Buying a Beach Home?

There’s Something Here for Everyone.

With lower prices and great interest rates, people are thinking this might be the year to purchase an Outer Banks property. From oceanfront to soundfront and everything in between, the variety of properties available here can be overwhelming. To help you save time in your property search, this article will describe some of the pros and cons of the general segments of real estate here.

Oceanfront
There is nothing like going to sleep listening to the waves wash up against this barrier island or watching the sun rise over the Atlantic promising another day full of joy and fun. The beach and the ocean are why most people visit or live here, and every square foot of oceanfront is generally more expensive than anywhere else on the beach. Prices in this location range from the mid $200,000s for a small older condo to multi-million dollar mansions with guest quarters. There are a few new and exciting oceanfront projects being offered today. Matt Whelan, a Senior Broker Associate for Village Realty, recently stated, “You have to see the amenities of the ultra-luxurious Croatan Surf Club to believe them.” Besides the proximity to the beach and the views, oceanfront properties book faster than properties off the ocean. If rental income is important to you, buy as close to the ocean as you can. Windows, doors and shingles tend to have a shorter lifespan closer to the ocean due to the sea breezes. But, regardless of these additional costs, owning an oceanfront property has its rewards with the fantastic views, the short distance to the water and the tremendous rental income potential.

Oceanside of Main Thoroughfare
Throughout the Outer Banks there is one main thoroughfare, locally known as The Bypass and officially as U.S. Highway 158, that carries the majority of traffic up and down the Outer Banks from Kitty Hawk to Nags Head. North and south of these two towns, the main thoroughfare becomes the two-lane N.C. Highway 12. (Additionally, there is the two-lane Beach Road that runs parallel to The Bypass in the Kitty Hawk to Nags Head areas, but for delineation purposes in this article, we use The Bypass as our reference point.) The Bypass can be difficult and dangerous to cross during the busy summer season unless crossing at a stoplight.

Homes here are still in the beach zone and make great vacation rental properties. Many homes in this oceanside area have good views of the ocean, and getting to the beach may take only a minute or two. Some oceanside areas have high elevations and can overlook the houses in front of them. Prices in this area vary from less than $200,000 for a small fixer upper to much more than a million dollars. Typically this area also has a little bit more of a neighborhood feel. During holiday weekends, out of town owners enjoy meeting their neighbors. Living oceanside of the main thoroughfare may not be the best place for a primary residence as vacationers may be frequently coming and going and enjoying themselves at different hours. Typical vacation rental homes are often not suited for year round living; carrying groceries to the third floor and living with smaller closets might be better left for vacation renters. All this said, the oceanside area is perfect for most people buying their first vacation rental home. It gives them the feel of the beach without all the cost and also provides the opportunity for significant rental income.

Soundside of The Bypass
This area is where the majority of the beach locals choose to live.
Prices in this area start at less than $150,000 for a modest flat-top home or one-bedroom condo and can range to almost a million dollars for a big new home with views. There is a large, vegetated dune that runs the length of the island in most places. Locals tend to move to the top of this dune for the views or to the sound side of this dune to get out of the wind. In the winter a tempest might be raging along the beach but on the sound side of this dune you wouldn’t know it. Having trees and neighbors makes living at the beach feel a little more like home. There are still quite a few soundside neighborhoods where local kids can go outside and play and not worry about traffic or crime. Locals get used to driving to the beach from their soundside homes, and most areas of the beach have good parking areas. It does not take long to get packing down to a science for a successful day at the beach.

Second home buyers not concerned about rental income may consider this area as well. Prices are more affordable and neighbors in these areas look out for each other. Having a friendly relationship with the year round resident next door can give an out of town owner additional peace of mind.

Soundfront
It does not get much better than being on the sound in the summer.

Prevailing winds almost always come off the water, keeping the temperature at a comfortable level. Many people will say that the best aspect of soundfront living is the sunsets. There are many places along the beach where the sun sets over the water. Randy Jones, an Associate for Resort Realty, recently stated, “The sunsets from the Landings at Sugar Creek are simply amazing!” Prices for soundfront properties run from around $200,000 for an older soundfront condo to more than a million for a soundfront palace.

The affordability of beach property is as good as it has been for years.

Prices have come down in every beach market segment. Also, interest rates are excellent. As of this writing a 30-year loan was hovering around five percent. If you thought about purchasing property in the past five years and just could not find the right place, it may be time to look again. You’ll be surprised at how far your dollars will now go.

Home Design & Maximizing Value

A buyer recently viewed a house for sale that set high on a hill overlooking the ocean in Southern Shores. From the outside this house looked fabulous. It had the highest grade siding, beautiful landscaping and a large pool. It looked like the perfect second home. The buyer’s hopes were dashed as they ascended to the top level and found what should have been a fantastic ocean view was kitchen cabinets! The builder had built the house without considering the uniqueness of this lot and its most valuable asset. Maximizing value in Outer Banks property is more important now than ever before. Home design can help maximize value for rentals, for selling or just for personal use. This article focuses on helping Outer Banks homeowners maximize value and personal enjoyment through home design.

Assuming you have a house that needs to be updated, the question becomes where should you start? This is the time to assess the home’s strengths and weaknesses. If you have owned the home for a while, it is wise to have someone help you with this process. It is human nature for people to get used to the features of a property regardless of their current desirability. For example, a seller recently said they loved their dark paneling walls because they were easy to clean up and didn’t show imperfections. But, in today’s market, dark wood paneling is a kiss of death for a sale and a return tenant. Getting a fresh opinion on the current status of a property can uncover some key areas that may need to be addressed as well as confirm good ideas you may have.

Good advice on renovations and improvements can be obtained from your property manager, Realtor, architect, builder or interior decorator. Part of this process is figuring out the most important things to do within your budget. These experts can help you get the biggest bang for your time and money.

Considering your tenants’ wishes can go a long way towards increasing the rental value. Just adding a few little things like a pot big enough for cooking crabs and updating the deck furniture can make a difference. Tenants will often list needed improvements in your guest book or in their cottage survey. Amy Smith, an Associate for The Cottage Shop in Duck and Nags Head, recently stated, “It looks like small purchases that make an impact on the cottages will be the way to go this year. Some examples are new bedding, lamps, pictures, accent furniture, kitchen items like dishes, small appliances and new outdoor furniture. These items make the cottage more appealing.” Property managers know what today’s visitors are looking for in a rental. They will gladly share suggestions on improvements as well as assess the value of these additions. Owners should be thinking of resale value while making a decision on the improvements. Compare your home to others in the area. When a home is by far the largest in the neighborhood, it is difficult to recoup the cost of the addition. Keep in mind that changing existing space adds less value than adding additional square footage. Therefore, try to add living area instead of just improving what is already there. Show your Realtor your plans and they will estimate the resale value with these improvements.

For those larger projects, an owner should consider meeting with an area architect and a builder. Their expertise is helpful in utilizing space, allowing in light and providing a comfortable and functional floor plan. They are also experts in making an addition look like part of the original house. Builders also know local regulations and codes. Oftentimes projects are limited by a town’s building ordinances. A builder familiar with these ordinances can save you time by knowing these local limits.

The easiest things an owner can do to improve the value of his or her property without spending a ton of money and time involve getting light into the house. Open, airy and bright rooms are in style. Replacing old light fixtures to more modern fixtures, installing bulbs with the maximum wattage allowed for those fixtures, cleaning windows and installing light-colored blinds can all be accomplished in a weekend.Owners looking for slightly more of an impact should consider a few other items. Painting the interior can help. Those people without much design experience may consider talking with a designer about colors that complement each other. Asia Evans, a Design Consultant at the Kellogg Design Center stated, “We specialize in helping owners make the most of their properties regardless of their budget.” An owner should also take a look at the flooring: Is the carpet worn or the vinyl cut, are tiles cracked? Sometimes a good carpet cleaning will be enough, but a worn carpet sticks out like a sore thumb. The kitchen is probably the most important room in the house. Tricia Boston, an Appliance and Floor manager with Cozy Kitchens, stated, “New countertops and cabinets can make a house look 20 years younger. Local homeowners often start with the kitchen as part of their complete remodeling plan.”

On the outside, a nice manicured lawn is a plus in some Outer Banks locations. However, part of the lure for many here is the minimal yard maintenance. Using native vegetation and just a small lawn may be the most appealing way to go. If your home is in the beach zone, then beach grass (instead of weeds) gives the home a good beach feel. Also, a fresh coat of paint or stain on the exterior not only protects the home but also dresses up the property. Local paint stores can recommend products and contractors that will result in a durable and lasting finish.

There are experts in every field of home improvement here on the Outer Banks who are ready to help. They will be happy to assist you in tailoring your home design plan to maximize value while not breaking your budget.

Buying Bank-owned Properties… A Road Map to Success

By F. Jeffrey Scott

Like most areas of the country, a few owners of Outer Banks real estate have tragically lost their properties to foreclosure. Bank-owned properties have traditionally been known as great opportunities for buyers to purchase a property at significantly less than current market value. It is still possible to purchase a great valued foreclosure property on the Outer Banks, but buyers must be very careful because there are many pitfalls involved with these purchases. This article is a primer for people considering Outer Banks bank-owned properties including the risks of purchasing this type of property and a general road map to a successful bank-owned purchase.

When most people think of buying foreclosure properties, they see the process as reading about the foreclosure sale in the newspaper and then outbidding everyone at the court house auction. In today’s Outer Banks real estate market this is usually not the best way to get a great valued property for a number of reasons. Many of the owners had mortgages that were higher than market value thus the bank will usually outbid all other bidders. Also it is not easy to view the interior of the home prior to the auction. This makes it hard to determine what you might be purchasing. Often these properties are in less than satisfactory condition and some have been abused. Waiting to purchase until a property is listed allows the lender to get the property in a somewhat marketable condition and write off some of the bad debt.

In this economy, banks frequently write off bad debt on their foreclosures. Like most areas of the country, there are quite a few bank-owned properties here where the former owner had very little equity in his or her property. Now many of these homes are worth 20% to 30% less, and the only way for the bank to sell them is to take a loss. Two recent examples include a canalfront home in Southern Shores that had an original mortgage of $900,000. The bank listed it for $675,000 and recently sold the property for $580,000. Another bank had an original loan of $198,000 on a small home in Kill Devil Hills. It ended up selling in January for just $119,900. Writing off debt is a key factor in obtaining a good-valued foreclosure property today.

Almost all local foreclosure properties end up being listed by a local Realtor and are placed in the Outer Banks Association of Realtors’

Multiple Listing Service. Most local realty companies’ web sites have capabilities to search for bank-owned properties. It is just another category that an agent has to check when inputting the listing data, and most search engines have been modified to search for this category. Jim Breashears, a Senior Broker for Beach Realty and Construction and expert on the local multiple listing service, recently stated, “While there is a method to search for bank-owned properties in the MLS system, some bank-owned properties are not listed as such. But your local Realtor has other methods at his or her disposal.” The best way to find all listed bank-owned properties is to have your agent search by the owner’s name.

Realtors’ web sites are a good place to start, but your Realtor can help you obtain a complete list.

Most foreclosure properties today are priced at or close to current market prices. Banks generally want to obtain as much as possible for each property while pricing them to get buyers to view them.

Occasionally today a bank will price their property very aggressively just to get rid of it. These instances are fairly rare, and buyers will find themselves in a multiple offer situation even in this market. An example of this recently was an oceanfront home listed in Corolla for $642,800. It had numerous offers on it in the first few days and ended up being bid up. It sold in mid December for more than $700,000. When looking at specific foreclosure properties, it is possible for your agent to pull up the listing history for the property. There you can see when it was first listed and see if any price reductions have been made.

The lender is less likely to negotiate on those properties that were just listed or recently had a dramatic price reduction.

Another consideration to make when deciding on an offering price is the condition of the property. Banks almost always sell their property in “as is” condition. If it is discovered after you have a contract that the heat pump needs replacing, then usually you can void the contract or purchase it with the broken heat pump. Matt Myatt, a Sales Broker for Village Realty, recently stated, “Buyers of bank-owned properties should expect to have to do some work to get the property in good condition.”

Often these homes require much more work because the former owners did not take care of the property long before they stopped making mortgage payments.

Lenders have their own unique addenda that they want a buyer to sign along with the contract. Most of these addenda are usually just disclosure forms but can also state that the buyer will pay the land transfer taxes. Sometimes these forms are not available up front and the buyer must review and sign these forms after a price has been agreed upon. Buyers and their agents should closely examine these additional forms to make sure no terms of the agreement have been changed.

Buyers should also expect the property to be transferred by a special warranty deed instead of a general warranty deed. This is because the bank may not know of defects in the title existing prior to the bank owning the property. This makes title insurance even more important to purchase when buying a foreclosure property. If a title problem arises after closing, then the title insurance will take care of it.

Currently there can be great rewards for a buyer looking to purchase a bank-owned property on the Outer Banks. Your local Realtor can help you avoid the common pitfalls found with these purchases as well as save you time in the process.