by Melanie McLane
Chair, 2012 Resort and Second Home Real Estate Forum
I’m a gardener by inclination. In a perfect world, I’d be a full time gardener, with unlimited funds and time. In the real world, I’m an early morning, late evening and weekend gardener, fitting it in when I can. I am a full time REALTOR®–doing sales, appraisals and education. One of the specialty markets I sell in, and love to teach others about, is RSPS. I have in my yard a perennial border with huge daylily on the corner. I remember when it was a measly twig like stalk. Here’s where my perennial gardening and real estate are alike: both can take years to cultivate, and both are worth the effort.
We know one of the unique things about our specialty is that our buyers are seldom in a hurry. A second home is a discretionary purchase. They can live without it. My perennial border is completely discretionary as well. I’d pay a fine if I let my grass grow long, but I don’t HAVE to have flowers. I don’t have to invest time and effort in flowers that don’t reach their peak for a long time. But, the payoff on that investment, like the clump of daylilies, is spectacular when it comes to fruition.
Our second home buyers are like that. We need to cultivate them, sometimes for years, making certain they get information (sunlight), advice (water) and keep ourselves top of their minds (weeding). If we are patient, they bloom beautifully when they are ready. Perennials, after a certain amount of time, get too big and need to be divided. That clump in the picture will get divided this fall—probably into at least four clumps total. I’ll give some to friends and family, and make another border somewhere in my yard—just like how, in real estate, we keep growing our business, sending and getting referrals—all because we gave our garden sun, water, and kept it weeded. Patience! It’s a byword for gardening and for second home buyers.
by Melanie McLane
Chair, 2012 NAR Resort and Second Home Real Estate Forum
It’s spring in North Central Pennsylvania. Fishing season opening day has been here already, and we’re busy getting our cabin ready for the summer. Across my region, this is when we return to camps and cabins for another season. A big portion of the real estate my husband and I sell are second homes used for fishing, hunting, hiking, snowmobiling, ATV riding, and just generally kicking back and enjoying life. This year, I’m reminded again of how special a second home is to so many families. Our first grandchild, Cayson, turns one in June. We had him at the cabin last year as an infant, but now he is walking and into everything. “Pap-Pap” (aka Jim) and I couldn’t resist getting three chairs for the creek bank–and one is Cayson-sized. Our old Adirondack chairs had finally given up the ghost. This is the spot we take our coffee in the morning and watch the mist rist from Kettle Creek and the fish taunt Jim (“You can’t catch us!”). Thisyear we had to have a place for Cayson–so whether he is there with us, his parents, or all of us, he has his own chair.
But the bigest part of why we love this place is what it means to our family. Cayson is the fourth generation of McLanes to come to “Forty Acres,” our place in the mountains of Pennsylvania, in Potter County. The original cabin was built by Jim’s dad and a team of his friends during the 1930s. Our son Clark, with some assistance, built a new cabin there in 2010. But the traditions and memories continue: smores on the campfire, card games at the old oak table, coffee in the morning along the creek, stream hiking on hot days and the absolute peace and stillness at dusk, as we watch the wildlife go to the creek.
Many buyers want second homes just for this reason–a place to enjoy with their families–a place to unwind and make memories. In our hectic lives, we can count on restoring ourselves with a trip to this special place. When I talk to those who have second homes–whether a cabin in the woods or a beach house, a ski chalet, or a condo in a tropical place–everyone cherishes the time and memoris they have there. One of the best parts of my job is helping people find a place to carve out time and make their own memories.
by Melanie McLane
Chair, 2012 Resort and Second Home Real Estate Forum
Often, one of the biggest issues for REALTORS® selling second homes is obtaining financing, including getting a satisfactory appraisal. To effectively value a second home, the appraiser must be aware of the “relevant characteristics” of the property and how they impact value. “Relevant characteristics” is a phrase right out of the Uniform Standards of Professional Appraisal Practice, known as USPAP, which is the ethical and legal code all licensed and certified appraisers must adhere to. USPAP is embedded into license/certification laws in all states in the US.
A relevant characteristic of a property is something that is quite simply, relevant to the value. Relevant characteristics can emerge overnight. My recreational market, which is hunting camps, cabins and fishing lodges in North Central Pennsylvania, has a new relevant characteristic—gas. Specifically, gas rights and gas leases are now a huge relevant characteristic as we are in the center of Marcellus Shale. Five years ago, most of our sellers did not know (or care) if they owned their gas rights. Today, it can make or break a sale.
Appraisers not familiar with second home markets can miss the importance of relevant characteristics. I have a REALTOR® friend who sells homes in the Poconos in Pennsylvania, and sold a property with lake frontage. Unbelievably, the first appraiser (who came from Philadelphia, about 3 hours away) used comparables not on the lake, and made no adjustment for frontage—despite extensive market data which supports the value of lake frontage.
In places like Aspen, ski in/ski out is a huge influence on value. In Lake Tahoe, a dock will add value. In your market, it may be a number of things. The important thing for you as an agent to find out is whether or not the appraiser is familiar with your market and its relevant characteristics. Do not hesitate to (nicely) educate the appraiser about what you consider to be relevant characteristics. Supply market data to support what you are telling the appraiser. Encourage your local lenders to insist that whoever orders appraisals for your market only assigns them to appraisers familiar with the relevant characteristics of your market.
by George R. Harvey, Jr.
2011 Vice Chair, NAR Resort and Second Home Real Estate Committee
Quite often when I go on a listing presentation, the seller tells me at the end of the presentation, “Well, I really don’t have to sell”. This is after giving them a thorough market analysis, showing them how many properties compete with their property and how many sales have happened in the last 12 to 15 months in their category. Sometimes I’ll take them out to look at several of the most similar properties to their property in order to give them an idea of what their competition is. Many times, of course, they say, “My property is better.” As you might guess, most sellers take that position. When I give the seller the market analysis, the same exact analysis that every buyer/broker is going to give their buyers and that seller says, “I really don’t have to sell,” the first question that enters my mind is, “So why are you putting your property on the market”? It takes a terrific amount of effort on the listing broker’s part for showing appointments, marketing materials, and advertising expense to have a successful sale. And then the seller is going to say, “If I can get my price I might sell my house.” Let me translate what that means. If we get a really wealthy person that will pay cash, close quickly, doesn’t do any market research, and is really stupid, and will just pay whatever the asking price is, I’ll sell my house. What an incredible burden this creates for the listing agent and a setup for disappointment for all parties engaged.
One of the biggest problems that we have in the Telluride market as well as other markets in the resort and second home niche, is sellers still pricing to the peak of 2006, ’07, and ‘08 markets.
Buyers in general are well informed and have done their homework on the internet and always ask for all the market comps. Sellers often say, “Well my property is special or unique or here’s why I bought it”. All those wonderful things are good points for potential buyers in the future, but every buyer has their own list of dreams and desires and they’re all watching Bloomberg.
Not only does a property in this market have to be priced competitively, but it needs to be one or two best values in its market category to even get on the show list. It also has to be in great condition, because buyers are now looking for every flaw possible and are making objections for the smallest of items. The end result for sellers that don’t price to the market is following the market all the way down and always being just behind the selling price range rather than just in front of it where they should be. If you are a property owner in a resort or second home market and truly want to sell, ask you listing broker to do a very thorough market analysis and what it will take to be the first one or two properties shown in that market niche. It will greatly improve your odds of making a sale and won’t waste your time and your listing agent’s.
You may contact George Harvey at 970-729-0111 or george@TheHarveyTeam.net