Outer Banks Real Estate

Buying a Beach Home?

2009-05-21T15:51:00.002-04:00

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

2009-03-31T11:11:00.006-04:00

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

2009-02-25T10:37:00.007-05:00

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.

Financing your Outer Banks Property

2009-01-06T09:43:00.001-05:00

A few years ago obtaining a loan was as easy as signing your name a couple dozen times at the closing table. Lenders were anxious to give money to just about anyone. Probably the best example of a loan program that epitomizes this lending time period was the NINA loan. NINA means no income and no asset verification. In fact National Public Radio reported on their radio show “This American Life” that in Ohio 23 dead people were approved for this type of mortgage. Of course since then the financial markets have been through a dramatic downturn and lending practices have changed. This article will not focus on who is responsible or dwell on past mistakes. It will focus on what loan options buyers have today and what current owners should be doing in these market conditions.

The mortgage banking industry is in a state of change right now. David Joyner, a mortgage broker for Planter’s Mortgage, recently stated, “Today there are daily changes in the Outer Banks mortgage industry, so talking with a local lender is a good idea.” What is changing? As expected, lending practices have tightened up over the last 18 months. The NINA loan has gone the way of the dinosaur, and local lenders are taking a closer look at a buyer’s ability to pay back loans. Lenders today typically want the buyer to put 20% of the purchase price into the second home purchase at closing. Buyers with credit scores above 720 have a much better chance of qualifying for a purchase at the best rates.

Money is still available for those people with good credit. This is especially true at the conventional loan limits. Rande Eure, a mortgage broker for Beach Mortgage, recently stated, “Conventional financing is readily available for people who qualify and can put 20% down.” In this area this maximum loan amount is $417,000. For homes where a loan above that amount is needed, there are quite a few different options. One common option for homes less than a million dollars is for the buyer to get additional financing in a second loan. There are also affordable loan programs for buyers who are looking for a home more than a million. Each local lender has unique types of loans. It is likely that a lender on the Outer Banks has a loan program that will fit the needs of a buyer with good credit and a decent down payment. Your Realtor should be happy to call around and find you a few different options regardless of your price range.

Unless you are paying cash when buying an Outer Banks home, not only are you preparing for years of enjoyment but you are also obligating yourself to years of payments. Lower interest rates make a big difference in that monthly obligation. For example the principle and interest on a $417,000 30-year loan at 6.5% is approximately $2,636 per month. That same amount on a 30-year loan at 4.5% is just under $2,113 per month. This is equivalent to having a 6.5 mortgage for 30 years on just $335,000 instead of $417,000! Amy Hill, a mortgage broker for American Way Mortgage, recently stated, “Conforming rates are just great!” As of this writing, the interest rate on a conforming, 30-year loan is approaching 4.5%. Buyers have an opportunity right now to obtain a property priced well below the market highs of a few years ago and borrow money at historically low rates!

There is also good news for current Outer Banks property owners. Owners with adjustable rate mortgages should be getting some relief. Over the last few years these owners have been shocked by the increases in their payments as rates went up. Now some owners who have been expecting an increase in their ARM may actually get a reduction. The LIBOR rate is now lower than it has been in years, and many adjustable rates are tied to this index. Owners with both ARMs and fixed rates also now have an opportunity to refinance at an even lower rate. As long as there is enough equity, buyers who purchased in the past five years can save thousands over the life of their loan by refinancing now.

Using an Outer Banks lender makes more sense today than ever. Local lenders are familiar with the different nuances found in this resort market. For example, they are used to seeing the furnishings selling by separate bill of sale with vacation rental homes. Some out of town lenders will put a higher value on this personal property causing a buyer to make a larger down payment. Also, they are familiar with the flood zone issues. Occasionally an out of town lender will refuse to lend on a property when they discover it is in a flood zone even though flood insurance is available. They also know local appraisers. Out of town lenders sometimes will hire an appraiser from another area of North Carolina who is unfamiliar with Outer Banks prices. Also, you will find local lenders’ rates competitive with lenders from other parts of the country.

In this current unsettled economic climate, financing conditions will continue to change. Recent changes are certainly in favor of the buyer with good credit. This may just be the opportunity buyers have been waiting for.

Staging a Home to Sell

2008-11-03T07:00:00.003-05:00

Competition to sell properties has been rather stiff these past few years. More than ever, buyers want to walk right into their Outer Banks purchase with just a suitcase and a fishing rod and make no repairs. In many cases today it is the best maintained, the cleanest and the most up-to-date houses that are the first one’s to sell.

Realtors marketing efforts are geared to help a seller receive the highest price in the shortest time period. But the marketing of a home does not stop with putting a home in the Multiple Listing Service, placing a sign on the property and advertising. It also includes presenting the property in the best light possible when it is being viewed by potential buyers. Donna Stvartak, a professional home stager and owner of Cottage Redesign recently stated, “We always want to make the best first impression and make a home stand out from the others on the market.” This article will focus on improving the condition of the property to enhance the salability of the home.

The landscaping and exterior is the first thing buyers see. If they do not look inviting then buyers may not want to get out of the car. A nice manicured lawn is a plus in some Outer Banks locations. However, is not as critical as a home inland. Many Outer Banks buyers do not want to worry about maintaining a yard. When preparing a home for sale a little landscaping and yard maintenance will make the natural look appealing to the average buyer. Make sure trees are trimmed away from the house and weeds and underbrush are removed. If your home is in the beach zone, then beach grass instead of weeds gives the home a good beach feel. Make sure the shrub and flower beds have fresh mulch and are clear of weeds.

Nothing welcomes a buyer more than flowers blooming at the entrance to the house. There are types of flowers that bloom in almost every season on the Outer Banks. Strategically plant some blooming flowers near the entrance to your residence. A clean and maintained yard invites buyers to take a closer look.

The exterior of the house should also be in good condition. Moldy deck boards should be pressure washed and cracked and worn deck boards should be replaced. Cracking or chipping paint is a signal to a buyer that it won’t be long before they will have to hire a painting contractor.

Recouping money spend on renovations rarely results in a positive return on the investment when selling. But painting or staining is one of the expenses that at least come close and may need to be done to attract an offer. Cobwebs, mold and algae are also commonly found on the exteriors of Outer Banks homes. These should be removed before putting the house on the market. Lastly, the door into the home should be in good shape. A freshly painted front door with a bright, shiny door knob welcomes a buyer to take a look inside.

Having the interior of the home prepared for viewing is as important to the marketing of the property as any advertisement. The best placed ad may get more people to look at the property but if they are turned off when they see it then you are still at square one. Over the years, home floor plans, building materials and styles change. As these things change, most homes remain the same. It is human nature for us to become comfortable with our surroundings. Some of those features of your property you enjoy may actually be a detriment to a sale. Recently a seller stated they enjoy the dark paneling interior walls because they are easy to clean. Unfortunately today these walls are a major turn off to most buyers. This is an extreme example but every seller should objectively look at their interior, see what things date their home to a former era and update what they can to better attract today’s buyers.

There are a few things a seller can do to improve the salability of their property without spending a ton of money and time. Getting as much light as possible in the house is important. Buyers today typically are looking for homes that are open, airy and bright. 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 make a big difference. Sellers should also remove all but a few of the personal items from the property. Removing personal items stuffed into closets and garages allows a buyer to visualize their possessions in the home.

Buyers willing to spend a little more money should consider a few other items. Painting the interior can help. Dark walls or paneling can be painted white and having an accent wall with color in rooms can be beneficial. Those people without much design experience may consider talking with a designer about colors which 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.” A seller 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 hurts the chance of a sale. The kitchen is probably the most important room in the house. Updating the appliances can make a huge difference in the overall feeling of the home. New counter tops and cabinets are not cheap but should result in considerably more sales activity of the house.

Regardless of market conditions, there are four variables that impact the salability of a property. These variables are location, condition, terms and price. Of course location can not be changed and in most cases today great terms are available to buyers. That leaves just the price and the condition. Taking the time and investing the money to improve the condition of your property should result in the property selling for the highest price in the shortest marketing period.

Market Indicators

2008-10-21T12:28:00.004-04:00

The Outer Banks real estate market is unique. Unlike what happens with sales in many other areas, the majority of Outer Banks residential sales are for vacation and retirement homes, and this fact changes the nature of the market. Vacation homeowners typically do not have to sell, and vacation home buyers purchase for enjoyment rather than shelter. These unique market aspects should be well understood before making intelligent buying or selling decisions here. To better serve our readers, the staff at Real Estate Outer Banks decided to provide you
with a few of the most valuable market indicators for these residential sales. Knowledge is power and these indicators combined with the knowledge and experience of your Realtor will help you make the best buying or selling decision for your particular circumstances.

This article will describe these three key sales indicators and how they relate to today’s market. The indicators are absorption rate, average days on the market and the median sales price. They will be obtained on a monthly basis from the Outer Banks Association of Realtors’ Multiple Listing Service database and compiled by F. Jeffrey Scott. The vast majority of real estate transactions on the Outer Banks come from this database. Each indicator is based on the last six months’ sales activity. Using the sales information from this timeframe allows trends to become evident while tempering very high or very low individual months. Sales activity, including the number of active listings, will be retrieved on or about the 15th of each month. By that date in each month, all sales for the previous month should be entered by all Realtor members. Because the absorption rate number is dependent on the number of listings in each market segment and the number of listings changes constantly, this absorption rate may vary slightly depending on when the active listing count was taken. These indicators focus only on residential sales of improved property. A local Realtor can provide you with land and commercial sales statistics.

Absorption Rate:
This indicator quantifies current supply and demand. It is the number of months it would take to sell the entire listing inventory at the current rate of sales. For example, if there are five residences currently on the market and one residence is being sold each month, then it will take five months for all the inventory to be absorbed. When the absorption rate goes down, it means that there are more buyers and fewer sellers and is called a seller’s market. When the absorption rate goes up, there are more sellers than buyers and the market favors the buyer. Most experts believe that an absorption rate of six months is a neutral rate that favors neither buyers nor sellers. Here on the Outer Banks where a much larger portion of all sales are vacation rental or second homes, the neutral absorption rate is closer to a year. In this current buyer’s market, absorption rates vary from 15 months to 41 months depending on the location. However, the current trend in almost all areas is towards an even or slightly lower absorption rate.

Average Days on the Market (DOM)
This indicator shows the average time period it takes for the total number of sold properties to go under contact. It is calculated by adding up the total number of days between when sold properties were listed and when they closed and then dividing that number by the total number of properties. There are a few factors that may cause this number to be lower than the true number. Sometimes a property is taken off the market and is listed by another company. The DOM for this new listing will go back to zero even though the property was for sale before. Also, this number only counts those properties that have actually sold. During every period, some homes are taken off the market without selling. Even though this number may be slightly lower than the actual number, it will paint an accurate picture of the DOM trend in each area. Average DOM information is also helpful in determining the value of specific properties. Since the spring of 2003 almost all information on properties listed in the Outer Banks MLS has been kept in an electronic history file. This information is easy for Realtors to access. Comparing the price changes and other activity of a specific property to the average DOM will give buyers and sellers a better feel for fair market value. Most areas today are seeing average DOM numbers close to 200 days.

Median Sales Price
This number is the actual sales price of a property in the middle of all the sales during that time period. For example, if seven properties sell and they are put in order of highest to lowest price, the sales price of the property in the forth place would be the median sales price because there were three sales lower and three sales higher. This indicator shows changes in property values over the long term, and in the short term it shows the price range where the majority of sales are occurring. Median sales prices have come down over the last year as jumbo loans (those loans more than $417,000) have become increasingly expensive. Buyers today are buying more of the lower-priced properties where they do not need a jumbo loan. This has caused the median sales price to decrease. Median prices vary greatly from each area of the Outer Banks. Duck and Corolla currently have the highest median sales prices over $500,000, and Kill Devil Hills has the lowest median sales prices at close to half that number. Even when using six months’ worth of sales activity, median sales prices can sometimes vary significantly between reporting periods. It is a good idea to look at a few months at a time to get a better feel for the current trends.It is our goal that this information helps you better understand the local real estate market. As this section of the magazine develops, please feel free to make suggestions about the type of statistical information you would like to see. Simply email dearjeff@oneboatguides.com or the editor at beth@oneboatguides.com.

Expectations for your Realtor

2008-09-15T12:31:00.006-04:00

I was recently in the market to purchase a bicycle. At first, this purchase seemed like a no-brainer. On my way over to one of the national chain stores that carry everything from baby food to big screen TV’s, I stopped in a local bike shop. While there, the sales person took some measurements and asked me a few questions about what type of bike riding I had in mind. He then made some recommendations and adjusted a couple models for me to take around the block. Thanks to this sales person, I never even made it to the national chain and made an excellent purchase.

So what does all this have to do with real estate? I never expected the salesperson to teach me about bikes or take the time to make sure I was getting the best bike possible for my budget and needs. And if purchasing the right bike requires a specialist, then what does the purchase of a new home require? Knowing what to expect from your local Realtor will help you in the buying process. This article will help a buyer understand what to expect from their Outer Banks Realtor.

A good sales person wants to make sure the buyer is happy with their purchase. Similar to purchasing a bike, a real estate agent can not help you find the right property until they know something about your wants and needs. At a minimum, an agent will want to spend an hour or so talking with you. This process may involve looking at a few properties before a Realtor can get a good feel for a specific buyer’s interests.

Part of this process is a discussion about agency as well. Agents are required to provide you with a brochure that outlines the different agency relationships available. Joanne Hanks, Broker/Owner of Four Seasons Realty in Duck recently stated, “I present this brochure along with other valuable market information when I first meet each buyer.”

You can expect most agents to ask you if they can represent you. Having an agent look out for your interests should not cost you any additional money. Most agents require just a verbal commitment before they begin to work for your interests. In North Carolina by law, agents represent the seller until the buyer agrees to allow the agent to represent them. Once both agree, the Realtor can help you obtain a property for the best price and terms possible as well as look out for your specific interests.

A buyer should expect their agent to provide them with all the facts, figures and information necessary to make an informed buying decision.

What does this entail? For starters, it involves getting as much information about a property as possible, from expenses and income to the number of occupants the septic system accommodates. There is a wealth of information available on each property if you know where to get it. Realtors are experts at getting this information and will save you a tremendous amount of time collecting this data. Buyers should also expect their agent to help them interpret this information. For example, how a specific property compares to other available and recently sold homes. Most Realtors will complete a market analysis of the prospective property prior to writing an offer so you have a target price in mind.

Realtors are also expected to have some knowledge of other real estate related subjects. They should have a general working knowledge about insurance costs, erosion, financing, zoning ordinances, tax implications of owning a home, vacation rental regulations, construction and contracts, just to name a few. You should expect the agent to use their expertise in these areas to save you time and money.

A buyer should expect an agent to follow through with the tasks necessary to close the transaction. This starts prior to making an offer on a property. After it is clear what features you are looking for, the agent will begin contacting you with new listings that meet the criteria. Michael Davenport, a Senior Broker Associate with Sun Realty, stated “Once a property is listed that meets a client’s needs, we contact them immediately so they won’t miss out on an opportunity. We also let them know when similar properties sell to keep them informed of market values.” The agent can also be expected to coordinate each activity after you have a contract so the closing occurs on time.
In return for their efforts, Realtors also typically expect a few things from buyers. As a prospective buyer you should be straight forward with the Realtor. When calling about a property when you already have a relationship with another Realtor, tell the agent on the phone you are already working with a Realtor. The agent on the phone will then give you the needed information and not try to sell you on their services.

This will save time for both parties. Sharing your wants and needs with the buyer’s agent allows them to quickly pinpoint those properties which would work best for you. Agents do not want to bother a client with properties that do not meet their needs. Being specific about the type of property wanted allows the agent to focus their search on those properties that might work. Agents also expect you to work exclusively with them. The real estate sales industry is set up so that only one person can be compensated for working with the buyer. If more than one agent is actively looking for an individual then all but one will be working with no chance of compensation.

Having realistic expectations is the first step towards a successful and happy transaction. Take the time to talk with your Realtor about expectations and enjoy a mutually beneficial relationship that should last long past the closing day.

Simply email dearjeff@oneboatguides.com and Jeff will respond to your question. Questions that would best benefit the public will be published in an upcoming issue of the Real Estate Outer Banks magazine.

The Magic of the Outer Banks

2008-07-17T11:27:00.015-04:00

This is the time of year when many people discover the magic of the Outer Banks. From combing the beach for shells as the sun rises over the Atlantic to watching the sun set over the sound, there are a myriad of activities here that invite you to relax and forget about life's worries back on the mainland. It is also a place where cherished memories are created. Regardless if it is your first body-surfing wave or sand castle with your grandchild, these memories will be with you for the rest of your life. The one part you won't want to remember is packing up and leaving the beach. Even locals talk about the feeling they get when they drive across the bridge to the mainland.

Every season here has its highlights. In the fall the beaches are still warm and the restaurants are not crowded. Winter's peace and quiet allows you to relax and walk the beach in solitude. Spring's warm breezes bring great fishing. Spending just a week or two a year on the Outer Banks is just not enough for thousands of Outer Banks vacation home owners. They've discovered that owning a home here is easier than it appears and is an investment in a better way of life. This article will help explain how the average person can improve his or her way of life by making a simple investment here.

An Outer Banks vacation home immediately paying for itself is as rare as an empty interstate highway during rush hour. It is an urban legend that vacation homes can pay for themselves in the first year with a 10% or 20% down payment. If this is the case, why have thousands of people purchased these homes? In part, it's because they realize the value of the lifestyle and want to create memories here with family and friends. Many owners planned and saved for years before making their purchase. But with recent market trends, investing in an Outer Banks home now can provide an attractive financial value.

Today, vacation homes are more affordable than they have been in recent years due to reduced prices, increases in rental income and low interest rates. Rental cottage prices have dropped in almost all locations. Marty Griffin, a broker for Coldwell Banker Seaside Realty, recently stated, "Sales prices on vacation homes have dropped between 10% and 20% in most locations." Rental income has also grown in recent years. According to the Outer Banks Chamber of Commerce, occupancy tax collections were up 15% through May of 2008 in Dare County. Janice Farr, Vice President of Sun Realty, stated, "Despite high gas prices, vacation rentals look similar to last year." During the boom a few years ago, a tremendous number of new homes were added annually to the vacation rental inventory. Now that this building boom is over, hardly any new houses are being added to the rental cottage supply. Interest rates today are still very good. Ronnie Roach, a Home Mortgage Consultant with Wells Fargo in Kill Devil Hills, recently stated, "Mortgage rates are still near historic lows, and conforming loans are hovering close to 6%." These market forces combined together make vacation rental home affordability the best it has been in a long time.

Each vacation rental cottage generates a certain amount of rental income. In today's market, the rule of thumb for decent rental income is between 5% and 8% of the purchase price. In other words a million dollar property should generate between fifty and eighty thousand dollars in rental income. There are quite a few variables that affect the amount of rental income a house generates. Everything from the amenities to the location to the condition of the property can cause the income to go up or down. A local property manager at one of the vacation rental management firms can help you determine if a cottage has potential to rent more.

The biggest expense on a vacation rental property is the mortgage. Other expenses include insurance, taxes, utilities and property management fees. It's also important to be realistic about the maintenance expense for the property. If the cottage has a pool or a hot tub, these must be maintained twice a week when tenants occupy the property. Also, each buyer should consider creating a reserve for when items such as the roof or carpet need to be replaced. The rental income should help offset a large portion of all these expenses associated with vacation home ownership.

Depending upon an individual's tax situation, there also can be tax benefits to owning a beach home. The most common scenario allows owners to reduce their federal tax burden by depreciating the property along with writing off a portion of the total expense of the property. It is a good idea to talk with your tax advisor to find the best option available to you. However be prepared for them to tell you it may not make the best business sense to purchase the property. The decision to purchase a vacation home is more of a quality of life decision than a business decision. And it can be hard to put a price on improving your quality of life. Of course it would be unwise to purchase something you cannot afford, but owning a home on the beach can tremendously improve your lifestyle.

Besides providing a place of refuge from life's daily grind, having a home on the Outer Banks allows owners to come and go as they like during most of the year. Vacation homeowners will frequently take long weekends during the off-season to enjoy the beach and piddle around their house. Today's vacation homeowners put a premium on their time. Being able to avoid check-in times and the congestion and lines that accompany those times is a big benefit. The pride of home ownership also comes with a beach cottage. Vacation homeowners are able to decorate and modify the home to their specific likings. Arriving at the cottage and seeing the trophy marlin or the picture of the entire family on the beach from the year before is a great feeling.

Making memories with friends and family is really what owning a home at the beach is all about. A recent popular song talks about how life passes in just the blink of an eye. The lyrics talk about a man who recently turned 102. In an interview he tells the reporter that he can't believe how fast he got married, raised children and lost his wife to old age. If this story speaks to you, waiting for things to change to enjoy the beach lifestyle may not be a good idea. So, go ahead and start making those plans to improve your quality of life by becoming an Outer Banks homeowner.

Summer Outer Banks Real Estate Primer

2008-06-11T12:05:00.008-04:00

Unless you have lived in a bubble the last few years, you have heard the doom and gloom about the national housing market and the lending crisis. The Outer Banks has not been immune to some of this national trend. However, the Outer Banks market is unique because of our remote location and the fact that a large portion of our sales are vacation rental home sales. Marlene Roberts, a broker at ReMax Ocean Realty, recently stated, “All real estate is local.” This certainly is the case on the Outer Banks where rental income and buyers’ desire to improve their quality of life are key factors in the number of sales that occur here. This article will candidly describe the good and the bad of today’s Outer Banks real estate market.

Recent history shows that the number of buyers purchasing here has become stable. The number of people purchasing property changed dramatically between 2005 and 2006. About half the number of people purchased Outer Banks property in 2006 compared to 2005. Since then the annual number of Outer Banks property purchasers has not significantly changed. MLS statistics show there was just a slight difference in the number of Outer Banks properties sold in 2007 compared to 2006, and the number of sales during first quarter of 2008 is remarkably similar to the two previous first quarters. The typical buyer during this time period is someone who is more concerned about enjoying the Outer Banks lifestyle with family and friends than with making a killer real estate investment. Tom Hranicka, a broker for Outer Beaches Realty, stated, “Our typical buyer is someone who has enjoyed the Outer Banks for years and now is finally ready to own part of the beach.” Statistics point toward a steady number of people becoming ready to take the jump into Outer Banks homeownership.

A key indicator to any real estate market is the relationship between properties for sale and properties closing. This is called the absorption rate. The absorption rate represents the period of time it would take for all the properties currently on the market to be sold with the current level of demand. As demand increases or supply decreases, the absorption time period goes down. In a typical suburban market the rate at which the market favors neither buyers nor sellers is approximately six months. In this resort and vacation rental market, that time is likely closer to a year. Since the beginning of our down turn, our absorption rate has stayed above 30 months for all but a few months. This is one factor that has driven prices lower. When the absorption rate begins to decline, it is likely that the bottom of the market is close at hand.

Since we reached our peak levels of inventory in July of 2006, inventory has remained at levels well above demand throughout the year. The trend every year during this buyer’s market is that inventory grows from its lowest point in January to its highest point in late June or July. It then goes down to its lowest point at the end of the year with many listings expiring at midnight on New Year’s Eve. Sellers realize that the best time to sell is in the spring and summer, and many take their houses off the market after the summer season. May 2008 was the first time since at least 2004 that the inventory actually went down before late June. It’s too early to tell but this may be the first sign that the absorption rate is going down as well. Who knows…we may look back at May of 2008 as being the bottom of the market.

Another factor that has driven prices lower is the amount of foreclosure properties that have sold. This year close to 10% of the properties sold through the local MLS were bank owned. Banks typically lower the asking prices of these properties until they sell. There are still occasional foreclosures occurring, but they do not seem quite as common as last year.

Lower prices can be found on properties throughout the Outer Banks. Even oceanfront property has come down. For example, a nine-year-old oceanfront house on a narrow lot in Nags Head sold for $1,575,000 in 2005. Today there is a house for sale that is almost identical in all ways for just $1,449,000. Hatteras Island has been affected too. Tom Hranicka stated, “Median prices on Hatteras Island have dropped almost 25% since the peak of the market.”

Similar to other investments, purchasing property on the Outer Banks is subject to human behavior patterns. When the market was good, every one was purchasing. Today the most common reason for buyers to wait on a purchase is that they do not want to purchase and have the property worth less in six months or a year. Buyers are waiting for the market to hit bottom before making an investment. Some agents have begun to see buyers bucking this “herd mentality” and deciding to invest now. Greg Roberts, a broker for ReMax Ocean Realty, recently stated, “The buyers we are seeing now are determined to purchase quickly before the market changes.”

If you’ve thought about purchasing Outer Banks property in the past or may want to purchase sometime in the future, it is a good idea to evaluate the conditions of the market prior to jumping in. Buying real estate can be compared to surfing on the Outer Banks. Local surfers watch the weather and check the ocean before diving in. Some of the conditions they look for are offshore winds and a certain size of swells coming from a specific direction. Rarely do conditions get perfect where everything comes together and the surfer gets to ride the perfect wave. But every surfer has a threshold where if certain conditions are present, he or she will go surfing. Each buyer should also evaluate the conditions of the market when considering jumping into the real estate market.

Market conditions today are not perfect but they are pretty darn good. For example, interest rates are still at low levels. Margaret Wells, a Vice President for Bradford Mortgage, recently stated, “Rates are close to historical low levels.” It is unclear what will happen to rates next year. Even just a one percent increase in an interest rate can dramatically affect the affordability of property. The mortgage payment is just about the same for a 30-year $500,000 loan at 7% and a 30-year loan of $554,000 loan at 6%. That is a 10% increase in purchasing power!

There are a few other conditions that point toward a good time to jump into this market. First, today the inventory is still very high. Buyers have a wide variety of choices and should not have to settle for a property that does not come close to meeting their wants and needs. Second, the market has not yet turned in the seller’s favor. This makes sellers more negotiable today than they have been in years. Sellers are privy to the same information as buyers; once it is known that the market has turned, they will be less likely to negotiate. Third, a purchase now allows a new owner to pick up most of this year’s rental income. A home purchased in June or early July allows the new owner to walk into thousands of dollars of instant income on vacation rental homes.

There are other reasons for being bullish about Outer Banks real estate today. Activity is up for many Realtors. Tom Hranicka recently stated, “Both showings and hits on internet real estate sites are up on Hatteras Island.” Unlike the last few years, there have been positive articles posted in the media about Outer Banks real estate. This spring the Wall Street Journal had two articles describing now as a great time to purchase a home on the Outer Banks. Well-priced properties also do not stay on the market long. Mark Massey, a broker for BD& A in Duck, recently stated, “When priced properly, buyers are there to act, and sellers are having success. However, only a small percentage of sellers have their homes offered competitively.” Second homes also still make up a large percentage of the real estate market today. According to the National Association of Realtors, the second home market represented 33% of all sales in 2007. This group is also forecasting the second home market to improve in the future due to the demographics of the country.

Conditions are good to purchase a property on the Outer Banks. Years from now will you be enjoying your property or will you be lamenting the idea that you should have purchased in 2008?

Buying a Beach Home? There’s Something Here for Everyone.

2008-04-15T08:09:00.003-04:00

With prices coming down, great interest rates and the income on vacation rental homes going up, many people are thinking this might be the year to purchase an Outer Banks property. Spring is a good time to purchase because it gives the new owner an opportunity to immediately collect rental income and possibly get a chance to enjoy the property before the busy summer season. From oceanfront to soundfront and everything in between, the variety of properties available here can be overwhelming. This article will help buyers narrow down their search by describing features of each area. Also, there are some tips at the end of the article that should further help save time during the home buying process.

Rarely does purchasing a home at the beach result in an instant financial windfall. In fact under almost all market conditions, it will cost a buyer a significant amount the first few years to own the property. Over the last 20 years there have only been a few periods of time when buyers could quickly make money on their beach home. Investing in the Outer Banks should be seen as a long-term lifestyle and monetary investment. Purchasing a home here should be considered an opportunity to make memories with family and friends and, perhaps one day, to provide a great financial return on the investment.

Rental income often plays a key role in the purchasing decision. Consequently local Realtors closely monitor the income on vacation rental homes. Like many local Realtors, Mike Ross, a broker with Southern Shores Realty, likes to look at the ratio between asking price and annual gross rental income for his clients. The gross rental income usually runs between three and six percent of the purchase price for properties on the oceanside of the main road. Of course the higher this percentage the more affordable the cottage becomes.

Below are a few different categories of property available here and some of the pluses and minuses of each area.

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 precious. Somewhere around the beginning of the 20th century the first home was built along the oceanfront in Nags Head. People thought the ones who chose to build there were crazy because they would be exposed to winter’s strong northeast winds and blowing sand. Little did these nay sayers know that the draw of the ocean would make enduring the harsh elements well worth the cost in the years to come.

Oceanfront property is generally more expensive than anywhere else on the beach. Prices here range from around $300,000 for a small older condo to multi-million dollar mansions with guest quarters. Besides the proximity to the beach and the views, oceanfront properties also provide the highest and most consistent rental incomes. Oceanfront homes book faster than properties off the ocean. Oceanfront properties also tend to appreciate faster than other properties. Linda Harper, a broker with Resort Realty, stated, “From my experience during 21 years of selling real estate on the Outer Banks, waterfront property has always appreciated at a higher rate than interior property. It is simply a function of supply and demand, and there is less waterfront property.”

Oceanfront properties also require a higher level of maintenance. For example, heat pumps on oceanfront homes are exposed to blowing sand and moist, salty air. Gray Berryman, a broker with Carolina Designs Realty, stated that, “The heat pump on an oceanfront house may only last five years, while you might get seven to 10 years on an oceanside property.” The strong winds that buffet oceanfront homes can also create additional maintenance issues. Windows, doors and shingles tend to have a shorter lifespan closer to the ocean. Regardless of these additional costs, owning an oceanfront property has its rewards with the fantastic views, the short distance to the ocean and the tremendous rental income potential.

Oceanside of The Bypass:
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. Most vacationers prefer renting on the east side of this road for convenience. Homes here are still in the beach zone and make great vacation rental properties. Quite a few homes in this oceanside area have good views of the ocean, and getting to the beach may take only a minute or two. Prices in this area vary from a modest monthly mortgage payment to homes costing much more than a million dollars. Future oceanfront owners typically start with a home in this area and eventually move up to oceanfront. Many of these buyers are able to move up in less than 10 years as they build up enough equity in this oceanside property for a down payment on an oceanfront home. Often these buyers will be surprised to find that their carrying costs are not much more than their existing property due to the increased rental income an oceanfront home generates.

Everything from doors to heat pumps will last a little longer in this oceanside area because the elements do not beat on houses as much. Typically this area also has a little bit more of a neighborhood feel. Most of the time the lots are smaller and the focus of each house is not always on the ocean. During holiday weekends, out of town owners enjoy meeting their neighbors. They will take time to discuss the new house going up around the corner, the fishing or share information about a good handyman.

Buyers who have a view of the ocean on their list of “must haves” can usually find a home with this view in their price range. Some oceanside areas have high elevations and can overlook the houses in front of them. Other areas have large spaces between the houses and allow for views between them.

In year’s past buyers would purchase homes in this area and rent them out for years with the intent of retiring in the property. Usually this works great for the owners until they decide to retire. At that time they soon discover that owning a home in the middle of a vacation rental area may be a little too busy for them in the summer time. Vacationers may be frequently coming and going and enjoying themselves at different hours than the retiree is used to. Furthermore, a typical vacation rental home may not be 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 three-quarters of a million dollars for a large, new home with views. It tends to be quieter during the summer months in this area. During the winter months, cars and homes are more protected from storms. When the nor’easters come in the winter, it is hard to keep car windows clean on the oceanside due to the salt spray. People who make a permanent move here look for familiar surroundings. 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 fantastic public parking areas. It does not take long to get packing down to a science for a successful day at the beach.

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 soundside of this dune to get out of the wind. In the winter a tempest might be raging along the beach but on the soundside of this dune you wouldn’t know it.

Buyers thinking about purchasing a second home at the beach that they do not want to put into a rental program 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 an additional peace of mind. Depending upon a buyer’s tax situation, purchasing a second home in this area can make more financial sense than purchasing a vacation rental home that generates considerable rental income. The mortgage interest deduction on a second home is similar to what is allowed on a primary residence. Within seven to 10 years of their purchase, these buyers oftentimes move up to oceanside property.

There are a few golf courses on the soundside as well. Besides canalfront properties, properties fronting a golf course can produce some weekly rental income to help offset expenses. These homes generally have better views and sometimes additional community amenities. At every golf course there’s a group of regular golfers. Second homeowners can easily “get in the game” when they are here.

Soundfront:
History shows that first vacationers to the Outer Banks preferred the sound side of the island to the ocean side. Residents of the towns near the Albemarle Sound like Elizabeth City, Hertford and Edenton came to the Outer Banks by boat and stayed in the hotel located over the water just south of Jockey’s Ridge. The same appeal that the sounds here offered 100 years ago makes soundfront properties today more expensive than soundside ones. Prices run from around $250,000 for a soundfront condo to well more than two million for a soundfront palace.

It does not get much better than being on the sound in the summer. Prevailing winds almost always come off the sound and keep the temperature at a comfortable level. Listening to the waves lap up against the shore has an almost hypnotic appeal. But, the best aspect of soundfront living is the sunsets. There are many places along the beach where the sun sets over the water. The famous Key West sunsets have nothing on ours! There is something magical about enjoying the company of good friends and family while watching the sunset on the Outer banks.

Sometimes the ocean gets too rough for swimming. The sound is a perfect spot in the summer for those days. Also, sound water is much warmer most of the year. There are not many soundfront properties that offer protected dock space. However, many soundfront owners store their boats all summer on lifts at the end of their pier. Soundfront owners also enjoy great crabbing and fishing off the end of their piers.

Great soundfront living does not end in September. In the winter the cold prevailing winds are out of the north and east. When these biting cold winds are blowing off the ocean, the warmest place to be is along the sound. There are many days throughout the winter on the sound when a coat is not required to stay warm.

Rental income on soundfront property can be good in most beach locations. The spring and fall seasons are the peak times of year for kiteboarders and windsurfers. These watersport enthusiasts prefer to be as close to the sound as possible. Also, many vacationers prefer the sound over the ocean.

The affordability of beach property is as good as it has been for years. Prices have come down in every beach market segment. Linda Harper, a Resort Realty broker, recently stated, “Because of market conditions over the past two years, there are some fantastic bargains available to astute buyers; smart investors always move against the tide while others are fleeing the market.” Vacation rental income is up as well due to the increase in visitors and the limited supply of vacation rental homes. Also, interest rates are excellent. As of this writing a 30-year loan was hovering around six percent. If you thought about purchasing property in the past five years and just could not find the right property, it may be time to look again. You will be surprised at how far your dollars will now go.

In choosing a location for a beach home buyers should determine their specific use. Buying a vacation rental property or second home is a little like purchasing a car or a boat. There are compromises a buyer must make regardless of the property. Each person should consider what factors are most important to him or her. For example, how important is a view? How important is beach access or access to goods and services. Fishermen may want to be closer to Oregon Inlet or Hatteras, and windsurfers may want to be closer to the Croatan Sound or Canadian Hole. The best rental home may not be the best second home or primary residence. Take time to write down those factors that you must have as well as those that you cannot live with and share this information with your Realtor. This will save you a tremendous amount of time in your property search.

Smooth Move ––– Relocating to the Outer Banks

2008-02-25T10:59:00.006-05:00

by Lisa Loy

The decision to make a life on the Outer Banks is influenced by a series of factors. For the majority of us, the call of the sea, typically after a few vacations here, becomes overpowering. We don't want to leave. We start to wonder what it might be like to own a home here and how much it might cost, and so we generally begin to convert the idea into a possibility by picking up a real estate sales publication such as the one you are holding in your hands. We thought you might also like to gain a sense of our people, our attitudes on growth and education, our physical and financial health and the level of commitment to community. But before we dive in to our many fine qualities, we should begin with our most compelling feature, the number one reason people make "the natural choice" and move to the Outer Banks.

"We live in a wonderful and dynamic environment. Proximity to beautiful ocean beaches and secluded, braided streams coursing their way through vast wetlands are but a few of the diverse environments that can be found in our area," George Wood of Environmental Professionals in Kill Devil Hills said of the Outer Banks. "Large tracts of land thanks to the existence of the Cape Hatteras National Seashore, Jockey's Ridge State Park, the Alligator National Wildlife Refuge, the Pea Island National Refuge, the Nature Conservancy's Nags Head Woods, the North Carolina Estuarine Sanctuaries and other areas are conserved or protected.

"There is always a place to get out and see bald eagles, pilliated woodpeckers, black bear, deer, shore birds and the occasional alligator or red wolf, among the host of other exotic and common animals," he continued. "This is, in part, because so many large tracts have been conserved to accommodate the wide-ranging habitats required by many of these animals. We are also on major migratory pathways for many species from ducks, geese, swan and butterflies. The opportunities change every season if not every day to see new and wonderful inhabitants of our environment.

"We exist in the transition zone between south and north Atlantic ecosystems so our plant life is equally varied. Hatteras Island can host palmetto palm while Currituck Outer Banks can support the rare sea beach amaranth. The transition in our oceans also provides richness. We are located where the Gulf Stream and the Labrador Currents collide fighting for dominance of our water temperatures, resulting in rich food sources for the better known sport species of our oceans, including marlin, sail fish, tuna and rock fish, and our sounds are home to redfish, speckled trout, flounder and many more.

"If you happen to be a geologist, you could revel in the largest active sand dune on the East Coast, in the changing landscape of wind-borne and water-molded sculptures that change hourly. Very clean ocean air makes for a great life but also assists in viewing the incredible vastness of our night skies. Low light pollution and clear cool weather allow for inspection of displays of meteors, stars, planets and space stations.

"Everywhere you look, taste, smell, touch and listen you are treated to the freshness of this area I call home if you are willing to take the time. Enough said," he smiled. "I think I will walk over to the beach and refresh my soul. Come join me."

George Wood's remarks sum up beautifully the great variety of natural features here that draw so many of us to move to this very special place. But he is also well-versed in the science behind the nature with a master’s degree in both biology and marine biology. Before George founded his consulting company, he worked with the North Carolina Division of Coastal Management as the local Coastal Area Management Act officer. CAMA, created in 1974 by the North Carolina General Assembly, affects all 20 coastal counties including ours––Dare County. Development along the ocean and estuarine shores is regulated by CAMA.

Now, while a real estate developer or building contractor might not always fully appreciate the constraints or limitations imposed under CAMA guidelines, people on the Outer Banks are generally thankful that someone knows how to delineate wetlands from buildable ground to preserve animal habitat and determine building setback lines from the waterfront to help ensure a long economic life for our dwellings and businesses.

In the wake of rapid development in this area, especially during the past 25 years, families and individuals who are thinking about moving to Dare County will find that growth here overall has been mindful, and the determination and foresight of so very many people and organizations to preserve not just our natural wonders but also to guide and protect manmade efforts is also apparent. As we have developed and grown as a community, this level of care is evident in almost every aspect of the Outer Banks lifestyle. From education to health and recreation, transportation and cultural arts, you'll find that local and state government is responsive and local residents are actively involved.

Like the braided streams of the marsh, the current in one area, recreation for example, can impact and benefit another, such as education and health. It is this interplay of support that is a hallmark of our tremendous community involvement. The OBX Marathon not only infuses our local economy with off-season visitors, but the proceeds the event generates also benefit the Dare Education Foundation and the Outer Banks Relief Foundation.

"There is so much a person who visits here can't see," Executive Director of the Outer Banks Chamber of Commerce John Bone said. "We have such a giving community -- that's what makes the Outer Banks a better place to live." In addition to the tremendous community involvement to bring about the OBX Marathon, John Bone cited examples such as the annual Outer Banks Hospital gala that last year raised more than $125,000 to benefit the new cancer center and the overwhelming community response to help replace the museum-quality collection of costumes and accessories that The Lost Colony, the much celebrated outdoor theater on Roanoke Island, lost after a fire destroyed most of this priceless collection.

Although summer populations swell beyond 200,000 people, our resident population is just over 30,000. This means we still enjoy a small town atmosphere, and our strong sense of community is apparent during the off-season. It's easy for newcomers to meet locals if they sign up with the YMCA or one of the many programs offered through the Dare County Department of Parks or Recreation. Membership to organizations such as the Dare County Arts Council will result in invitations to a wonderful variety of events and art openings. Of course, the best way to become a part of the community is to roll up your shirtsleeves and become a volunteer at one of the more than 110 non-profit organizations that exist on the Outer Banks. The Dare County Arts Council, the Outer Banks Hotline Crisis Intervention Center, The Wright Brothers National Memorial, Dare County Schools and the Outer Banks Hospital all welcome and appreciate volunteers.

The economy in Dare County is primarily driven by tourism, and historically, even when the real estate industry is slow across the nation, we still enjoy and benefit from our visitors. This is evident in Dare County occupancy receipts that steadily increase each year, from $172,840,144 in the 1999-2000 fiscal year to $288,420,135 in 2005-2006.

Our non-resident population doesn't require year-round services such as schools, yet the money they bring to our area benefits Dare County's efforts to provide a great education to our students. Our county does much to attract fine new teachers, even to the extent of planning affordable housing, and there is a vitality in our schools that is easily sensed just by walking through the halls. For the third straight year, only students in four of the 115 school districts across North Carolina, with SAT participation rates of more than 70 percent, achieved higher average SAT scores in 2006-07 than students in Dare County.

In January of 2006, two new schools, Nags Head Elementary and Manteo Middle, opened on the same day, and in August of the same year, four ribbon-cutting ceremonies were performed to celebrate the major renovations and new construction completed at Kitty Hawk and Manteo Elementary Schools, Manteo High School and the Dare County Alternative School. The new Cape Hatteras Secondary School opened in 2007.

Although private schools are often considered superior than public schools in many cities in America, and there are four very good private schools on the Outer Banks, newcomers with children learn quickly that in Dare County, the public schools deliver a first-rate education. Both First Flight and Manteo high schools were selected to join a group of only 700 schools in the nation as members of the Successful Practices Network, and Hatteras Secondary School was awarded a five-year $300,000 Implementation Grant through the North Carolina New Schools Project, an initiative of the Office of the Governor and the NC Education Cabinet supported by the Gates Foundation.

Like other resort and retirement areas, jobs tend to center around construction, real estate sales and rentals, retail sales, leisure activities and hospitality. There is a high level of entrepreneurship here, and John Bone said that a "Create the Future" group that meets at the Chamber of Commerce is exploring ways to continue attracting people who create their own jobs. He cited existing fiber optic cable as an example of our area's ability to support the intense internet needs of business such as the Outer Banks Hospital, which relies on the internet to do all kinds of diagnostic work. "Real estate companies have really taken advantage of it, just like the hospital."

And in today's world, with more and more employees and employers interacting online, it often matters little where the employee is physically located. Recognizing this, Bone believes that the county is on the right track in matters of technology. "We're well connected."

A better quality of life is more than a topic of conversation here. It's a reality.

Anne Thomas, Director of the Dare County Department of Public Health tells us that the recent Community Health Assessment heralded that Dare County is seen by its citizens to be a good place to raise children and a good place to grow old.

“Dare County has a lower incidence of diabetes, cancer and cardiovascular disease than other counties in North Carolina; we have a low infant mortality rate and appreciate a comprehensive health system for an area of our size. Our county enjoys both a strong social and healthcare network of support, such as the newly proposed alliance with The University of North Carolina at Chapel Hill’s North Carolina Cancer Hospital; we look forward to increased prevention and treatment opportunities.”

Data also shows that from an environmental health perspective, Dare County has been a good steward of water quality. Dare County ranks among the 20 percent of counties in the nation with the cleanest surface waters. Anne Thomas added, “Maybe the most important thing is that Dare County and its leaders recognize good health as a valuable asset to our community and the people who live here.”

The financial strength of Dare County, which encompasses the majority of the Outer Banks, is also a key element in shaping the future of the Outer Banks lifestyle, and it’s looking good. The $1.3 million dollar surplus in the 2006 fiscal year increased the unreserved, undesignated general fund balance to $22.3 million. This fund helps Dare pay for the costs associated with storms or capital improvements, which can also be funded with land transfer tax revenues. Low debt, low unemployment rates and high property tax collection rates from non-resident property owners all demonstrate Dare County’s ability to serve Outer Bankers’ needs.

All of the elements, from the environment to growth, health and education that support a happy and healthy lifestyle, are present on the Outer Banks––all we need is you. Like George Wood says, "Come with me."

Affordable Housing Opportunities Exist

2008-02-18T12:32:00.003-05:00

by Lisa Loy

When Steve and Michele Albright moved to the Outer Banks several years ago, the young, educated couple from Michigan, after a one year stint in Bermuda where he was a landscape designer, rented a home here in an older neighborhood called Avalon.

Their goal was to live as economically as possible until they could familiarize themselves with the various communities here and figure out where they wanted to live, then buy a home and raise a family.

Although both of them had good jobs, Steve with the Town of Kill Devil Hills and Michele with the Pasquotank Arts Council, they quickly learned that they’d be lucky to find something they could afford. They had moved here during the height of the buying frenzy––a seller’s market. The first baby came, a beautiful girl, and they were still living in the rented house.

But they didn’t give up. Nor did their Realtor Cheryl White who traveled beyond the Outer Banks to the Currituck mainland and as far as Columbia during their extended search. They continued to monitor available properties in the neighborhoods with year ‘round residents, close to schools (Michele is very focused on education) and water access (Steve is an avid sportsman, and a playground (the little Miss Albright is an avid climber). They waited almost four years before the lull in the market delivered a greater supply of listings, and suddenly, there it was, a tired old beach box in need of a face-lift. It was perfect! And it was on the Outer Banks!

Or rather, it was the location that was perfect; the house however could be fixed.

The site in Colington Harbour is lush with vegetation and located on a quiet street. It has a sound view, is within walking distance to the swimming and racquet club, the play ground and soundside beach, there is a marina for Steve’s boat and First Flight schools are just 5 miles away.

With baby number two on the way, Steve and his “can do” attitude worked on it for several months in the evenings after he left his office for the day, transforming the little house into their home sweet home. They bought new carpet and installed new appliances. They painted. They didn’t quite finish sprucing up before their son arrived, but they were close, and they were smiling.

For the Albrights, timing and tenacity paid off, but more help is now available to buyers in search of affordable housing.

In a groundbreaking move, the Manteo Board of Commissioners responded to the wishes of its people by adopting an Inclusionary Affordable Housing Ordinance. One of the first such provisions in the state, it breaks the trend of high housing costs in a resort area by giving developers incentives to participate such as density bonuses and a waiver of building fees.

Already three new developments––Cedar Bay, The Flats and Salt Meadow Landing, are planned that will dedicate a number of homes and home sites for purchase by eligible Manteo residents based on income and employment. These are not low-income projects, these are diverse new communities sought after by families who just want to live in a great neighborhood.

In the Town of Kill Devil Hills, the Community Development Corporation (CDC) located on Mustian Street near the library, is working to bring affordable housing assistance to the area and a new development in Kill Devil Hills, Nature’s Walk, is already under construction. This new development of 20 homes meets the CDC requirement for affordability with a mix of affordable and market rate homes.

In addition to collaborating on affordable developments here, the CDC is also a HUD Approved Counseling Agency. This means they offer homebuyer education programs and advice on loss mitigation, debt management and prepurchase and postpurchase counseling.

Plans are also underway to develop “teacher housing” on Dare County Board of Education land located near First Flight schools. It’s no secret that affordable housing is a key element in the county’s ability to attract more teachers to the area. According to its executive director, Amy Montgomery, the Dare Education Foundation, which has been raising money for our schools for about five years, is eager to apply for a State Employees’ Credit Union Foundation Grant to fund the project. Talks regarding the 9.5-acre site in Kill Devil Hills include partnering with the CDC for a proposed 55-unit townhouse development with one-bedroom units priced as low as $120,000 and four bedroom units up to $225,000. Some of the units would be available to rent.

This would be a welcome development in a county where the percentage of residents that can afford a median-priced home since the year 2000 dropped from 41 percent, or 6100 year ‘round residents, to only 4 percent, or 547 residents, by the year 2005. Although we can expect a certain reversal of this trend, due to the flood of listed properties by sellers who are now willing to negotiate in this arena of intense competition for sales.

With greater environmental awareness, urban sprawl on a national level is also beginning to experience an about-face. The new preference to live closer to work in smaller homes is considered a proactive way to use less energy and less fuel commuting to work––less being more in terms of the common good. Anthony Flint, a futurist and journalist from the Lincoln Land Institute, cited the need for compact, mixed-use developments recently at a breakfast co-sponsored by the Outer Banks Chamber of Commerce and the CRC.

“Regional land use planning is the way we’ve got to do business and we must approach together the issues of affordable housing, sustainability and economic growth,” he stated.

Flint urged redevelopment through “recycling” land and older buildings and recommended that housing, transportation and the environmental agencies work together to achieve this objective. Certainly the plans for “teacher housing” is a great example of different groups working together for the common good.

But on a personal level, there are other reasons that some Outer Bankers pull up stakes and move to the mainland that have proven to be more than thrifty. Although the general attitude is “people can’t afford to live here anymore,” there are a growing number of beach people attracted to this landlubber’s paradise. The prices are significantly lower of course, but other benefits include privacy with abundant land in wide open places, historic homes in charming towns like Columbia and Belhaven, a world-class equestrian center in Martin County, and abundant hunting, fishing and water sports on the other side of the sound. There’s room to breathe out there for many Outer Bankers who have prospered after working hard for decades; they love their weekend get-aways in the country.

Another twist in the general mindset on affordable housing is, in a word, modular. Modular homes are built in sections in a factory then transported to the home site and assembled. In this industry’s early years, these homes were a no-frills bargain, often with no down payment required, that enabled many first-time homebuyers a chance to realize the American dream.

Manufactured homes have come a long way and today, over 22 million people live in them across America. One of the area’s most well-known and admired contractors, Stan White, owns such a home on Ocracoke Island.

Stan’s award-winning company could build anything he and his family could want, but the builder found that the logistics in getting one of his construction crews down there to raise a stick-built home was cost prohibitive, and he wanted a retreat, not another rental, so economy was a goal. He mostly wanted to go fishing, and soon. He looked into the possibility of a manufactured home for his “fishing camp” and found that the quality of materials used at the factory had improved dramatically and final completion could be accomplished in a matter of weeks.Whether you’re a first-time or budget-minded buyer in need of some guidance, the prospects are improving all the time. Contact a local Realtor or the CDC to help you strategize, locate, and learn about the variety of affordable possibilities. It’s your market, and it’s time to go shopping.

Choosing Your Buying or Selling Season

2008-02-12T18:01:00.001-05:00

By Lisa Loy

The change of seasons is evident in nature––we see it with our eyes, we feel it on our skin. But have you ever considered the annual ebb and flow in the real estate market? When is the best time of year to buy, build, rent or sell?

The buzz on the beach all year has been that now is the time to buy, and of course, that’s true. Experienced investors shop like experienced housewives. They buy when the products they want go on sale. Housewives are driven by value. They’ll buy 50 lbs. of shrimp in summer, when they’re in season, abundant and consequently less expensive, then measure them out in freezer bags to enjoy all year.

Why is that so hard to do with real estate, or stocks and bonds for that matter? In these markets, investors flock to buy when prices are rising and sell when prices are dropping. Real estate activity during the past decade was all about price, and it was driving speedily uphill in a bandwagon. It had to overheat at some point. When prices began to crest, sellers climbed aboard the bandwagon causing a glut of available homes and prices to drop.

To a lesser degree, there are fluctuations in the real estate market that occur every year. For example, the slowest month of the year for real estate sales nationwide, traditionally, occurs during the month of December. It’s a whirlwind month––folks are too busy with parties, shopping, and caroling to add to the revelry by scheduling a closing during the holiday season. Slow sales in December may also be influenced by the “close after the first of the year” strategy some tax conscious sellers employ.

In a resort area where vacation rentals come into play, one might think sellers would be more apt to negotiate in the fall when faced with the lower occupancy rate associated with winter. But there’s a yang for every cold, dark yin, and it’s called rental deposits. Vacation homeowners receive income from their property managers monthly. Deposits are being tendered all winter long as bookings for summer occur well in advance.

The fall is not only a great time to look at real estate, it’s a beautiful time of year to experience the Outer Banks. It’s not always easy to go house hunting in summer when vacationing families occupy every house, but in the fall, touring prospective properties is a breeze. The ocean is still warm after absorbing the summer’s heat, and surfers and anglers are enjoying the secret season.

Moreover, the Outer Banks comes alive in the fall. Locals, after working hard all summer, have more time to enjoy themselves. For someone considering a move to the beach, the fall is an opportune time of year to get to know us. After the crowds of summer go back home, the beach reclaims its small town atmosphere. You’ll find plenty of opportunities to meet the locals at events such as the Dare County Arts Council’s Artrageous Art Extravaganza & Auction occurring at Rec. Park in Kill Devil Hills on October 6th. And although the OBX Marathon in November draws thousands of competitors from across the country, it is also a huge community event.

If you’re planning to retire here, drop by the county’s senior centers, the Baum Center in Kill Devil Hills and the Fessenden Center on Hatteras Island. These facilities look and feel like country clubs with an active, social population. There’s a tap dancing group at the Baum Center and a basketball court at the Fessenden. Attending the Senior Games, occurring annually in the spring, would also be a good way to visit and meet the area’s most robust retirees.

For families with school age kids to consider, a visit to any one of Dare County schools is time well spent. Our schools have some of the highest rankings in the state, and a Friday night football game, as in any small town, is a great way to meet the locals.

Meeting people, when you are here to look at available property, who are year ‘round residents will help you learn whether or not the Outer Banks as a community is a good fit for you and your family.

Off-season, there’s time to think, to plan, and remember why you came here. Buy a rental home in the winter and you’ll experience the luxury of time to enjoy and personalize your new home before a busy summer. You won’t be stuck in traffic on Saturdays and there isn’t a waiting line at every restaurant.

If you wish to build a new home, the quiet months in winter are also an ideal time to work out your plans with a builder. In the spring, contractors are often rushing to fulfill their contracts and complete their homes before the summer rental season is in swing. If you are not interested in rental income, you may do well to schedule construction of your new home during the summer and fall. Like most artisans, a builder will have more time to do his best work when he’s not under a tight deadline.

In winter you can walk land more comfortably with not a thought of pesky flies and without fear of surprising a snake. But nature is present. It’s not unusual at all to see deer taking a their daily stroll through a yard or find a little fox peering at you from beneath a wax myrtle. Without the hot haze of summer, the atmosphere can be wonderfully clear, bringing sunsets with color vivid enough to rival the gold and orange leaves of a New England maple. When the swans finally arrive and float en masse on the sound just offshore, the season is complete.

Timing your closing on the purchase of a vacation rental home in spring is akin to the story of the “loaves and the fishes.” The fishing season is in high gear with an abundance of tuna, dolphin and cobia, and the bread, well, that’ll be on your HUD Settlement Statement in the form of a hefty pro-rata rental income credit.

Buying any home in the spring, as would be expected, lessens the likelihood of negotiation. After all, the spring is especially beautiful and is the advent of summer––the epoch of the Outer Banks experience.

For most of us that live here, the investment aspect of homeownership is a factor. After a few seasons go by though, you’ll probably find out what we already know. Price, quality, and growth are all important, or so we believe at first, but none of it outweighs the personal value we reap when we embrace the Outer Banks lifestyle. No, not by a long shot

Making the Most of Vacation Rental Home Ownership

2007-08-28T16:05:00.000-04:00

By Lisa Loy

The majority of homes listed for sale on the Outer Banks are available to rent on a weekly basis. There are many advantages to a prospective buyer with this sort of arrangement, paramount among them is the income generated that offsets the cost of homeownership. Other benefits include the opportunity to “test drive” a home or neighborhood by renting the house first, and later, as a homeowner, to enjoy personally the investment with friends and family––you can't do that with a handful of stocks and bonds.

Rental income helps tremendously with the expenses related to vacation home ownership. Buyers not only want to spend time here on the Outer Banks, they want to comfortably afford it and enjoy the satisfaction of a good investment. This article focuses on the ways prospective homeowners can maximize rental income potential through careful assessment of the location and features of the home as well maintaining and marketing it to potential renters.

Location plays a key role in generating rental income and proximity to the ocean is the foremost consideration. Although oceanfront homes cost more to buy, they also command a higher weekly rental rate. Moreover, they are in greatest demand by the vacationing public. Consequently, an oceanfront home will garner more weeks rented, as many as 30 weeks in a year here on the Outer Banks.

Buyers may wish to compare supply and demand with other resort areas along the eastern seaboard. What are the related factors? Accessibility certainly––the number of hours it takes to drive from the northern states where the majority of our vacationing families live. The distance from Manhattan is manageable by car with an average drive time of 8 hours. For a family from Toledo, the difference between a 12-hour car ride to the Outer Banks verses a 19-hour drive to West Palm Beach is considerable, not only in fuel cost, but time lost on the beach. Even water temperature comes into the mix. The average ocean temperature in West Palm Beach may be 80 degrees, but the Outer Banks enjoys a Gulf Stream influence too with an average October water temperature at a refreshing 70 degrees. Just last month on August 7th, The Today Show cited the Outer Banks Town of Kill Devil Hills as one of 13 “Beach Buddies” nationwide for its clean water.

Lifestyle and location come into play as well. For some buyers, eventual retirement to the Outer Banks is a goal. So in addition to finding a home with walk-in closets, those buyers may prefer a location with more year ‘round neighbors and conveniences. Although most vacationers think of the Oceanside when reserving a home, good weekly rentals can still be enjoyed from the shelter of the woods or the along the soundside as long as recreational facilities such as a private pool or access to a golf course or marina are present. Condominiums can also work well for future retires who won’t want the yard maintenance and who will appreciate the elevator most multi-family structures provide. On the oceanfront they rent very well because they not only cost less to buy, they cost less to rent than a single-family home, and condominiums often have a wide array of recreational features. This adds up to a cash flow that is very agreeable.

Assessing the lifestyle of the coming generation of Baby Boomer retirees coming to vacation here is worth a look. They will have the time and the money to vacation here. Typically, they are a physically active, health conscious bunch, and they are technology savvy. A homeowner would do well to appeal to this category of renter by providing high-speed Internet access as an amenity in addition to the televisions and entertainment centers most homes already feature.

Homeowners should “set the stage” for the type of renters they wish to attract.

First impressions carry a great deal of weight when one considers the high volume of vacation homes from which to select. The first photograph prospects generally see is an exterior view of the home in a printed catalog or on the Internet. Standout features such as roof pitch, gables, covered porches, artful window combinations, and landscaping can capture attention, tempting the prospective renter to learn more.

Many property management companies now provide online reservation services. This is not only convenient for would-be tenants because they can access information 24/7, online reservations also give management companies the ability to share tremendous amounts of information. Now, instead of one or two photographs with a paragraph of text in a printed catalog, the renter can enjoy dozens of photographs depicting each room in the house, the pool, the view from the deck, floor plans, and area maps are becoming the standard marketing tool.

For a buyer interested in rental performance, it’s now an easy matter to check availability online and confirm the number of weeks rented. A little time spent researching confirmed reservations is well worth the effort because one can begin to see the trends in rental income as it relates to location and amenities. Additionally, the buyer can see which rental companies are able to deliver the most reservations. It will help the buyer set his weekly rates.

This leads into another point. Many homes are already up and running with a property management company and the buyer will assume the existing agreement at closing and the pro-rata share of rental income will be delivered as well. These agreements are generally renewed annually in the late summer or early fall and should not escape perusal. Compare the percentage of gross rents charged for management and the services provided for that amount. Rental management companies vary in cost not just with competing companies, but in-house too depending on gross projected rents and the ease with which they can handle the property. A property manager might charge a lower commission, perhaps 18 percent, to handle a large upscale oceanfront home bringing in more than $100-thousand a year than it would for a basic beach box located 100 yards from the ocean grossing $17,000-thousand. A newer home will likely have fewer maintenance issues than an older one. Experienced managers feel perfectly justified charging 22 percent or more for the older, smaller home that is harder to rent and more prone to maintenance.

The buyer should find a rental management company with the best fit. Are the staff members good communicators? What are the company’s payment practices, its charges for extra services such as spring cleaning and maintenance calls, the ease with which the owner can access activity records online, the convenience of office locations, and its marketing techniques? Some companies give owners a password to view their rental activity online––deposits paid, owner disbursements made, an opportunity to reserve “owner weeks” or make edits to the home’s inventory.

Once rented, a fresh and clean, well-maintained home is as important as the interior décor, Attracting repeat renters is much easier if the home is spotless. Paint should be touched up annually, and new linens, upholstery and carpet should be considered. Corroded fixtures, worn-out beach toys and chairs should be replaced.

There is a lot to be said about small, thoughtful amenities such as newspaper delivery, toiletries, board games and books for rainy days. Some homeowners have postcards printed up with a photograph of the house so that their renters can send them off to friends and family. It’s a nice touch and promotes the home at the same time.

The seating, the housewares, and appliances should be sufficient to handle the number of occupants. One coffee pot might not do for a group of 16. Some homeowners have more than one refrigerator now, choosing to install one in the sports bar on the ground level with the pool or ping pong table or put another out-of-doors in the summer kitchen or Tiki bar out by the swimming pool. These features improve the social, hospitable ambience.

Interior colors and furnishings can be brighter and fun than “back home” where more conservative décor may be preferable. Art is vital to complete the scene. There’s nothing to be gained by spending more for a beautiful house in a great location without providing those thoughtful, finishing works of art and photography. It will personalize a rental, reminding its visitors that this building isn’t a house so much as it is a home.

Buyers should focus as much attention on the finer points of rental management as they do negotiating the purchase price of the home. Like any business, being mindful of operational matters will affect the bottom line.

Does all of this sound like work? There’s good news to go along with every suggestion and task in this article––buyers can count on their realty agents to prepare cash flow analyses and rental comparisons. And rental managers not only oversee reservations, housekeeping and dispatch maintenance calls, they are even prepared to handle the purchase of replacement items and upgrades to ensure that a home stays in demand. The beautiful truth about owning a home on the Outer Banks is that homeowners can be as involved, or not, in its care as they wish.

Getting in the Rental Game: A Guide for Property Owners

2007-08-09T13:20:00.000-04:00

Renting is a great way to offset the cost of owning an Outer Banks vacation home. But renting your second home to vacationers is not as simple as installing a pool and putting up a “For Rent” sign in the yard. If you want to generate a reasonable amount of income, you’ve got to be a serious player in the rental game. Renting is a competitive business on the Outer Banks, and if you want to play, knowing the rules will give you a competetive edge.

When you’re ready to rent your property, the two main issues you will face are 1) attracting as many renters as possible, and 2) retention, in other words, getting those same people to come back AND pass the word to their friends and family.

Step 1: Attracting Renters

The best way to attract new renters is to start with a stellar property. Then you’ll need a top-notch management company with a highly visible marketing plan and professional service.

Renters initially look for the basics: location on the Outer Banks, proximity to the ocean, price and number of bedrooms. A wide range of rental properties is available on the Outer Banks, so every renter can find an option to suit. The homeowner’s responsibility is to offer the best possible property for the price range, location and number of bedrooms.

Beyond these basics, property managers say that plenty of amenities and a comfortable atmosphere are the two most important elements in attracting renters and keeping them as repeat customers.

Today’s renters want entertainment, and they want it on site. They’re paying a lot for the house, and they want to feel like they’re getting their money’s worth. They want amenities galore. Pools and hot tubs are the top renter-attraction devices. Homes with pools typically rent for more weeks for more money than those without pools.

Recreational space and equipment is a big draw as well, especially separate recreation rooms where the kids can play while the adults relax, or the adults can play while the kids sleep. Popular recreational equipment includes game tables such as pool, Ping Pong, Foosball and air hockey. DVD players and a DVD library, big-screen TVs, video games, board games, computers with high-speed Internet access, stereos and bars with mini-refrigerators are also sought-after amenities. Some homes offer a room entirely devoted as a home theater, with comfy seating, a huge flat-screen TV and a diverse DVD selection. Also attractive to renters is fitness and exercise equipment. This can be as simple as a treadmill and some free weights or as elaborate as a full-blown home gym with cardio equipment, weight machines, stereo and TV and a sauna.

Outdoor recreational equipment is a big plus. Anything extra you can offer, such as kayaks, bicycles, volleyball equipment, a basketball goal, horseshoe pits and swing sets, will add to your home’s rental potential. Beach chairs, umbrellas and a beach cart are definite recreational pluses because otherwise your renters will have to spend extra money to rent these items.

Another way to make your home stand out is to try to fit into a niche rental market. For instance, you can target families by offering baby equipment (gates, highchairs, cribs), plenty of recreational amenities and playground equipment onsite. You can attract corporate retreaters with high-speed wireless Internet access, fax machines, audio-visual equipment and conference space. You can attract wedding parties and functions with open interior spaces, outdoor gathering areas, large kitchens separate from the party space, and special decor. Fully handicapped accessible homes, with an elevator, wide doorways and other special features, and pet-friendly homes also stand out on the rental market.

Of course, if you have a great home but no one knows about it, what good is it? Enter the property-management company. Look for a top-notch management company with a highly visible marketing plan. Do your research before you sign on with a management company. Look for one that offers homes similar to yours. If possible, ask other homeowners about their experiences with certain companies. Try renting with the company you’re considering at least once, so that you can get a feel for the quality of service they offer from the perspective of a renter. Once you’ve chosen a company, listen to the advice they give you about setting the rental price.

If you’re thinking of renting the home on your own, you should know the amount of work it involves. Are you ready to deal with all the things the management company does — marketing, scheduling, contracts, trip insurance, deposits, service calls, renter complaints, house and pool cleaning, among many, many other things?

It is up to you to tell your property management company about your home’s amenities. If you add any amenities or upgrades to your home at any time, you must advertise them. Tell your property management company what you’re offering so they can advertise for you on their website and in their rental brochure.

Step 2: Retaining Renters

Those in the know say that the name of the game in the rental business is “Repeat Customers.” If your house is attractive on paper only, a customer might rent your house once and look for another property the next time they rent. But if your house is both easily marketable and exceedingly comfortable to stay in, renters will come back again and recommend your home to their friends.

As one property manager told us: “If a home is comfortable, well-equipped and obviously well taken care of by its owners, people will come back.”

Putting some thoughtfulness, attention and, yes, money, into your rental home will bring the renters back. Remember that renters are staying in your home because they want a home-like atmosphere (albeit usually nicer and cleaner than their real homes). They like the special touches that the owners provide. Personal things like artwork, a few well-placed knickknacks and comment books are nice. But property managers warn that you should not be too attached to the belongings you place in your rental home — so no sentimental or valuable objects. Renters do not place the same value on things as owners do, and owners who expect renters to do so are often disappointed.

Guests appreciate any extra amenities and will remember them when deciding whether to rent the home again. Extras like a DVD library, a varied selection of books, lots of local information and guidebooks, a few current magazines and beach equipment go a long way in the minds of renters.

They also appreciate comforts. Comfortable mattresses, pillows and furniture are some of the best ways to leave a lasting impression. Outdoor showers and well-placed foot washes, extra fans and blankets, plenty of clothing storage areas, hangers in the closets, and a nice selection of porch furniture are other amenities that will leave an impression in your renters’ minds. If your home sleeps more than six, large capacity washers, dryers and dishwashers will be very much appreciated. The renter may not consciously notice all of these extra touches, but they will remember that your home was comfortable.

A comfortable home is also a well-stocked home. More than any other room, the kitchen should be well-equipped. If you want return renters, go above and beyond the basics. Flatware is basic. Good-quality kitchen knives and a varied selection of cooking utensils and gadgets are above and beyond. A blender is basic. A Cuisinart and a hand-mixer are above and beyond. A random selection of pots and pans is basic. A quality set of pots and pans, various casserole and baking dishes and several sizes of mixing bowls and measuring cups is above and beyond. You get the idea. Having the proper number of table settings for the number of people the house sleeps is not optional, and it’s always a good idea to get extra settings of everything to account for breakage or loss. Be sure to offer matching flatware, plates and glassware, a simple touch that makes renters feel special.

The atmosphere of the home should be welcoming and friendly. Keep the decor simple, but let some of your personality shine through. Try to avoid lots of clutter.

Expect to spend money every year to keep your rental in top renting condition. Property managers and interior designers alike agree that owners need to constantly update their rental homes. The interior of the home should feel like the owner takes an interest in it. Any broken, stained or unsightly items should be replaced immediately. Interior designers say that often you can start updating a home with the simple, inexpensive things: Add new bedspreads, shower curtains, throw rugs and throw pillows. Slipcover or reupholster some of the furniture. Put a fresh coat of paint on the walls, replace broken blinds, add updated lamps and accessories. Of course, there will always be times when you have to do more major updates, such as replacing damaged furniture or worn carpet, replacing appliances or painting the exterior to make the home more inviting.

To reduce the wear and tear on your home, make sure your interior furnishings and décor are sturdy enough to hold up to renters. Check with local interior specialists; they know what works in rental homes. For instance, the upholstery you choose for your sofas must be fashionable but easy to clean and highly durable and resistant to sunscreen oils and salt. Carpets need to be tight-looped and flecked, not solid color pile. Appliances should be high quality but simple to use, without too many features. These are the types of invaluable tips local interior design and home-outfitting experts can offer.

Sometimes, to attract and keep renters returning to your home, you may just have to spring for some major construction. Adding a pool will bring in extra money and more renters, so it is, in most cases, worth the cost of installation. Adding an extra master bedroom or closing in the garage to make a game room may increase your home’s rentability as well.

Remember, in the end, your property management company is the expert on what attracts renters and what will keep them coming back to your property. It’s their business to know!

Agents of Change

2007-07-31T21:38:00.000-04:00

Real Estate Brokers Go
Above and Beyond Expectations
By Molly Harrison

It’s a common misconception that all a real estate broker does is set up signs in yards, list properties on the Multiple Listing Service (MLS), show a few houses here and there, then sit back and rake in the big commissions. There’s a lot more to selling houses and properties than most people realize — much more.

Real estate professionals work with clients way beyond just the obvious showing of properties. From assisting people with investment strategies and offering relocation information to helping clients achieve personal goals and appeasing the fears of first-time home buyers, the real estate broker is the middleman, or middlewoman, of big life changes.

Just think of the broad range of subjects that real estate brokers must be knowledgeable about. Not only must they know a property inside and out, including its history and market value, but they must also have a great knowledge of the town, the county, the state and the geographical area where the property is located. They must know about all of the codes and covenants and laws — current or in the works — that might affect the property. They must know about septic and sewer systems, water hookups, home maintenance and repair, cost of services, where to find community information, school information and so much more. All of this knowledge is intangible but extremely valuable. Real estate brokers are required to be diligent researchers. They are constantly looking into building codes, rental histories, property histories, property liens, insurance laws and tax information.

“You have to be constantly learning and researching,” says Darlene Styron-Doshier of Sun Realty on Ocracoke and Hatteras islands. “You can’t lag behind or you’ll get left behind.”

In a vacation market such as the Outer Banks, where the majority of properties are second homes or rentals, real estate brokers are required to have more than just a general knowledge of rental programs and how they work. Buyers want to know about net and gross rental incomes and they want a solid idea of the investment return on a rental property.

Brokers also need to be able to inform clients about land values, flood zones, insurance requirements, erosion rates for waterfront property, how the purchase of a second home affects taxable income and the types of loans available. They need to be able to recommend the right type of lenders and tax accountants. Out-of-area buyers have many questions about local information, such as hurricanes and storms, cost of maintenance and recommended contractors as well.

“On the Outer Banks, most buyers or sellers are from out of town, and their broker is their only local contact,” says Marlene Roberts Brantley, Broker with RE/MAX Ocean Realty. “Consequently, we have to work with them on everything from house inspections to selection of attorneys and lenders. We have to arrange with them to have inspections done, negotiate a repair agreement, get quotes and arrange for repairs, inspect the property along the way, line up elevation certificates, and make sure it’s all done in a timely fashion.”

For relocators, agents must be able to provide community information about everything from schools and sex offenders in a neighborhood to churches and the name of a good dentist.

As a seller’s agent, the job goes well beyond putting up a sign and showing the house. First and foremost, the agent helps set the selling price.

“Pricing a home is not as easy is it may seem,” says Gordon Jones, Owner/Broker of Coldwell Banker Seaside Realty. “You have to factor in location and the home’s features and come up with a price that yields the largest amount for the seller but doesn’t leave the house on the market too long. Agents are constantly studying the market and expanding their knowledge base of properties so they can set a reasonable selling price for properties.”

Once the price is set, the agent must make sure that potential buyers know the house is for sale. Brokers must be expert marketers, and they are constantly thinking of ways to market the property, both out of and in the area. They pay for ads in newspapers and other publications, on the Internet and through direct marketing. Writing those ads to appeal to the right buyers is an art mastered only by those in the know.

The broker must also make sure the house is in good condition for viewing. Therefore, a broker is often called upon as a consultant on “staging the home,” and he or she must have some knowledge of interior decorating and curb appeal. The broker must have a good, objective eye, considerable tact and be able to recommend the least expensive changes that will have the biggest impact on buyers. He or she must be able to recommend contractors for yard work or repair work.

On the buyers’ side, real estate brokers invest a lot of time catering to potential clients, whether it’s via phone, email or in person, even though many of those clients do not end up buying, especially in a vacation market. Most all real estate brokers say that the key is to treat each contact as if they were buying, because everyone is a potential customer.

Often vacationers are very serious about buying a property while they’re here, but when they get back home and crunch numbers their interest wanes. Local real estate brokers have the added difficulty of trying to maintain interest with people who are so far away and can’t come back to look at a property again and again.

First-time home buyers have special needs that require more of the agent’s attention than normal. "There’s a lot of educating and hand-holding with a first-time home buyer,” says Brantley. “To get a first-time home buyer from selection to closing is a demanding situation. Buying a home is one of the most important things people do, and we have to help them through it. It’s important for a first-time home buyer to have proper representation during the process, and serving as Buyers Agent to first-time home buyers is something we enjoy and take very seriously. It may be the most rewarding part of what we do as Realtors.”

Some buyers and sellers think the job of a broker is so easy they can do it themselves, without an agent. This is possible for some people, but most experts recommend having the expertise of a broker to help you through the process. Not only can a trained real estate professional guide you smoothly through the art of making a deal, but he or she also wades through the incredible amounts of paperwork. The broker tracks down all the legal signatures and make sure the details are carried out with lenders, attorneys, inspectors and insurance agents.

On the Outer Banks, brokers also have to deal with the stiff local competition.

“In Hatteras, it’s a lot more intimate area, and you’re obligated to go above and beyond for clients,” says Danny Couch. “It’s required. You’ve got to look for that extra edge.”

Couch gives all of is clients community information along with historical and cultural information that gives them a good background of the area. He even gives all of his clients a local cookbook. “Out-of-area people want to be made to feel local,” says Couch. “They want to do more than own a house here. They want to be a part of the community. I try to help them with that, and they appreciate the little things.”

Finally, another misperception about real estate brokers is that they make too much money.

“The average real estate agent on the Outer Banks works anywhere from 30 to 50 per week and makes an average living for a profession that takes a lot of time and knowledge,” says Jones. “When people go to an attorney or a financial advisor they don’t flinch at the fees. But for some reason when they go to a real estate agent it’s different. A real estate agent’s fees are related to one of their most important assets – their primary or secondary home. People grow investments such as stock and bonds and they build wealth with real estate, and they need the right professionals helping and guiding them when they buy and sell.”

Many people look at the commission fee and think that it will all go to one person. These people don’t realize that most of the time the commission is split as many as four ways.

“Most properties today are co-broked between a buyer’s agent and a seller’s agent,” says Louanne Woody, Broker in Charge at Sandmark Construction and Real Estate. “Whatever fee is earned is split between the buying and selling companies, then typically each company pays the agent a portion of that that fee.”

Then each broker has many expenses that offset their earnings — advertising expenses, webmasters, association dues, travel expenses, cell phone service, to name a few.

“I spend a lot of money up front when I market a property for a seller,” says Woody. “I buy ads, set up websites and spend the time to do the legwork to properly market the property. I need to be available to answer property inquiries at all times. I don’t get a cent until the property sells, and in many real estate markets that can be months down the road.”

Real estate brokers are out there day in and day out, on evenings, weekends, beautiful summer days, even when the surfing is epic, always on call to suit the needs of clients and more than earning every cent they make. Call upon their expertise for your real estate needs.

Getting Your Beach Bearings: A Community Compass

2007-07-25T17:58:00.000-04:00

By Lisa Loy

The decision to buy property on the Outer Banks should be made with more information than just the lay of the land. We may succumb to the lure of the Outer Banks’ natural land and seascape and embrace the variety of ways we can enjoy the sport and soul of life outdoors. It’s a fact that some buyers have chosen to live or invest here based on little more than the view.

For year ‘round living, our moderate climate, relatively low taxes, great schools, world-class fishing and a score of superb golf courses can tip the scale toward the decision to buy. For vacation home buyers, a rental cash flow analysis offered up by an experienced Realtor can provide all the justification one might need to partake in “the life.” But what else should you know? Within the broad reach of our 100-plus miles of coastline, there are many villages and towns. Which Outer Banks community is right for you? How do you get your bearings when there are features that you can’t see, such as local attitudes on growth and the environment? These attitudes will ultimately shape the future look of the Outer Banks. Will it be green or glitzy? Here, then, in addition to some physical features of note, is a view of another sort, from north to south -- a snapshot of each community.

The financial strength of Dare County, which encompasses the majority of the Outer Banks, is also a key element in the future shape of the Outer Banks lifestyle, and it’s looking good. The $1.3 million dollar surplus in the 2006 fiscal year increased the unreserved, undesignated general fund balance to $22.3 million. This fund helps Dare pay for the costs associated with storms or capital improvements, which can also be funded with land transfer tax revenues. Low debt, low unemployment rates, high property tax collection rates from non-resident property owners and staggering growth in property valuations, now estimated at $16.5 billion, all demonstrate Dare County’s ability to serve Outer Bankers’ needs. It is the 16th fastest growing county in the state.

The majority of the communities covered in this article are located in Dare County, but at either end, due to primary access routes through Dare, the Currituck County beaches and Hyde County’s island of Ocracoke are also considered part of our overall community.

We begin at the northernmost village, beyond the paved roads in Currituck County’s Corolla and above the wildlife sanctuary, in the village of Carova. Accessible by 4-wheel-drive vehicles by way of the beach, this area was subdivided and canals were dug in anticipation of an access roadway from Virginia planned some years ago. But when the Back Bay Wildlife Refuge came into being, those plans were dashed and the subdivisions remained isolated, albeit affordable. Lot sales were a bargain and included owner financing, but building a home that far out of the way back then was a bit of a financing challenge. As a result, the homes there are a hodgepodge of old and new, ramshackle and opulent. Residents no longer push for better access, they are friendly, but they want to enjoy their privacy. They shy away from development, even the mere grading of their main route, Sandfiddler Road, as proposed last January. The effort was dropped due to a petition signed by more than 150 residents who feared that road improvement would spark more development.

Although Carova is geographically just a few miles north of the village of Corolla, it is a world away in appearance and economic development. Corolla is manicured, tourism driven and on a fast track toward self-governance. The future “Corolla, Incorporated” is made up of homes in developments with extensive recreational facilities that attract a steady stream of vacationing families who arrive weekly in Mercedes and Volvos. The year ‘round population is small, but visitors carry big pocket books, and the resulting revenue stream is significant, benefiting the larger agrarian mainland of Currituck County, a catalyst in Corolla’s hopes of township. Most non-resident homeowners take advantage of premium weekly rental income to offset the cost of ownership. For the Currituck beach communities, access to schools is currently a challenge for local families, meaning Corolla is not attracting many new, year ‘round residents with children and won’t until the long anticipated mid-county bridge, connecting the Currituck beach to its mainland, is finally built.

“If a bridge is built, it will be easier for people to live there year ‘round,” Mark Massey, a Broker with BD&A Realty & Construction, Inc. said. The bridge will help lengthen the season for Corolla’s business community because it will be more accessible for day-trippers to the area. He said that a number of people he knows have tried to make a go of living full-time in Corolla but that after a year or so many of them give up and move south to Dare County.

“There are a few large parcels up there that present the possibility that new communities will have some commercial or mixed-use areas,” Massey said. He sees that as a plus for year ‘round growth and, consequently, greater participation in the future look of Corolla. He also noted that sales activity is up right now, not unusual in the spring as buyers enjoy closing in time to receive the upcoming season of rental income. What is encouraging to him is that the overall activity indicates a more level market throughout the year.

In addition to shortening drive time for southbound vacationers to the northern beaches, the proposed mid-county bridge will help ease the travel volume on N.C. Highway 12 through the towns of Duck and Southern Shores.

Like Corolla, the town of Duck is a vacation destination with upscale vacation rental homes in attractive developments, but the year ‘round population is growing due in part to its better proximity to the conveniences of major medical facilities, schools, shops and restaurants. Duck is the northernmost community in Dare County and has made great strides since its incorporation five years ago with its own police department and other services. It has acquired property for a town hall, and the first phase of a new park at the same site, is almost complete. This year Duck is providing free concerts there this summer and fall. By and large the people of Duck are actively involved in their town, eager to enhance its beautification.

“My take is that the atmosphere in Duck will be maintained for the future,” Massey said. “The lack of open parcels available and the tight controls the town has in place to preserve vegetation and minimize house sizes will help.”

Overall, the way the Outer Banks compares to other coastal communities along the eastern seaboard is also a factor in Massey’s estimation.

“It’s hard to find a place near the water with this kind of natural environment and small town feel,” Massey said. Some people from the north who have retired to Florida have chosen to move halfway back home. “My friends call them ‘half-backers,” he said, attributing the reasons half-backers make North Carolina their second choice is that they miss the changing seasons not present in Florida. They miss that rhythm and find the moderate seasonal changes here quite comfortable. Accessibility to friends and family is also a factor; a day’s drive to the Outer Banks is much easier on their children and grandchildren from Ohio than a two-day trip or the cost of airfare.
Farther south, the Town of Southern Shores is a magnet for the mature buyer. It is a full-fledged year‘round residential community that enjoys the shelter of extensive maritime forest, profuse with wild flowering dogwood each spring. The attentive community benefits by a large retirement population who volunteer for many services to such a degree that they also enjoy the lowest tax rate in the county.

Unlike its neighbors to the north with a wide variety of subdivisions, Southern Shores was carefully planned from the start. There are no recreational facilities that rely on hefty homeowner’s association dues. Instead, nominal dues paid to the civic association support community spaces that provide access to ocean and sound with parking and a few playgrounds. The country club, Duck Woods, offers membership for those wishing to play golf and tennis. Like Duck, the residents of Southern Shores don’t want a four-lane traffic corridor through their town and support plans for the mid-county bridge.

Kitty Hawk was never planned, it was settled. It has one of the greater concentrations of old families on the Outer Banks who live primarily on the rolling, wooded ridges that rise above intermittent marsh. Names like Perry, Twiford, Tillett and Baum that appear on many street signs give tribute to these true locals. They avoided government for as long as they could, preferring a live-and-let-live lifestyle, but by 1981 development had intensified to the degree that Kitty Hawk chose incorporation to gain control of its future appearance; its first order of business, a zoning ordinance. The Town has garnered kudos for its efforts to preserve more than 1,800 acres of its woods with the support of the Carolina Estuarine Reserve Foundation.

Mary Davenport, a broker with RE/MAX Ocean Realty and recent Outer Banks Realtor of the Year, believes good development planning is also present. Kitty Hawk Landing is a case in point.

“The people who developed Kitty Hawk Landing had the foresight to buy land at the beach,” she said, citing that homeowners in this tucked-away, soundfront neighborhood are able to enjoy parking and convenient access to the beach.

The largest of the towns with a population of 6,613, Kill Devil Hills is considered “Outer Banks Central” with numerous county facilities including the First Flight Schools complex, the Baum Senior Center, County library and satellite offices, and the site of Wright Brothers National Memorial. With a progressive attitude on growth and redevelopment, it is the first beach community to install streetlights along U.S. Highway 158 and to require all new commercial developers to install sidewalks along that corridor. The new Streets Division, charged with managing storm water run-off, will be housed in a new public works complex, and the Ocean Rescue Division will be located in the new Ocean Boulevard Regional Bathhouse. The Town is completing plans to begin the construction of a second firehouse on U.S. 158 at 8th Street. In 2004 the Town created the Historic Landmark Commission to identify homes and other structures of historic significance. At present the Town is working on an affordable housing effort in an attempt to help new teachers make their homes here and is leading the charge to prevent the construction of new overhead power line towers along U.S. 158.

Like Kitty Hawk and Kill Devil Hills, the Town of Nags Head has a healthy mix of year ‘round residents and vacation homeowners. The Town attracts a high number of anglers due to its proximity to Pirate’s Cove Marina and Oregon Inlet Fishing Center. The only beach nursing home, Britthaven, and the Outer Banks Hospital are both in Nags Head, and the new Nags Head Elementary School opened in January of 2006.

Officials in the Town of Nags Head, encouraged by the many communities that are successfully maintaining their beaches up and down the Atlantic seaboard, are leading the way locally to implement beach nourishment practices. But in April, residents voted down a five-year special tax assessment to fund the program. The Commissioners still believe the majority of residents want nourishment, they just don’t agree on how to pay for it.

The Town took a big step forward, however, in its financial contribution toward the Visitors’ Bureau purchase of 9.6 acres that will be developed into a convention center, with a twist. The “green” facility as envisioned would utilize sustainable energy practices such as capturing rainwater, wind power and solar energy. The Outer Banks Visitors’ Bureau hopes to bolster year ‘round businesses by bringing more visitors in the off-season.

The historic Town of Manteo on Roanoke Island, just west by bridge from Nags Head, is the cultural arts center of the Outer Banks. With several blocks of galleries, restaurants and shops, it is the most walkable and charming of the towns, and it is in the midst of a growth spurt with new, history-friendly developments under way that complement the surrounding neighborhoods that have been tended with care by some of the county’s oldest families. This careful redevelopment is the result of a 20-year plan that was developed by the Town and NC State University that literally sent students door to door to survey the visions of its citizenry. The county seat is in Manteo, and while a new Justice Center has opened, plans to preserve and restore the old historic Courthouse are in progress. New elementary and middle schools have been constructed and the former middle school is being renovated and absorbed by the Dare County Campus of the College of the Albemarle. The only commercial airport, The Dare County Regional Airport, Roanoke Island Festival Park, and the Outer Banks History Center are all located here, as are Fort Raleigh National Historic Site, the birthplace of the New World on Roanoke Island.

Mary Davenport believes that it is also the caring nature and involvement of the people who live on Roanoke Island full-time that make life here a special experience, now and in the future. She cited her neighbors at Heritage Point on Roanoke Island.

“It was asleep for a long time, but eventually, as we got some houses and it turned over from the developer, the community really got together. Now, after a storm we get together to trim trees. We share generators. For new residents we even have a welcome committee.”

Davenport went on to say that she believes that the many people who have moved to the Outer Banks are eager to support the community. “Look at Relay for Life,” she said. “For comparable areas in size and population, we were Number 2 in collections in the nation!”

South of Nags Head, over the aging Herbert C. Bonner Bridge at Oregon Inlet, the 60-mile-long Island of Hatteras elbows some 23 miles out to sea. The Cape Hatteras National Seashore, the Pea Island Wildlife Refuge and Buxton Woods Preserve encompass much of the island, crowned by the granddaddy of all U.S. lighthouses, the Hatteras Light. The seven villages on the island attract sportsmen from around the globe, and as a result bolster the economy during the shoulder seasons. This sport-specific visitation accounts for some of the highest numbers of weeks rented for homeowners engaged in the vacation rental home market. Although many beautiful resort homes have been built in recent years, the island is still an affordable mainstay for anglers, surfers, windsurfers and kite boarders. The northernmost three villages of Rodanthe, Waves and Salvo are contiguous with a small year ‘round population and large vacation rental sector. Avon, Buxton, Frisco and Hatteras villages to the south have more permanent residents, and many of the locals can trace their roots back hundreds of years. Hatteras Island is also gaining a new school this year, and the Graveyard of the Atlantic Museum is finally becoming a reality. The Gulf Stream-bound charter fishing boats operating out of Hatteras enjoy a robust existence because they can reach the blue water in less time than marinas to the north.

Scott Leggat, Vice President of Marketing and Administration at Outer Beaches Realty Inc., said the two main issues facing residents today are the possibility that beach driving will be restricted or prohibited altogether and the imperative need for a new bridge across Oregon Inlet.

“Both of these issues, people are passionate about,” Leggat said.

When asked what he thought Hatteras Island would look like in 20 years, he said, “In some ways, maybe it’s wishful thinking, but I don’t think it will change as much as it has in the past 20 years.”

Leggat’s rationale is that within 20 years, the villages on the island will reach build-out, or critical mass, as he puts it. With no possibility for sprawl into National Park lands, redevelopment of older neighborhoods will likely occur.

In Hatteras, there is also a free ferry service to Ocracoke Island. Development on this island has been hindered in recent years as the water utility has struggled to expand and keep pace with the growing need for service. Like Hatteras, a large portion of the island is part of the National Park. The village, like Manteo, has a waterfront setting as it wraps around a harbor called Silver Lake. It is a charming village with quaint shops, restaurants and enchanting small cottages. This island also attracts visitors in great number, including a significant number of northern Outer Bankers who find Ocracoke to be a perfect weekend getaway.

Eventually, the entire Outer Banks will experience the scenario of build-out that Leggat describes for Hatteras Island. With most communities here already mature and huge expanses of natural land set aside in perpetuity, with much infrastructure already in place and financially solvent municipal and county governments, and especially with a population of residents ready to drive their visions into active planning and meet the challenges as they come into play, Leggat’s wishful thinking might just ring true. If you’re just now considering a purchase of Outer Banks property, it’s possible that the place you buy today will still resemble itself two decades down the road. And that, when all is said and done, is what draws most people here to begin with.

What’s Really Going On with Real Estate on the Outer Banks in 2007?

2007-07-18T11:22:00.000-04:00

By Gian Hasbrock

You made it. You’re on the Outer Banks, one of America’s great destinations, and you’re interested in owning a bit of this place. But what’s really going on with the market here? You’ve heard rumors; you know that there are a lot of places listed for sale. Well, this article can answer some of your questions. To get a clear picture of the Outer Banks real estate market, we’ll look at the recent past, which if you don’t look hard at statistics might point to a drier market, but we’ll also get some hints from some real estate professionals who are experiencing their best year ever.

That sound you hear is not necessarily the hiss of the so-called collapsing real estate bubble. More likely it’s just the ever-present Outer Banks wind. But there are quite a few voices in your ear and they’re probably not singing harmoniously. It’s easy to be confused. But the top producers we spoke to are quite clear: Don’t let this year go by without a buy. You really don’t want to wait a few years and exclaim how you could just kick yourself for missing one of the best buyer’s markets on the Outer Banks in years.

Jack Riggle, of BD&A Realty and Construction, had a very successful 2006. What does he think 2007 holds? “If you really look deep at the numbers, you’ll see that our market started its slowdown back in July of 2005. It has already seen its bottom, troughing in July of 2006. I’ve been sensing a pickup since late 2006.” He’s looking forward to the near future where we’ll regain the momentum that drove the market in the first part of the decade. “The pot is beginning to bubble,” Jack said. He predicts a slower than usual spring but a stronger than usual summer and fall. “Now is the time to buy,” Jack said.

To get a more educated look at the Outer Banks market, let’s look at the nation, the region and then the local scene. The number of existing homes sold nationally in 2006 was 6.48 million units, down 8.4% from 2005 when there were 7.1 million units, and down 4.4% from 2004 with 6.8 million. New home sales were down 17.4% from 2005 and down 11% from 2004. Nonetheless, 2006 was the third best year ever for real estate sales, with 2005 the best and 2004 the second. (This just goes to show the strength that the near-50 year lows in interest rates we had in the first part of this decade can bring to a market.) So what’s all the fuss about in the media touting a real estate market that’s in the tank? Simply put, it was the precipitousness of the downturn in 2006 that made the headlines. We had not seen such a marked year-over-year contraction since 1979. (And do you remember 1979? Interest rates then were approaching 20% and inflation was in double digits.) The reality is that the average existing home price in 2006 was $268,300, an increase of less than 1%. New homes average prices at $304,602 were up 2.6% last year.

Dave Hoare, also of BD&A Realty and Construction, has been a top producer on the Outer Banks for years. He knows confusion doesn’t sell. “There’s no confusion now,” Dave said. “Confusion in the past resulted from real estate activity that resulted from a feeding frenzy. Rents were out of alignment with sales prices. Now the rental numbers will dictate the pricing,” he predicted. “There are really good buys out there today. But ensure that your activity reflects the real estate fundamentals,” he advised. “If you’re going to use the property yourself and you believe in the area and its future, then move forward with what time will prove to be a good investment.” Dave noted that without the mob pressure, and with lots of inventory, purchasers can make a truly wise decision. “It’s a great time to be a buyer,” he exclaimed. “Sellers are the ones in a state of confusion. If they bought recently, they have some hard choices.” Dave advises even today to not invest in real estate if you can’t hang on through slower times.

So what does the REALTOR trade organization, NAR, forecast for 2007? They are projecting existing home sales will be down 1% to 6.4 million units and new home sales down 9.4% to .957 million units. NAR is projecting that existing home prices will increase 1.9% this year and new home prices will be up 1.8%. How accurate are their forecasts? Well, um, not very. They tend to underestimate growth in good years and understate losses in bad years. But, okay. We’ll take their forecasts on the national level with a grain of sand (hey, this is the beach, we have more sand than salt). Since we’ve already experienced nearly a quarter of the year already, we can examine the data. How are we doing nationally?

Existing home sales have improved from late 2005 but still lag behind 2006 numbers. In new home sales, the first months of the year showed a continued slide. Down 20% from the same period in 2005, there’s a massive inventory still to be absorbed in the new home markets around the nation. The slide was augmented by historically high cancellation rates as investors fled the market. Where did all those investors go? Well, they went to the stock market, where equities were breaking all-time records...until March when Greenspan sneezed in Shanghai and the markets caught pneumonia. Perhaps some of those investors will be returning to the real estate arena sooner than they thought.

How do we stack up in North Carolina against these national figures? Pretty well. In January of 2007, U.S. existing home sales were down 4.3% from January of 2006, but in North Carolina, we were down by only 2%. Give credit to the Triangle and the Triad, which saw significant 6% increases compared to 2006. How did the Outer Banks stack up? Our market was down 16% in number of sales overall compared to January of 2006, but we did rather well compared to two other resort markets in the state. Brevard County in the mountains was down 52%, and Brunswick County in the southeast was down 54% (ouch!).

Dan Martier is a top producer with Coldwell Banker Seaside Realty, and last year his activity put him in the top 2% of all REALTOR® members of the Outer Banks Association of REALTORS. Dan echoes our other professionals in noting that “it’s a wonderful, amazing time to buy real estate on the Outer Banks. It’s time for the truly savvy buyers to come on.” His best advice to sellers: “Conform. If you really want to sell, you need to conform to where the market is today, and it’s still adjusting. There’s just so much competition out there, you must place yourself in a position to sell,” Dan mentioned. To be placed in that position, it’s all about your pricing. “So if you really want to sell, you’ve really got to take a hard look at your price to get noticed,” he concluded.

The bright spot on the Outer Banks statistics is found in comparing homes under contract in the first two months of 2007 compared to 2006. With 211 units contracted this year compared to 123 last, that’s an increase of 72%. Land sales remain highly depressed on that same measure: down 67% compared to 2006. Tip O’Neill once said that all politics is local, and real estate is all about the specific location. The top submarkets for homes on the Outer Banks, based on activity so far this year, are Kill Devil Hills, Nags Head, Kitty Hawk, Corolla, and Duck. Another bright spot is that median pricing in February is down only 1% from the same month in 2006. Back in July of 2006, the median price was down nearly 20% from a year earlier.

Ben Seal, who works with OBC Real Estate has been active in the Outer Banks real estate market for more than 20 years. He has seen many cycles, both boom and bust. Ben advises, “Go south [to Hatteras Island]. Visit the newest communities where there is still room for appreciation. Natural amenities are waiting to be enjoyed. Buy now, because supply of quality waterfront neighborhoods is limited,” he advised. Sellers and developers are offering great incentives to become involved. “There’s no doubt: Market conditions are in the buyer’s favor,” Ben said.

The real estate market runs in predictable cycles. Last year we concluded an expansion in real estate nationally that ran double the length of the “normal” cycle. It was a necessary correction, a breather, and here on the Outer Banks, we were blessed that we got most of our pain out of the way early. So, before you say bye to the Outer Banks, consider a buy. Our panel of professionals say that it’ll save you from that horrible comment you might make 10 years from now of…”If only we had bought back in 2007!” Don’t miss one of the best buyer’s markets ever on the Outer Banks.

Gian Hasbrock, MIRM, CRS, ePRO, is VP of Sales & Marketing for OBC Real Estate in Kitty Hawk and Salvo and heads WOWISM (Walk On Water Inspired Sales & Marketing). Reach Gian at (252) 207-9000 or gian@wowism.com

Closing from a Distance

2007-07-16T17:58:00.000-04:00

By Lisa Loy

For years you’ve enjoyed a vacationing here, and the idea of owning a beach home grew from an idle fancy to a top priority. Finally, you decided that yes, this is the year to make it happen. It’s a buyer’s market after all, the timing is right. You’ve done your homework, shopped the possibilities, and didn’t even mind when your real estate agent phoned at dinnertime. You’ve been happily inundated with information and escorted through every potential cottage in and above your price range. This is it. You’ve signed an offer to purchase an Outer Banks home. Your dream is finally going to become your reality.

But now, with the ink still wet on your contract, you have to drive back home to the real world and all the responsibilities that come with it. Worrisome details start to creep into your mind. You live 500 miles away. How are you going to navigate the closing on your deal of a lifetime from that distance? You can’t use your attorney and/or title company back home (a title examination must be performed locally) or your bank where they all know you (it’s out of state), and how’s the “walk through” going to happen if you’re not there to do it? Well, there’s no need to pop your beach ball over it. Most buyers are just like you, and everyone here, from attorneys to lenders, and realty agents have considerable skill assisting distant buyers close in an efficient, uneventful manner. So begin by making full use of your Outer Banks real estate agent.

Your first goal is to see that your contract contingencies are met. Generally, the biggie on the contract is the proviso that you are able to secure financing at a rate and product that suits you. Your agent will shop mortgages with you. We have a good number of local lenders and it’s worth making the comparisons as they offer a wide menu of financing options.

“Most local attorney's, Realtors, and lenders are very familiar with the "mail away" closing process,” Gray Berryman, a broker with Carolina Designs Realty in Duck said. “Familiarity with this type of closing is another reason that it is very important to use a local lender, not an out-of-state broker who does not work on the Outer Banks regularly.”

Crouse Gray, an attorney in Kill Devil Hills, said that while it is convenient to use a local lender, buyers have more choices since the Mortgage Lending Act was modified two years ago. “A lot of people have relationships back home,” Crouse Gray said. “Almost all of your big lenders are now registered in most other states. It is no longer the problem it used to be.”

The fixed rate 20 or 30 year mortgage is considered the gold star, but, if you plan to be a short-term owner, say 4 years (at which time you’ll retire, sell your beach house and your primary home, and move to the Outer Banks full-time into a new year ‘round home) you might explore adjustable or balloon rate mortgages. You’ll never regret doing the math. Short-term owners will save a significant amount on adjustable rate mortgages with the “teaser” rate offered the first year. Then the interest rate goes up. Some adjustables will increase the full 2-percent the following year, others don’t ratchet up until two or three years later. There are also interest only loans available whereby borrowers’ make payments that only cover the interest due and don’t reduce the principal amount of the loan. Now, make a comparison with the best-fixed rate loan for the same 4-year period.

Be mindful of the points––a one-percent fee the lender charges at closing to reduce the your interest rate. Generally, every point you are willing to pay reduces the interest rate by .125 percent. Ask yourself, “Will I own this property long enough for the lower monthly payment to offset the extra money I paid to get the lower rate?”

Also, if you or your deal is unusual, you might also ask your agent to help you find a lender, usually a bank, that “shelves” its loans. These loans remain with the same lender for the duration of the term, which is different from most lenders that follow strict guidelines in the loan application process because the loans will then qualify for sale to the secondary mortgage market (i.e. Fanny-Mae). This is the reason some lenders charge an origination fee––they won’t own the loan long enough to make a profit on interest, so they have to make their money up front.

Once you’ve made your decision and applied for a loan, the lender will order an appraisal of the property that you will pay for up front along with an application fee. They need to confirm that the loan-to-value is true.

Stay in touch with the loan processor to keep things moving. Be proactive. If for example, some of your verifications are late coming in, you can help by calling your employer or depository with a little encouragement. It’s just the sort of thing that can cause a late loan approval, which means the lawyer’s office receives the loan package late, resulting in less time to accomplish the task of preparing the closing documents in time for the closing date specified on the contract. You can help by calling your attorney’s office as soon as you receive word that your loan is approved.

In this way, the lawyer can get started on your title search and order any necessary reports before he receives the loan commitment from the lender. The thing to remember here is that the lawyer and the Realtor do not wish to expend money on your behalf until your loan is approved. This is why a lot of things are happening later than sooner.

“Real estate agents line the buyers up with a list of local attorneys,” Crouse Gray said. He will order a termite inspection and survey if the lender requires it. “Surveys are recommended, but about 70 percent of the time lenders don’t require it,” he said. “Most people opt out.”

A new survey frequently isn’t necessary to obtain title insurance for the benefit of the lender. But it is if the buyer wants survey coverage on an owner’s title insurance policy. It is worth discussing the benefits of this insurance coverage with your attorney, especially since the premium is only paid once and not annually like most insurance policies. Title insurance protects you from defects in the title that may not be disclosed by a title search, long lost heirs that come forward with a claim for example. If a boundary line dispute arises in the future, survey coverage on your title insurance policy can protect you.

The majority of lenders email the closing package to the attorney’s office. Almost all the closing documents are prepared by a centralized loan office,” Crouse Gray said.

When the attorney receives it, he will review and complete the documents and prepare the HUD or Settlement Statement. This is a line-by-line soup to nuts itemization of every penny spent and received including deposits, tax pro-rations, insurance premiums, lender’s and attorney’s fees.

Don’t be concerned if it seems you never get to speak with your attorney. I see most of those offices as little real estate closing factories. The attorney does the trouble shooting while his 2 or 3 legal assistants perform the bulk of the labor. Some secretaries coordinate as many as 10 closings a week and as a result are highly experienced. They can handle most of your questions.

In addition to scheduling any inspections that need to happen, your real estate agent can help you by providing information for the transfer of utility accounts and coordinating with the property management company if there is rental income to pro-rate.

Although cyber conveniences have dramatically reduced the time it takes to accomplish many closing tasks, the Promissory Note and Deed of Trust (the document that is recorded at the courthouse to secure the Note) must still be signed by you in the presence of a Notary Public. If you don’t already know a Notary at home, go ahead and locate one so you’ll be ready when the time comes, as there is very little turn-around time at that point. Many banks, real estate firms, county offices, and of course, attorneys have a Notary on staff to perform this service simply to confirms that you are the person you say you are (a driver’s license is usually enough proof), and then to witness your signing or execution of the documents.

“Since loan documents and wire transfers are involved, buyers often sign their documents the day before closing and overnight them to their attorney.” Gray Berryman said. “Recordation can happen at the court house that same day in which the documents are received provided that the funds are wired and the Realtor gives a thumbs up on the pre-closing walk through. By that point, all of the paper work has been signed and last minute issues have been finalized.”

“We package all our closings and meet the other attorneys at the courthouse in Currituck or Dare County,” Crouse Gray said. “We update the title, do the exchange of documents and money.”

As many buyers already know from experience, there are many components that have to come together for closing on the purchase of a new home. And you’ll be pleased to find that rental property managers are ready to pick up the ball after closing. You’ve got lots of good help down here, freeing you to enjoy your home, just like you fancied you might, on that very first Outer Banks vacation.

Perspectives from Hatteras and Ocracoke

2007-07-11T10:02:00.000-04:00

Buyers’ Market vs. Sellers’ Market:
What’s the Difference and Who Benefits?

By Molly Harrison

“There’s an awful lot on the market now. Use that to your benefit to get the best house for your needs. There are some excellent homes out there and some very good deals.”

It’s no secret that the Outer Banks real estate market has changed dramatically over the last year. A little more than a year ago, sellers were in control. They could name their prices and get them — fast. Today, however, the tables are turned, and it’s the buyers who have the power to name the prices that they are willing to pay. This is why everywhere you go on the Outer Banks — everywhere from real estate offices to Internet blogs to bars to dinner parties — everyone is referring to the current Outer Banks real estate scene as a “Buyers’ Market.”

So just what is a Buyers’ Market, as opposed to a Sellers’ Market? What are the pros and cons of these markets, and, based on this knowledge, how should you react if you’re planning to buy or sell property on the Outer Banks?

Simply put, during periods known as a Sellers’ Market, homes sell quickly and sellers have a lot of power over the price they set. Therefore, real estate prices rise very rapidly. This is known as a “hot market.” During the last decade, we saw this on the Outer Banks to a great degree: skyrocketing prices, properties selling in just a few hours after they were listed, multiple offers on one property, bids sometimes higher than the asking price, investors making big money, numerous for-sale-by-owner signs. Buyers had to be the ones on their toes, working hard to find a house before it sold, getting pre-approved for financing, being willing to settle without a lot of contingencies in the contract, or taking properties “as is.”

During a Buyers’ Markets, homes and properties sit around for a while before they sell, creating an abundance of supply. Prices start to go down because sellers no longer have as much power over the selling price, and those who need to sell will drop their prices to do it. Buyers in this market are not under pressure; they can take their time to find a good deal and usually name the contingencies they want. The signs of this type of market abound on the Outer Banks today: houses lingering on the market for months, falling real estate prices, fewer homes for sale by owner and sellers offering incentives.

It’s a simple case of supply and demand. RealEstateABC.com puts it like this: “In real estate, the relationship between supply and demand is calculated as ‘available inventory.’ Longer inventory times are associated with Buyers’ Markets. Shorter inventory periods are associated with Sellers’ Markets.”

Outer Beaches Realty’s website is a wealth of information about Hatteras Island’s real estate market. The website says that currently on Hatteras Island, “the inventory of property for sale is about 60 percent higher than it was a year ago, and both the number of sales and the volume of sales are down approximately 50 percent.” It goes on to say that “the Hatteras Island Pending Home Sales Index, a leading indicator of sales 45 to 60 days in the future, has remained essentially flat since last November, suggesting that current market conditions will continue for the next few months.”

Ocracoke Island is somewhat of an exception to the true Buyers’ Market shift.

“Ocracoke is about half and half,” says Darlene Styron-Doshier of Sun Realty on Ocracoke Island. “It’s starting to lean toward the Buyers’ Market but it’s not totally all the way there yet.”

Everyone has an opinion as to why the Outer Banks market has changed. “Rentals are not totally covering the mortgages anymore,” says Guy Newell of Hatteras Realty. “Buyers are cautious. Everybody is in a ‘wait-and-see’ mode.”

Other reasons that have been cited include investor withdrawal from the real estate market, rising interest rates, unsustainable price appreciation, and a soft rental market.

Everyone agrees that the leveling off is completely normal, part of the cyclical nature of real estate economics.

“This is just the normal real estate cycle,” says Leslie Painter, a Realtor with Colony Realty on Hatteras Island. “I think that in the next six months or so, we’ll start to see the market move again.”

The shift from Sellers’ to Buyers’ market is not just a local phenomenon; it’s happening all over the country.

“Buyers often tell me, ‘As soon as I sell my property elsewhere, I want to invest on Hatteras Island,’” says Newell. “But sales in other areas are slowing down as well. So what’s happening in the rest of the nation affects us here.”

Real estate professionals on Hatteras and Ocracoke islands are not worried about the market. Those who are in the business for the long haul recognize the natural market cycle and have a positive outlook. Hatteras Island and Ocracoke markets are mainly second-home markets, and nationally 40 percent of all residential transactions are second homes.

“This is such a unique area, and more people are fi nding out about it,” says Newell. “People are always going to want to be here.”

What should buyers, sellers and investors do in a Buyers’ Market? Here is the advice of some real estate professionals.

Advice for Sellers in a Buyers’ Market

According to the professionals, the number one piece of advice for sellers is to set a reasonable price at the onset of placing the property on the market.

“When a house goes on the market overpriced and then sits around for months, it gets to be old news and then people won’t even look at it,” says Painter. “Agents and buyers have a tendency to overlook a house that’s been on the market for a while because they think it is overpriced.”

Your best bet on setting a reasonable selling price is to consult a real estate professional who is highly experienced in the local real estate market.

Some sellers — those who can afford to wait — are withdrawing from the market for the time being and waiting for the natural cycle of the market to shift again. Those sellers who need to sell at this time will have to find ways to stand out in the flooded market. They may have to invest in home improvements or upgrades or offer additional incentives to buyers, such as help with financing.

Advice for Buyers in a “Buyers’ Market”

Real estate brokers say that, without a doubt, now is a good time to buy on the Outer Banks.

“Now is a great time to get in on that Hatteras lifestyle, defi-nitely better than it was a year ago,” says Newell. “There is a lot more inventory to choose from, so buyers can be more selective and take their time. Interest rates are very good, and prices are dropping.”

First-time homeowners and locals looking for a year-round home should definitely be keeping their eyes open for a good deal. While prices are still a little out-of-reach for most locals, the cost of local real estate is dropping.

Since buyers are not under pressure at this time, Painter suggests that buyers compare similar houses and find the best value for their dollar.

“There’s an awful lot on the market now,” Painter says. “Use that to your benefit to get the best house for your needs. There are some excellent homes out there and some very good deals.”

Newell adds that not only is it a good market but that the time of year also is right for buying, especially if you’re buying a home to put into a rental program.

Advice for Investors

As always, the advice for real estate investors is to invest for the long-term.

“People need to realize the difference between being a real estate investor and a real estate speculator,” says Painter. “An investor looks at the market 5 to 10 years from now. Speculators are looking for a quick turnaround.”

A Buyers’ Market is not a good time for speculating or “flipping,” which is buying a property and expecting to sell it quickly at a high appreciation. This practice was successful a few years ago on the Outer Banks in the height of the “hot market,” but it also got a lot of novice investors in trouble financially when the market became “soft.”

Renting a Vacation Home 101

2007-07-05T11:49:00.000-04:00

The vacation rental is by a long-shot the most popular choice for accommodations on the Outer Banks. There are approximately 11,000 vacation rentals, including homes, timeshares and condominiums, in Dare and Currituck counties, compared to only about 3,000 hotel rooms.

If your idea of the perfect getaway accommodation is a setting with all the comforts of home plus the added luxuries that make a vacation special, a vacation rental is for you.

Vacation rentals carry a bit more responsibility — you have to sign a contract, be careful not to damage the home, bring a bit more stuff — but the advantages definitely outweigh those added responsibilities. Just a few of the advantages of renting a house include:

Privacy You won’t have to share your oceanfront balcony or swimming pool with strangers. Plus, there’s much more privacy within your own family because everyone can have their own bedrooms.

Freedom Sit on the porch in your bathrobe. Walk around in your undies. Turn up the TV as loud as you want.

Cooking A full kitchen means that you don’t have to eat every meal out, a real money-saver. Some homes have gourmet kitchens for people who like to cook.

Common Areas As opposed to a hotel room, a house has common areas, such as family rooms, kitchens, porches, dining rooms and game rooms, where family groups can be together in comfort.

Gatherings & Celebrations Vacation rentals are perfect for uniting groups for events such as family reunions, weddings and retreats. Many of the vacation rentals on the Outer Banks were built specifically to handle large groups; they have super-sized common areas, extra-long dining tables, kitchens with two refrigerators and two stoves, and other amenities to comfortably outfit a crowd. Of course, if a week with your in-laws sounds a little unnerving, or if your group is too large for one house, you can always rent several houses side by side. Rental companies are used to this request. (Keep in mind that most all of the rental companies have strict rules prohibiting house parties and groups like fraternities and sororities, high-school graduation celebrants and the like.)

Many of the Outer Banks rental companies now have concierge services or event planners on staff to help work out the details of planning reunions, weddings and retreats. These people can help you find a home specifically suited to a group’s needs. Corporate retreat planners can find a house equipped with fax machines, wireless Internet access and desk space. Family groups can find houses equipped with game rooms, home theaters, play rooms, swimming pools and baby gear.

A popular use for oceanfront rental homes is small weddings. Couples rent a magnificent oceanfront home with an open floor plan, then have their wedding on the beach and their reception in the rental house or around the pool. Rental houses are also used for wedding accommodations, even if the wedding is not on site. It’s easy to find a large house for the whole wedding party or several houses close together. Not all rental companies allow events such as weddings in their homes, and most require an additional security deposit if you are planning a wedding in the house.

Amenities
With 11,000 rental homes on the Outer Banks, it’s a sure bet that everyone can find the perfect house! The homes of the Outer Banks offer an incredible variety of amenities, all of which are well-advertised to attract renters. You can expect the basics — ac/heat, cable TV, stereos, telephones, washer/dryers, all kitchen appliances, standard indoor furniture and outdoor furniture, cooking utensils and equipment, blankets, comforters and pillows, and equipment for normal housekeeping. Most homes offer outdoor showers, beach equipment and grills as well. You might find a few rustic cottages with no air-conditioning, TV or phones, but those are very few and far between.

As more and more rental houses come on the market, owners are adding more and more amenities to attract renters. What used to be considered luxury is now almost standard — hot tubs, private pools, whirlpool tubs, DVD libraries, CD players, fireplaces, wireless Internet service and game rooms. Other amenities you can find include keyless entry and check-in by mail, home theaters, whole-house audio systems, media centers, gourmet kitchens, home gyms or fitness equipment, elevators, outdoor play sets for kids, pet accommodations and more.

Things to Consider When Choosing a Vacation Rental
As you would expect, there is an enormous variety in price, location and amenities of Outer Banks rental cottages. Locations span across the islands, from the ocean to the sound and everywhere in between, and individual ownership means that properties vary widely in décor, design and amenities. Price varies depending on both of these factors. The main factors to consider when looking for a rental house are location, occupancy, amenities and price, in whatever order is most important to you.

1. Choose Your Outer Banks Locale
One of the first things you need to decide is which area you would like to stay in. The areas of the Outer Banks are very different, so do a little research and pick a location where you and your party will be the happiest. The first sections of the Outer Banks Newspaper will give you a complete overview of each area of the Outer Banks from Ocracoke to Corolla.

2. Choose a Location
Now you need to choose a location within your preferred locale. Do you want to stay on the ocean or the sound or in between? For some people, this decision is driven by price. Obviously, waterfront properties command the most expensive rental rates, with those on the oceanfront the highest. Take a look at some of your general options. Keep in mind that these are not the only designations rental companies use, and there may be other designations depending on the location options.

Oceanfront — Directly on the beach. The benefits are many: convenience for beach-going, incredible views, private walkways.
Semi-oceanfront — This is the next best thing to oceanfront. Semi-oceanfront denotes that the house is one row or house back from the ocean. Not all areas have more than one house on an oceanfront lot, so this is not available in all areas. These homes often have great views.
Oceanside — This means that the property is not directly on the oceanfront, but it’s on the east side of N.C. 12 and therefore you don’t have to cross a major road to get to the ocean. You do not have direct access to the ocean and will have to use a public or community access.
Between the Highways — This designation applies mainly to the properties in Kitty Hawk, Kill Devil Hills and Nags Head. The property is between the Beach Road (N.C. Highway 12) and the Bypass (U.S. Highway 158). Typically it is not a long walk to the beach, but you will have to cross N.C. 12 to get there.
Westside —These properties are on the west side of the island, west of N.C. 12 or U.S. 158. In the wider areas of the islands, it may not necessarily be close to the sound. If you’re looking for a good deal, something very affordable and usually nice and quiet, Westside is a good option.
Soundside — On the soundside of the island, but not soundfront. These properties often have great views of the marsh and sunsets.
Soundfront — Directly on the sound, with great views and usually some sort of access to the sound. The soundside of the island is much more tranquil, so even if you can afford oceanfront you might want to consider soundfront. Kiteboarders, kayakers and windsurfers can enjoy sound access.
Golf Course — Many vacation rentals are available overlooking one of the Outer Banks’ four golf courses.
Canalfront — A home on a canal usually offers a boat dock, which is very convenient for vacationers who bring their own boats.

3. Occupancy
Plan well for the number of people you will need to accommodate and the configurations in which they will sleep. The rental company jargon is that a home “sleeps” a certain number. Typically, a house sleeps two people per bedroom, so a four-bedroom home would sleep eight people. But sometimes a home has a pull-out sofa or extra beds in the rooms, so it sleeps more than you think for the number of bedrooms it has. Each house has a maximum occupancy, so pay attention to this before you book. Respecting a home’s occupancy limits is very important, as most Outer Banks homes are on septic systems instead of sewers. The occupancy limits are also set based on the amount of parking that is available.

4. Price Range
As we said before, the price of a rental home varies widely according to season, location, amenities and size. Property management companies’ websites allow you to search for properties according to price, so you can set a budget and then find a property that falls within it. An important note: The base price you see on the house listing is not the final price. The price is always higher because of added taxes, security deposit, trip insurance and processing fees. All vacation rentals are subject to the North Carolina sales tax (7 percent) and the county occupancy tax (at this writing Dare County was 5 percent; Currituck County, 6 percent; Hyde County, 3 percent; but this is subject to change). So expect to pay from 10 to 12 percent in taxes. At least one company that we know of now includes all the fees, taxes and deposits in the base price of the house. This is a new trend, so read the rental literature of the company you’re working with closely.

5. When to Come
The price of rental accommodations varies greatly according to the seasons. All of the different rental companies have their own systems of dates, terminology and rates for the rental seasons, but in general they all revolve around the prime or peak, shoulder and off-season schedule. The most popular seasons for vacations are the most expensive times to rent. The prime season, i.e., most expensive season, is summer, from mid-June through August. Early June and late August are sometimes a little less expensive. The shoulder seasons of September and October and April and May are less expensive than the summer. In the off-season, or winter, typically November through March, prices drop even more. Seasonal prices for each house are clearly listed on websites and in rental brochures.

6. The Rental Week
Do you want to rent from Saturday to Saturday or from a Sunday to a Sunday? If this matters to you, be sure to talk to a rental agent. Some companies now offer Friday to Friday rentals, which means that you come and go outside of the busiest rental changeover days on Saturday and Sunday. Friday to Friday rentals are also nice for those planning a weekend wedding.

7. Length of Stay
In the prime season (June, July and August) most companies have a one-week minimum rental. But some companies offer last-minute, partial-week rentals for any properties that are not already booked. They usually won’t make reservations for these until two weeks before, or the week of, the rental. In the off-season, partial-week rentals are more readily available. You’ll also hear the term “mini-vacations,” which allow you to rent a home for three or four days instead of a full week. Not all properties are available for partial weeks. If you’re looking at the last minute in the off-season you can typically find a place. Policy varies on how the rate for a partial week is determined.

Book It!
There are about 50 property management companies/rental agencies offering vacation rentals on the Outer Banks, and that’s not including the cottages offered by cottage courts, motels and private individuals. With so much competition, you can bet the companies work hard to earn your business. You don’t have to work with any company whose service is less than exceptional. All of the companies offer websites and color rental brochures detailing their properties. Do-it-yourselfers can search properties online, using a variety of criteria, and even book the property online. If you prefer speaking to a person, all of the companies have booking agents who can help you find just the right property.

Once you have booked your property, you will be required to pay a deposit, usually half of the booking fee, plus a security deposit, administrative fee (if applicable) and trip insurance if you choose to buy it. Once you have paid your deposit, the company will send you a lease agreement to sign and return. The balance of the fee is due within 30 days of your visit.

What to Bring
You’ll need to bring your own groceries, including condiments and spices, along with toiletries, paper products, cleaning products, linens and towels (unless you choose to rent these) and your personal items. Some homes have cribs and high chairs, computers, bicycles, volleyball courts and other offerings, and those amenities are usually listed in brochure or website.

If the house doesn’t have all the items you need, you don’t necessarily have to bring everything from home. Many of the rental agencies now rent linens and towels. Plus there are several equipment rental companies on the Outer Banks that offer linens, baby equipment, bicycles and strollers, all sorts of beach gear, sports equipment, stereos, grills and just about anything else you could want.

7 Steps to Buying Your Own Outer Banks Vacation Property

2007-04-23T08:30:00.000-04:00

Right up there with swimming, fishing, golfing and relaxing, one of the most popular vacation pastimes is house hunting! If you find yourself picking up real estate publications in the grocery store, scoping out “for sale” signs during your sight-seeing trips, and day dreaming about your own little place by the sea, you may want to read this article.

With a little prudent planning, the dream of owning a vacation home is within reach for many people. But here’s a piece of advice: Unless you have an unlimited budget, this is no time to be impulsive. One local Realtor said that a second home is like marriage — it’s a serious commitment that you don’t want to enter into lightly.

More than half the homes on the Outer Banks are owned by absentee owners, and that includes second homes for personal use, investment-only rental properties and rental properties that owners also enjoy. These owners know that Outer Banks property is a good investment. Prices are affordable relative to other resort areas, appreciation is steady, and there are many investment opportunities here.

It seems simple: You’ll rent the house, it’ll pay for itself, and you’ll get to use it in the off-season. But is this a realistic vision or a far-fetched fantasy? Renting your vacation home can make the cost of a second home more affordable by diminishing the costs of ownership and offering tax advantages in some cases. And if you want a second home that rents well, the Outer Banks is a good location choice. The demand for short-term rentals is high, and the rental season is long, extending well into the fall and spring.

But while renting offers a way to afford that second home, real estate brokers and investment specialists say that it is unrealistic to expect rental income to cover all the expenses of owning the home.

In general, says one local Realtor, you can expect the annual rental income on a stand-out property to be about 5 percent of the total cost of the home. That figure was a lot higher 10 years ago, but times have changed. The number of rental homes has increased exponentially over the last 10 years, and the market is quite competitive. A good, solid property will rent most if not all weeks of the peak season, and the payoff varies according to the ratio of the cost of the house to the price of the rental and the number of weeks it rents.

If you’re considering buying an Outer Banks property, whether you plan to rent or not, here are a few tips and things to consider, courtesy of various Realtors and investment professionals.

1. Approach the planning and decision-making without emotion; try to remain objective. If you plan to rent, learn all that you can about the rental process and the implications of owning a rental home. Renting your home is a business investment, so treat it that way.

2. Hire one local agent to help you in your search. Instead of calling the agent who lists each property you’re interested in, which means you’ll deal with numerous real estate agents during your search, get your own Realtor, a buyer’s agent, who will help educate you and serve your best interests.

3. Get pre-approved for a mortgage. Many real estate agents will tell you to do this before you start looking at properties. This lets you know exactly how much you can afford, so you don’t waste any time looking at properties that are out of your league. It also tells the brokers and sellers that you’re a serious player.

4. Start out as a renter. Rent various houses in various areas of the Outer Banks and find the type of house and location that best suits you. If you plan to rent your home, what type of amenities did you enjoy as a renter? Rate the property management companies so that you can choose the one that will best represent your home one day. One local property management company said that every homeowner they represent had rented with them before they bought a property of their own.

5. Be wary of rental income projections that are too good to be true. Some sellers might pump up a property to look like a cash cow or “easy money.” Your buyer’s agent can help you determine accurate rental projections and make suggestions about properties that would generate reasonable income.

6. Know the costs of owning a beach house. Besides the down payment and mortgage payment, you’ll need to pay for things like annual maintenance, furnishings, updating and repairs. If you rent, renters can be very hard on a house! But even if you don’t rent, the Outer Banks climate weathers a home much faster than in other areas, and diligent maintenance is required. Whether you rent or not, you’ll also have to consider insurance, which may be more expensive than your primary home insurance because on the Outer Banks you also need wind insurance and probably flood insurance. Also, the second home will have an impact on your taxes, depending whether or not it’s rented and how often it’s rented. Second homes and rental homes are subject to many different deduction standards, so consult with an accountant before you buy.

7. Be realistic about the amount of work that’s involved in renting your home. You can’t rest on your laurels when you have a house in a rental program. “It’s a competitive business right now, and if owners are not keeping houses up, the rents go down,” said the manager of one rental agency. “You have to keep raising the bar. You have to constantly keep up with it.”

If you’ve thoughtfully considered all these points and want to buy a vacation home, how do you work out a vacation rental, logistically?

This is where property management companies come in. Most owners of rental properties live outside of the area and hire a company to handle renting and maintenance. About 50 Outer Banks companies manage properties for off-site owners. Some are a division of a real estate firm; others deal exclusively with vacation rentals. Most property management companies charge the homeowner a percentage of the gross rent, and homeowners are paid monthly.

Property management companies do many things for the homeowners they represent. Number one, they market your home to potential renters via advertisements, catalogs and the Internet. They handle the bookings. They draw up leases, mail them out to customers and collect their rents, deposits and taxes. They keep up with the laws in the Vacation Rental Act and offer Trip Insurance to renters. They field complaints and criticisms about your property. They handle the cleaning, inspections and light maintenance after each renter vacates the property. They do the necessary maintenance to keep your home functioning properly, including regular pool and spa maintenance. They can offer tips and suggestions on setting rates and how to get your house to rent more often. Each company’s services vary, and each company has a niche that they fill in the rental market. Unless you are willing to handle all these things yourself, it is not recommended that you try to rent or maintain the property on your own. For most people it’s easiest to do a little work to find a company they like and then pay whatever it takes to turn the work over to them.

All agents we spoke to for this article agreed: Owning a rental home on the Outer Banks is a good investment and a good way to afford a vacation home, as long as you approach the process as a business venture instead of a way to make easy money.