell the buyer you’ll pay six months of condo fees if you can go to settlement by Dec. 31. It resonates with buyers looking for a deal,” says Knull.
Watch the decor
Holiday decor can also be used to entice shoppers to buy. “Most houses show beautifully with decorations and take on the joy of the season,” says Cestari. “With the scent of candles and holiday baking, buyers can get swept up in the feeling of the holidays and see a listing as their future home.”
But stager Murphy warns that greenery and ornaments can make rooms look smaller and distract prospective buyers’ attention. “A tree in the corner can take up a lot of space and a mantel with swags can camouflage a fireplace, one of the best aspects of a house.”
She and others recommend the simplest of holiday decorations, such as seasonal wreaths and non-flashing white lights, and warn against religious touches. “Too much baby Jesus or too much Hanukkah can be a turnoff,” says Knull.
Deborah K. Dietsch is a freelance writer.