Keeping Your Head Above Water…
When
Selling Waterfront Real Estate
Selling
homes on waterfront is much more complicated than selling a home in a
plat, where most of the time, what you see is what you get.
This report is to stress the importance of recognizing problems
early on in the marketing process to facilitate a smooth transaction. Homes on waterfront have issues like:
Zoning
Wetlands
Shoreline Management
Encroachments/Easements
City
& County Ordinances
Growth Management
All
of these issues can be overwhelming when it comes time to represent your
property. I can help you
every step of the way. The
following is an overview of things to think about when putting your home
on the market.
Determining Value
Each home and lot on
waterfront has it’s own unique properties that play a role in
determining value. Some of
the decisions affecting value are a direct result of the Federal and
State government, sensitive areas, wetland and wildlife regulations.
Zoning, easements and Conditions, Covenants & Restrictions
(CC&R’s) need to be factored prior to completing a Feasibility
Study. A knowledgeable
agent will be able to defer and refer you to the proper source of
information to help with feasibility studies, gathering comprehensive
property information and establishing a fair market value.
Where to Start…
Review the Title Report
Review your current title
report. If a copy has not
been ordered, have your agent order one or call a title company for help
in ordering one. Once you
get the report, read it and if you have any questions, contact the title
officer who prepared it (usually noted on the top of the report). Be sure to ask for any referenced attachments (often
indicated by a recording number). This
is important since there may have been liens or documents recorded
against your property that you may not be aware of, or that were
attached erroneously. This
will give you time to address any problems that surface.
Conditions, Covenants & Restrictions
(CC&R’s)
Any
CC&R’s will be attached to these documents and you should review
them, even if they do not seem enforced.
Many lots were created prior to any of the current restrictions
and regulations were in effect and many of them have changed during the
years. It is always good to
know what you’re dealing with and whether “grandfather” rights
apply. For example, does
your property violate any existing codes; i.e., zoning violation? Is your lot conforming?
Are there any easements, public access rights? Is your property impacted by the Shoreline Management Act of
1971 or State Environmental Policy Act (SEPA)?
Are there any setback or sensitive area issues?
For example: if you
are selling view property and much of the view needs to be cleared, make
sure you are aware of any clearing restrictions.
Never guarantee a view! Ask
your agent how best to represent that feature of your property.
Encroachments/Easements
Encroachments are common on
the waterfront. Sellers and
listing agents should always
disclose encroachments, no matter how small they are or how long
they’ve been in existence. Buyers
will always investigate encroachments to make sure they’re not buying
into a lawsuit. Sellers
should never offer an opinion about whether adverse possession has been
established in a particular case, because even cases that appear
“easy” on the surface can turn into a nightmare of litigation. Whenever a question arises about an encroachment or adverse
possession, you should seek advice from a lawyer.
Factors That Add Value
With less and less
buildable waterfront, prices are at a premium where pre-existing
conditions are:
Cleared land close to
bank or shorelines
Pre-existing structures
closer than today’s setbacks
A lot ready to build with
permits available now.
So
many times pre-existing structures will become valuable!
However, whether you live in the structure and are
“grandfathered” for future remodeling - a word of caution:
Never assume! There
are usually conditions under which the “grandfather” rule applies
and one should check with the county for interpretations.
This “grandfather” rule could change in the future,
especially with the Endangered Species Act having a greater impact on
regulations.
Limitations to Values
Flood plain.
Setback
requirements.
Setbacks
from “Top of the Bank”; for example, 100’ conservancy setback
+15’ building setback line.
Health
Department Rules and Regulations.
Drainfield
and water source.
Geotech
regulations; i.e., is a high bank stable
Drainage
plans and review; i.e., how much impervious surface can the parcel
have, where will the drainage go, how much $$ for retention
facilities, etc.
Clearing
limits. What is the
conservancy setback and % of land that you are allowed to clear.
Reasonable
use permit or variances that may be required in the future, due to
size, sensitive areas, whether there is a house on it or not.
Again,
never assume! Just
because there is a pre-existing house on your property doesn’t
automatically mean it’s an asset.
If the house is dated or it’s design functionally obsolete
and due for a remodel, it will depend on how feasible or workable it
is to change, add or completely remove the structure.
How Do I Evaluate Waterfront?
Comparing waterfront is
always like comparing apples and oranges.
No two lots are ever the same!!
Here are some basic factors directly affecting desirability and
value:
Location: What side of the lake, what city, proximity to freeways, noise
factors, etc.
Beaches:
Type of beach - what kind of beach does it have?
Sandy, rocky, muddy?
Width
access – is it level with the house, does it have a bulkhead?
Exposure
– sunny or shady what periods of day?
Open vs. protected cove
Condition
– clean water? Lillypads,
millfoils, solid bottom or sandy bottom, subject to erosion?
Structures
– dock and it’s condition, boatlift, canopies
Shared
access – how many parties?
Banks: High or low?
Stability? Type and
condition of bulkhead?
Views: Mountain views, how much water view, etc.?
Topography
of the Land: Flat vs sloped
and severity of the slope.
Other
water features: Streams,
wetlands, drainage ditches.
Zoning: Subdividing possibilities. Building
new dwellings and remodeling restrictions.
Shoreline setbacks.
Lot
configuration: Width,
length, irregular shape, etc. Conforming
vs nonconforming.
Utilities: Existing and/or availability of such; i.e., septic vs
sewer, well vs public gas vs electric; high speed cable access, etc.
Privacy
and noise issues.
Neighborhood:
Consistency of waterfront parcels.
Access
to Lot: Steep driveway or
level access. Shared or
private?
Boat
and seaplane restrictions.
General:
Wildlife, pollution, aesthetics, noise, ecology, and general
public interest.
Public
right issues, currently in process; i.e., converting railroad
right-of-ways to public trail
systems.
Price per foot:
When evaluating waterfront properties, one has to be very
careful when quoting prices per front foot.
It usually is not the best way to compare value since
individual properties vary drastically in size, shape,
location and access.
Price per square foot is comparable and often the front foot is factored
in. Reasons for this is because larger homes can be built on a lot
with more sq. footage or could be subdivided or zoning may differ with
lots that have the same front foot but different square foot size.
Zoning
One should have and expect
to decipher the zoning, such as an architect or the County Building
department. When
representing a property it is important to beware of all the possible
retractions and or requirements needed for the highest and best use of
the property like:
Is
there an existing survey of the property and was there an extended
title issued when you purchased the property?
An extended title will ensure around any encroachments or
easement issues that are common disputes on narrow lots of waterfront.
In order to be issued an extended title, one must have a
survey.
If
value is difficult to establish, have an appraisal performed by
someone who is experienced in the area and especially with waterfront.
See references:
Alan Pope & Associates,
Inc. in Redmond (425-882-0608) or
http://www.alanpope.com
Shapiro & Assocs.
Environmental Consultants (206-624-9190)
Chicago Title Insurance
Company (206-628-5666).
Final Consideration
Finally,
know how many buyers are in the market place at one time.
Keep abreast of the inventory and rate of sale.
Know if the market is rising or falling or stable.
Remember, it’s ultimately the “buyer’s” perception of
the property which determines the value of the property.
For
further information and essential tips on how to get your home sold
quickly, see Ruth’s 29 essential steps to getting your home sold.
I hope this information will be helpful; however, it is not all
inclusive, so I would be pleased to discuss your plans and concerns or
to help you establish value and discuss marketing strategies for
selling your waterfront property.
