Tips for Buying a Home on the Outer Banks

Many vacationers dream of one day owning a home on the Outer Banks.  Whether your goal is to vacation here in your very own place or have a retirement spot later in life, many OBX investors start out as visitors just like you.  Buying a home on the OBX is not as hard as you think!  Let our elite group of Outer Banks Real Estate Experts help you in finding your dream home.  Here are some key thoughts/conversations to help us get started:

  • Will this be a second/vacation home for your personal (and family) use
  • Does it need to be suitable for a retirement home â??down the roadâ??
  • Do you need rental income to assist in making this dream a reality (more affordable/doable to take the plunge)
  • Will this strictly be an investment property
  • Location and proximity to the ocean will play a major role if this property is to provide rental income
  • Size and number of bedrooms will be determined (in part) by your budget and the area of the OBX you wish to be located
  • Determine and communicate your â??must havesâ?? as well as your â??like to havesâ??

If you are unfamiliar with the various areas of the Outer Banks, your agent can tour you around to give you the â??lay of the landâ?? to assist you in honing in on the area that best fits your needs and desires. Determining the above (defining the search criteria) will enable your real estate agent to research the market in the areas that will more likely match your goals, however in order to begin this process one needs to know the price-range within which to â??shop.â??  This is best accomplished by getting you pre-qualified with a local lender; we have several top-notch recommendations to pass along; each can assist you with pre-qualifying you over the phone.  Of course you will follow up with the required documentation so that once you have selected your dream property, negotiated your Offer to Purchase to a Contract and chosen the lender with whom you wish to work, you will be well on your way to OBX property ownership! 

The initial property search may not uncover the home of your dreams, but your agent can set you up to receive auto email notifications when a property comes available that matches your search criteria.  You can also be notified when a property has a price change or status change within the initial search results. This search could go rather quickly or it may take multiple trips back to the OBX to work with your agent in seeing the current inventory that has come on the market since your initial appointment.  Your agent stands ready to preview any suitable property that comes along and will advise you to take a look at your earliest convenience.

Once you have that contract on your dream home, your agent will assist you with every step of the way to property settlement.  Once you are under contract, you will have a specified number of days to perform your â??due diligence.â??  During this time, likely 14-30 days as requested and agreed upon in your contract, you (along with your agentâ??s guidance, recommendations, and assistance) work through the loan process including appraisal, property investigation: inspections, review of documents, obtain insurance estimates including flood, survey and elevation certificate, investigate any zoning and government regulation (current and proposed), order Home Inspection (and other inspections as may be suggested by home inspection report, i.e. HVAC/roof/electrical), Termite Inspection, Septic Inspection. Should you wish to place your property into a vacation property management program, you should check into this during this time, to discover suggested rates, fees, and management percentage, etc.

Once you have this â??discoveryâ?? during the due diligence period, depending on the findings, you may ask to amend the contract by requesting that the Seller address and pay for certain items to be repaired.  This often times results in the Seller paying an agreed upon amount towards Buyers closing costs, allowing the Buyer to complete the repairs (or not) after settlement. However, upon this discovery (depending on the findings), you may elect to terminate the contract for any reason or no reason, up until 5 PM of the day your due diligence expires.

Letâ??s say that you are pleased with the inspections, the negotiations of any dollar amount towards closing costs, and you are heading towards settlement! During this period, approximately two to three weeks, your loan is being finalized by underwriting, all of the insurance figures and tax pro-rations are calculated, and you will be provided an estimate of closing costsâ?¦the amount of funds that you need to provide at closing.  On the day of closing, you and/or your agent will do a walk-through of the property just before â??signing your life away!â?? You will be given the keys or keyless entry code, and upon hearing â??we are recorded!,â?? you will be OBX property ownersâ?¦your dream has just come trueâ?¦the journey has just begun!

For more information on Outer Banks Real Estate or the homebuying process, please contact our team of Real Estate Professionals at 252-449-5385

Tips for Buyers and Sellers

Thinking of Buying or Selling on the Outer Banks?  The tips below from our Sales Team will help Buyers and Sellers get the most out of their transaction.  Feel free to contact our Sales Team for more information or download and view the “Working With Real Estate Agents” document below from the NC Real Estate Commission. 

Atlantic Realty Real Estate Sales

Buyer’s Tips:

1.  Get Prequalified for a Loan — There is nothing worse than finding the perfect home only to find that after the long and arduous mortgage process you don’t qualify.  Mortgage companies have stricter guidelines these days so even the slightest credit issue, or personal debt issue could affect your ability to qualify for a loan.  If you know will need a loan to buy a house, get the process started and then you will know going in the proper price range that you will be able to afford. 

2.  Work with a Realtor — Local Real Estate Agents know the market better than anyone and can help you with the complicated process of buying a home.  Issues such as Taxes, Insurance, and Zoning are very important items to consider and although it’s often public knowledge, Realtors can give you the tips and advice from their experience and knowledge of the area to ensure a smooth transaction.  Their expertise is invaluable, especially for an out of town Buyer. 

Seller’s Tips

1.  Get a Home Inspection Before Listing — It may sound cliche’ but knowledge is power in Real Estate.  Knowing potential problems ahead of time give Sellers the foresight to price homes properly and not watch a Buyer walk away from the sale due to a surprise defect.  Also, truthfully stating any problems beforehand helps to build trust and confidence in a sale. 

2.  Work with a Real Estate Agent — Same as with a Buyer, a local Real Estate Agent has knowledge and expertise than cannot be found anywhere else.  There is a lot of information on the Internet about pricing and sales, but Agents who work in it every day can tell you the best and most effective way to market and sell your home for the best price!  After all, isn’t that what every seller wants? 

3.  Price a Home Properly — Real Estate Agents spend a lot of time finding comparable properties in order to price a home just right.  If priced too high, the home will sit on the market and be passed over for other properties in the area priced properly.  Homes on the market too long raise a red flag with Buyers who question why it has not sold and then wonder “What’s wrong with it?”. 

4.  Staging/Decluttering — Buyers like to imagine themselves (and their things) in a home before they purchase.   In our market, which consists of mostly second homes and investment properties, this usually is not a problem.  But it should be said that homeowners should remove personal items such as family photos and mementos so Buyers don’t see it as “your” home.  It’s also a good idea to remove any artwork or furniture you plan to keep so Buyers don’t fall in love with a peice that goes perfectly with the home only to find out it does not stay with the home when it sells.  We’ve seen this happen before and it can be a dealbreaker.  It goes without saying that homes should be clean and clutter free.  Buyers don’t want to peek inside closets to find it stuffed full of old items and trash.  Staging is also important in conveying the message to Buyers that this could be their home.  Simple items such as setting places at the table or arranging the kitchen in an appealing way are all subtle hints to the Buyer that this home could be theirs for relaxing and entertaining. 

 

Download the “Working with Real Estate Agents” Brochure Here!

Should Real Estate Be Part of Your Investment Strategy?

Many potential home buyers remain skeptical about the housing market and for that matter about any market they are considering for investment of their discretionary funds. What should a distributed investment plan today look like? Placing money in the banking market is generally secure but provides marginal rates of return. The bond market always deserves close scrutiny. The stock market has certainly improved though rates of return remain below desired levels and there is always a fear that it may tumble in value again based on circumstances the investor or maybe even the nation cannot influence sufficiently. What about the housing market? Is it showing the necessary signs of improvement for an investor’s distributed investment strategy to once again include a significant allocation to the housing market? How should I redistribute my investment portfolio today and does the housing market deserve a larger share? To provide one respected view, let’s examine the August 01, 2012 Wall Street Journal article, “Finally, It Is Time to Buy a House and Realtor Magazine’s Daily Real Estate News, August 06, 2012 summary of that Wall Street Journal article. Here is what was reported.

Some Americans are still jittery over the housing market, but here are eight positive signs that should quell some of their fears.

  1. Housing prices are on the rise across the country.
  2. Foreclosures have slowed. Analysts suggest that as the supply of distressed homes slows, buyers will be forced into higher-price properties too.
  3. Inventories of for-sale homes on the market are decreasing. In fact, inventories of for-sale homes have dropped 24 percent from a year ago.
  4. Mortgage rates are at ultra record level lows, for those who can qualify.
  5. Housing starts rose 6.9 percent in June. Also, existing-home sales were up 4.5 percent higher in June compared to one year ago.
  6. Home building stocks are on the rise.
  7. For investors who are buying homes, rents are soaring, allowing them to cash in on their investments. Rental prices are at a 10-year high as median units rent for $710 a month.
  8. Home affordability is at record highs for the median income family, due to falling home values and super low mortgage rates. In fact, a recent study found that it is cheaper to buy a home than rent in basically every major city in the U.S. For those who buy, you can save the cost of renting by owning the home for five years or less.

But while the signs point to a housing market on the mend, some Americans still remain hesitant. Many Americans are still underwater on their mortgage, owing more on their home than it is currently worth. Also, the economy continues to weigh on the recovery, particularly a dampening employment outlook, which analysts see as tied to housing.

Still, The Wall Street Journal concludes in a recent article that if you take into account all the positive signs lately in the housing market, “housing presents an attractive long-term investment that should hold steady or even have upside surprise in the short term.”

So this is what the Realtor Magazine and the Wall Street Journal have concluded very recently about the general US housing market. Does that apply to the Outer Banks (OBX)? The answer is a resounding yes. Housing prices have not yet begun to rise but they do not appear to be declining as they had over the last several years. Inventories are reducing, the number of foreclosures and short sales has decreased, interest rates for second homes have been available at or below 3.5% with no points, and rental income has been on the rise all while fixed income yields have fallen to an historic low. Therefore, this may be exactly the right time to invest in housing in the OBX.

It is my personal view that the market in the OBX has experienced most of the market corrections one would expect for these past 5-7 years in the form of a growth in inventory, a glut of foreclosure and short sales, and lowered prices. These trends are indeed reversing themselves along the lines described in the Wall Street Journal article. The Outer banks Association of Realtors (OBAR) monthly statistical report supports the new trends. Their July 2012 report states that active inventory has declined 24% over the last three years, and 2012 year-to-date sales are up 17%. During July 2012, Dare County foreclosure filings declined by 44% supporting an overall belief that there is a definite downward trend in the number of filings. Similarly, the OBAR reports that sales of distressed residential properties (short sales and bank owned sales) have also declined steeply. Meanwhile the overall rate of increase in sales year-to-date compared with one year ago has risen by 17% (40% for land and 12% for houses). This suggests that wise buyers in late 2011 and throughout 2012 are taking advantage of the buyer’s market. If the market trends reported above continue and other factors remain constant, housing prices may be in line for a gradual increase again.

I believe the OBX market is poised for a gradual resurgence that will afford investors with excellent bang-for-the-buck purchases that include affordable and very reasonable prices, excellent rental income, tax advantages of ownership, and a real opportunity for value appreciation again.

Following are four examples of exceptional houses, one that was recently sold and one rapidly under contract at prices that will allow the new owners to enjoy almost certain market appreciation while accruing rental income if desired, and two in Nags Head that are listed for sale and can provide new owners with a similar forecast for return on the investment. Each of these will grow in value as the housing market continues to recover.
 

  “SOLD” MLS# 73979 The first is a new construction 3 bedroom, 2 bath, 1500 sq ft house with lots of upgraded amenities on West Avalon Street that just sold below appraised value for under $250,000 with a 3.5% mortgage and seller contributions toward closing costs.



 

  “UNDER CONTRACT” MLS# 76011 (atlanticrealty-nc.com) ($415,000)
The second example is a previously owned exceptionally maintained property and great buy on Hallett Street between the highways, 3 lots from the ocean in Kitty Hawk. In less than 2 weeks, this 5 bedroom, 3.5 baths, house with pool and numerous other amenities was under contract with a backup offer.



 

  “FOR SALE” MLS# 74232 (atlanticrealty-nc.com and Coastalhaven.com) $599,000
This 6 bedroom with 4 masters, 5.5 baths, private pool, hot tub, abundant decking, fireplace, game room, large front and rear yards, ocean views, is in Nags Head. Well located in a quiet cul-de-sac between the highways 3 lots from the ocean, this dream house provides the total beach experience but is also close to outlet mall and grocery shopping, restaurants, and recreation spots; medical, police, and fire respondents; and Jennette’s Pier, Jockey’s Ridge, and avenues West to Manteo and South to Hatteras and beyond. Its immaculate condition, location, and abundant amenities have made it a favorite with 2012 rental income of $40,000- $50,000.



 

  “FOR SALE” MLS# 74153 (atlanticrealty-nc.com) $497,000
This 5 Bedroom, 4.5 baths, house with private pool, hot tub, sun decks, ocean view and other amenities is also in Nags Head. It has just undergone a make-over with fresh paint and all new flooring and enjoys good rental income. It too provides the privacy of a quiet cul-de-sac and is close to recreation, good food, shopping, Jockey’s Ridge, and Jennette’s Pier.