Many people dream of owning waterfront property, and for those in landlocked states — that dream is a lakefront home. And, since COVID-19 has left people to their own devices when it comes to staying home, the interest in lakefront properties has increased dramatically. In markets all across the country, lake sales have soared in the midst of the pandemic with most of the sales being vacation and second homes as more employers and schools are allowing remote and virtual work.
With the threat of another lockdown or quarantine always looming, people want a place to enjoy with space, recreation, and relaxation while confined to home. However, before you sign on that dotted line to purchase a lakefront property of your own, there are several important factors to consider.
Lakefront buyers may be surprised to learn that home insurance rates tend to be higher the closer you are to water. However, there are other factors that also impact insurance rates. Amanda Cabe, Realtor and lake expert at Drake Realty Lake Area in the Lake Sinclair and Lake Oconee area says “Homeowner’s insurance will take into consideration that it is, more than likely, a second home. It will take into consideration any watercraft, it will also take into consideration where there is water hydrant, and if the fire department is a volunteer department or run by the county.”
Before you make an offer, call several home insurance companies to get a specific quote on the property you’re interested in. This can avoid any surprises down the road. It can also enlighten the buyer as to items that will be of significant to home insurance companies.
Cabe explains that lake buyers are shocked to learn that “there are rules to what you can do with your lake home. For example, these rules can dictate if a home can have a dock or not. They can dictate what type of dock. These rules can dictate something as simple as changing boards on a dock to taking down trees along the shoreline.” While not all lakes are part of Homeowner Associations, some are subject to the rules, design, and upkeep created by an HOA, municipality, or Corp of Engineers. Cabe continues by saying that “Not all property can be built on, not everyone can have a dock, not all trees can come down at the whim of the homeowner.” From building a dock to cutting trees, many of these projects require permits and approvals on lakefront homes.
Call the local HOA, Corp of Engineers, county, or local governing body to learn more about what permits are required, as well as what is and is not allowed on the property. Cabe explains that their local body, “will even meet with the potential homeowner to discuss their questions and concerns.” It is important that this meeting either happen before you make an offer or that your offer is contingent upon your satisfaction of the discovery period.
While not all lakefront homes are vacation, a large percentage are second homes. If homeowners are not present all the time, they may be aware of deferred maintenance items, failing systems, or damage from elements. If a buyer is obtaining loans like an FHA or VA, there are minimum property standards that must be met. If a home sits in a flood plain, Cabe explains that “Homes that sit on the 350-degree contour line will usually need flood insurance, these are typically flat lots and the homes are typically closer to the water.” Depending on the previous flood history with that property, it could impact financing.
As with any real estate purchase, it’s critical to have an in-depth conversation with your lender about the potential hurdles the lake property might have. Choosing a local lender that is familiar with lake front property financing will be critical in helping to address any problems.
Each lake area has their own rules and procedures, and it’s critical that buyers are fully informed of the rules for the property. According to Cabe, the best way to do that is to “get a local Realtor! Most agents locally know the rules and guidelines…Local agents know details about the location of the home and the water it sits on. For example, is it shallow or deep? Are there tree fields under the water that are impossible to navigate with a watercraft? Can you get good internet service in the location they are looking?? Local agents typically have a boat and can show the home by water. Local agents know the land managers, they know the area and know the rules.”
Research your Realtor before choosing one! It’s okay to ask if they’re local to the area, how long they’ve been selling lake real estate, and what connections do they have in the lake community. Homes.com allows you to find an agent and search for your lakefront home!
Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.