It may be cold outside, but lenders and
home sellers will give buyers a warm welcome
By Michael D. Larson • Bankrate.com

Try to picture what it's like being a mortgage lender or Realtor right now. The phone isn't ringing. Homes aren't hitting the market. The wind howling outside is nothing compared to the boss howling inside about those last few loan files that haven't been closed yet. Shouldn't buyers feel some pity?

Heck no, according to real estate experts. Now's the time for mortgage hunters in many parts of the country to pounce, they say, because only the most eager sellers and lenders try to get deals done at this time of year. As a result, price cuts, closing cost incentives and other bonuses await buyers brave enough to withstand the wind chill.

"The holidays slow people down. They slow the Realtors down. They slow the lenders down," says Terry Eilers, a Browns Valley, Calif., author who wrote How to Buy the Home You Want, for the Best Price, in Any Market.

"If you really want a deal in Alpena, Mich., go out and buy your home in January because you can't find the sign sticking out of the snow. They're desperate at that time."

How slow can it get?
Just how slow can things get? It varies over time depending upon the state of interest rates, employment, stock prices and other economic measures. But year in and year out, all of the real estate indexes show the same thing -- a significant drop-off in lending and housing activity during the December-to-February period in most areas.

"The home buyer season is more spring and summer," says Bud Carter, senior director of residential finance at the Mortgage Bankers Association of America in Washington. "Business does slow down a little bit, particularly in the winter."

Buyers can benefit from the decline in activity in several ways. On the home pricing front, they can save a few dollars because there aren't as many bidders chasing property. The lack of competition encourages some sellers to accept lower bids and prevents others from pitting several interested parties against one another. Because people who sell at this time of year tend to be those who really need to, buyers will often find they have even more clout.

"If you want to make the deals, that's the time to look," Eilers says.

Of course, financing a home can be trickier than getting a good price for one. But winter holds some pleasant surprises there as well, especially this year.

Doling out the perks
Consider that buyers traditionally have been able to find more closing cost coupons, fee discounts and other bonuses this time of year. That's because brokers and lenders have less traffic coming through their doors. But late 2000 has been much quieter than late 1998, when super-low interest rates spurred record numbers of homeowners to refinance. As a result, companies are even more inclined than usual to dole out the perks.

"There's no question around the country you're going to see lower closing costs or lenders trying to kind of keep their factories humming," says Brad Church, president of Wachovia Corp.'s mortgage division. The bank is headquartered in Winston-Salem, N.C.

"They're perhaps going to subsidize their rates and prices a bit and your closing costs might be $250, $500 less."

Borrowers will find the lender's office much less harried than the mall this time of year, too, according to Church. Loan officers can take applications with less hassle and process paperwork in less time, allowing consumers to close more easily.

"With volume down, we're not going through the refi craze, so we're able to take care of our customers better," he says.

Seasonal benefit does vary
Still, the seasonal benefit for buyers varies by location. In South Florida, for instance, there are many more people -- and potential house hunters -- milling about between December and Easter because that's the tourist season. Ski resort towns and regions with red-hot growth, such as Silicon Valley or the Greater Boston metropolitan area, may not see much slackening either. Even places that consumers might think would cool off with the weather don't because of localized market phenomena.

"Here in this area of Montana, we're the fastest-growing area in the state," says Bob Evans, a broker with Real Estate Brokers of Montana in Bozeman. "The demand is high here and it's somewhat of a seller's market in most price categories."

In many places, though, buyers who shop around the holidays can find the perfect Christmas present without Santa's help -- especially since this winter's shaping up to be positively Grinchlike for lenders.

"There are some companies in the last couple of years that have done very well from an income standpoint but are finding it's very difficult to work in this kind of environment," says Alan Cohen, a branch manager with Irwin Mortgage Corp. in Indianapolis.

"They may be looking for year-end numbers or are looking to generate some income, so it's not uncommon that you'll see coupons for closing costs or other types of incentives," he adds. "It's geared toward a slump in sales."