I wrote the article below on Lake Martin waterfront lots for the April 2013 issue of LAKE Magazine. I got a lot of positive feedback from it, and even had it quoted back to me by a client: “John, we’ve thought about looking for a larger lake home, but I think we’re going to love the lot we’re with (and renovate).” If you missed it in print, here goes:
This month’s issue of LAKE magazine has a lot of great information about designing and building a home on Lake Martin. I think this is a superb idea. Not only does the lake boast many inspiring and original home designs, but we also have more than our share of talented architects, builders and subcontractors.
That’s right, the lot. The dirt. It’s why you are here. Well, maybe not the dirt per se, but the fact that the dirt leads up to the water. It may seem obvious, but we all need to remember that the lake is what makes our real estate so valuable. The lot value is also the major driver in overall real estate value.
I see this time and again with buyers who are new to the Lake Martin market. They really have to wrap their heads around the concept that a little humble cabin on a huge lot with a big water view will likely sell for more than a newer home on a smaller lot in the back of a slough. It’s the facts. It’s market preference.
I also hear from people who want “just a little quaint cabin, a fixer upper, on a nice lot. I can do some of the work myself.” Sometimes, it takes a while for it to sink in for them that the proverbial “quaint cabin on an awesome lot” is a very popular request. Popularity equals price pressure. In our market of limited supply, price pressure always equals higher prices. Economics 101.
This rule does not limit itself to the small cabins. Even the larger waterfront homes are subject to the reign of the lot. One only needs a cursory review of county tax assessor appraised values to see that even on homes assessed above $1 million, the lot is likely greater than half of the overall value. Unless you are coming from major metro areas that have similar buyer pressure on land, that high percentage may be a shock.
I am certainly not the first real estate agent to give this advice, but I always tell waterfront home buyers, “You had better love your lot, because you can never change it.” Once again, an obvious statement; however, it is one we need to keep in mind. Most buyers work under a budget, and budgets mean tradeoffs. No two homes or lots are exactly the same, so if buyers find themselves trying to pick between two very close contenders, I always counsel them to buy the one with the lot that they like the best. They can always change everything else.
This magazine is chocked full of friendly people to help you improve or redesign everything other than the lot. On that point, be sure not to build too much house on too small of a lot if your goal is to increase your home’s overall worth. If your goal is to have fun or just to customize, go for it. I don’t want to discourage “dream home” activities, but you have to understand that every improvement may or may not increase the overall value of your real estate asset. Your particular improvement may increase value, but not necessarily. It all depends on what the market has proven that it will bear. Think about it: Would an Eskimo pay extra for an outdoor shower on the side of an igloo? Would someone living on the equator pay extra for an electrically heated, snow-and-ice-proof driveway? Not likely.
Don’t misunderstand me – I am not trying to hold you back from home improvements or building. Far from it. Just remember what we have discussed here. And if you can’t be with the lot you love, honey, love the lot you’re with.