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What Adds Value to Lake Homes?

Written by on Monday, 27 January 2014 5:12 pm

Value influences on “normal” properties are many, when buyers begin the evaluation process on secondary or vacation homes they exponentially multiply. Of course those normal concerns are there (condition, area, appeal) but due to the unique nature of vacation homes and specific desires of buyers, characteristics that are often held in a lower priority or even absent with “normal” homes become important.

Lake Sidney Lanier is located in the in NE part of the greater metro Atlanta market. It is is one of the most popular second home destinations in the area, it’s also a lake that attracts many full time residents. A great fishery, very diverse lake with broad appeal and easily reached, most folks around Atlanta have been there at least once and many on a regular basis. We have worked with primary and second home buyers on and around this lake since ‘94; not only buying and selling, but appraising vacant lots to multimillion dollar estates. There is a consistent theme here; opinions tend to be valued as much as factual data, and that can make things tricky.

This is not limited to Lake Lanier; whether on a lake or river, the ocean, in the mountains or on the slopes, factors contributing to value and appeal vary. How much each of these factors contributes to value also varies; the “value in use” to the owner may not be the same to the buyer. The value placed on different features of the property by the owner may not be shared by the buyer. The challenge then becomes trying to find comparables to develop an idea of what values the market places on the features most coveted by the seller and buyer. And for most second home markets, that’s where things can get tough.

Using Lake Lanier as a model just a few of the variables present (obviously thelake-lanier variables are unique to the type of home under consideration):

  • Size of the home, designed to enhance the setting?
  • Condition of the home
  • Size and terrain of the lot, distance to water
  • Easements, rights of way, private roads, HOA requirements, fees
  • Utilities available and installed
  • Lake views – seasonal or year long? Ability to manipulate the site?
  • Terrain – sharp decline to home, erosion, retaining walls, useable area around home
  • Slope to the water and improvements (steps, path)
  • Dock? Size, condition of the dock, accessories like power, lifts and slips
  • Water depth on managed lakes, flood control, power generation
  • Water depth at the dock, can dock be moved as/if needed?
  • Lake management type – private, Corps of Engineers, power companies?
  • Ownership rights – fee simple, leasehold, deed restrictions, limits by COE or other entities?
  • Access to and from major population centers – how long of a ride for the second home buyer? Access to essentials and services?
  • Demographics in the general and immediate area – median values?
  • Value in use for the buyer – does the home fit the buyer’s requirements?
  • Can the home be rented if desired?
There is a demonstrated tendency for most agents (not all) to embellish the features of a home in order to secure a listing. This can be difficult to avoid with second home owners; clearly they have enjoyed their home and have a sense of pride in it, they want an agent to convey that when it’s marketed. However, it’s incumbent upon that agent to properly research the current data and provide that to the owner; to explain it and to ensure that they understand that as nice as the home is, the data must be considered. Saying “the lot alone is worth a million” when there is absolutely no basis for that and the home has been sitting for months at 800K undermines credibility. A home is worth what the market (the buyers) are willing to offer.

Advising buyers and sellers on Lake Lanier over the last twenty years and appraising here just as long reinforces a consistent theme; very few homes have everything. This isn’t unique to Lake Lanier; finding the right lot, view, location and myriad of other “must haves” is a challenge that’s infrequently met. Buyers with a clear definition of success, a good “must have” and “like to have” list that work with an experienced agent will find a good value. The same rules apply for any home search but the stakes are typically higher with second homes.

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