The Worst Day of the Year to Close on Your Home
Spring is the time a young man's fancy turns to . . . home buying! Actually, spring-time's home buying frenzy is not limited to gender preference, marital status nor age. For example, many single women buy homes.
In colder climates, soon as tender tulips burst through the melting snow, first-time home buyers are hitting the streets. Where I sell real estate, in Sacramento, home buyers are clamoring to tour homes the minute rain stops falling.
Spring is typically the hottest real estate market everywhere in the country.
Why Home Buyers Pick Springtime to Buy
Reflecting on my own home purchases, it would appear that, with one exception, I've always bought homes in the fall. But I'm not your typical home buyer. Here are reasons why many home buyers choose spring to house hunt:
- Spring fever. Buyers are glad that winter is over.
- More family get-togethers; there are great holidays in March and April.
- School year is ending. Buyers want to move as soon as school is out.
- More inventory is available. Many sellers decide to list in spring.
- Pre-vacation planning. Some buyers use vacation time to move.
What Day is the Worst to Buy a Home?
It's the last Friday in May. You might argue that Christmas Day is a likely candidate for worst day, but it's actually one of the best times to buy a home.
The problem that arises is not contingent on whether home buyers start looking for a home in February, March or April.
The problem is many eventually settle on a home in April. Then, they sign a purchase offer with a closing date for the last Friday in May. Suddenly, there are a bazillion closings all scheduled for the same day in May. Title companies hate it.
Reasons to Avoid the Worst Day of the Year to Buy a Home
Why is the last Friday in May the worst day to buy a home?
There are many reasons, starting with competition from other buyers and ending with the actual move itself.
- The best new listings sell first and at a higher price. Location plays an important role. If homes in the best condition at appealing prices are located in desirable neighborhoods, many buyers will want them. Competition breeds multiple offers, so, sometimes buyers end up paying more than they had planned on paying.
- You might not close on time. Pending sales often peak in April, resulting in a larger-than-average volume of closed sales in May. Normal workloads for real estate professionals can triple during this month, which can result in a backlog.
- Memorial Day weakens otherwise exemplary service. Many people leave town for long weekends and are unavailable to work on your transaction. Sometimes, lenders can't process loan documents fast enough to keep up with demand. Fewer days to work in the week puts pressure on closers, too, meaning something has to give. So, it might be your file that gets pushed into June.
- A delay in closing could mean paying a higher interest rate. If you have locked a loan for 30 days, that rate will expire at the end of that period. If rates go up -- often rising because demand goes up -- you could find yourself stuck with a higher mortgage payment due to the rate increase.
- Movers charge more. Moving companies know that many people want to move at the end of May. Increased demand equates to higher moving costs. And that's if you can find a mover to hire. Some movers are booked solid every weekend through July. Green moving companies might be more expensive at this time of year as well.
Courtesy of Elizabeth Weintraub