Purchasing waterfront property is practically everyone’s dream. It’s the scenic view and easy recreational access that’s most attractive and to people who like to build solid equity, there’s no better location. Lakeside property outpaces landlocked residences in terms of equity growth and that makes for a worthwhile asset.
Buyers new to waterside homes are generally surprised at the differences between those properties and homes which are in traditional neighborhoods. If you’re in the market to purchase a lakefront residence, you should be well educated about said differences. There are factors, if left unknown, that can easily turn a dream purchase into buyer’s remorse.
Being waterfront, by its very nature, is a great aesthetic location, it’s also brings geographic and legal realities into play. Before you put in a purchase offer, take time to get to know the local area, and, the home itself so you make a good choice.
Calculating the Value of a Lakeside Home
Depending on the location, the number of lakes, the size of those bodies of water, and the density of the homes which encircle them in-part or in-entirety, will make a big difference in the value. For instance, if there is an area with one large and two smaller lakes, the largest will likely be the most expensive location. In addition, access is quite important when it comes to value and listing price, as will the health of the localized real estate market.
“When you buy lakefront property, you assume part of the responsibility of caring for the lake. Your actions on the land as well as in the water affect the health of the lake and everyone’s enjoyment of it. A little time invested in learning about lakefront living will pay back sizable dividends in matching your expectations to reality.” —United States Environmental Protection Agency
Ask your buyer’s agent to work-up a comparative market analysis or CMA, or, you can hire an appraiser. Before you balk at the latter suggestion, know that you’ll pay for an appraiser if you’re going to finance the purchase because that line item expense will paid when you pay the closing costs. This will tell you how much the property is actually worth in the current market. You should attempt to eliminate as many surprises as you are able to well in advance of making a purchase offer.
Seven Questions to Ask before Buying Lakefront Property
Knowing the real market value won’t be enough. Price is based on location, amenities, the value of those amenities, and condition of the home and the property on which it sits. Here are seven questions to ask prior to making a lakeshore home purchase:
- Does the home require flood insurance? Depending on the location, the house might be in a probable flood zone and if you are taking out a mortgage, your lender will require you incur this cost. Even if you’re paying cash, this will be a necessity to avoid a sizable financial burden from unpredictable natural forces.
- Who takes care of the lake weed management? It might be you directly, an association, or even a municipality. Find out who or which entity is going to be managing the natural because, depending on the answer, the costs will range from very little to quite a lot. If it’s going to be your responsibility, ask how much the current owners spend annually.
- What’s the condition of the dock? In many locations, the dock will be part of your property, which makes it yours to maintain. Ask about its condition and if it’s in need of repairs or replacement. Also, ask if there are any newly enacted rules that require docks to comply with certain specifications.
- Are there any recreational restrictions? Boating, swimming, fishing, and many more water activities are probably the single biggest reasons you’re purchasing lakefront; so, learn about any restrictions before you commit to buy.
- Is this a seasonal property? Seasonal means precisely what it sounds like. Find out how many months of the year is the lake accessible to get the most out of your new residence.
- What about the septic system? You could be on city sewer systems or have a proprietary septic symptoms, depending on which it is, will figure into your personal budget. If it’s private, ask about the condition and when it was last inspected.
- Is this area managed by an association? If it’s managed by an association, get a copy of the bylaws and read them line-by-line to discover if there’s any deal killers.
One more question you ought to ask is if the lake rights are owned or shared. Easements are quite important because they will determine what’s private and what is shared. In addition, ask about any recent upgrades or additions which might have been completed, you’ll want to know well before closing day because unpermitted work will present a problem.