12 TIPS TO HELP YOU GET THE MOST OUT OF SELLING YOUR SECONDARY HOME
By Rochelle Mortensen
Thinking about selling or gifting your luxury vacation home? It’s best to plan ahead.
The market for luxury properties is beginning to show signs of volatility, so it’s important to maximize your return, quickly. In many markets, there is increasing inventory of available properties. Keep in mind that for many secondary properties, carrying costs start to outweigh benefits of ownership, so whether the market is up or down matters less than the cost of ownership. Buyers now have a lot of choices in luxury homes and different priorities when it comes to buying secondary homes than when they buy their primary residences. In fact, according to the National Association of Realtors (NAR), less than half of vacation property buyers were in the market to use the homes solely for a personal vacation residence. Many planned to use the home as an investment or for future retirement.
The Luxury Real Estate team at Heritage Auctions has sold hundreds of millions of dollars’ worth of luxury real estate, and make it a priority to get the maximum return on luxury vacation property. Here are tips from Heritage to prepare your property for selling.
1. Sell before it becomes a burden on others
If you’re concerned about leaving property behind for family members or thinking about donating a property to charity, you should know that it’s better to sell in advance to avoid probate and carrying costs on the inheritor. Plus, charities prefer proceeds from a sale over a piece of real estate because they often cannot maintain a donated property. Even when properties are left in a trust, preparing a house for sale and negotiating repairs and terms can be burdensome and create conflict among heirs. An auction creates a sale with a deadline, with terms decided in advance.
2. Sell during peak tourist season
Put the natural benefits of your home’s location on display. If you have a beach or lake house, it’s best to sell when vacationers want to be there. That way, your property can show off its amazing patio, the lush vegetation, or the soft, sandy beach during prime time. The house will attract the most potential bidders during preview, and those bidders will be more excited. Bidders will be most interested in competing at auction if the house, the drive-up and the weather are all ideal. Unlike selling real estate through the traditional market, auctioning vacation property allows you to time the sale to precisely the moment when interest in the area is at its peak.
3. Put the (home’s) best foot forward
Just as you would for your primary home, make sure your vacation home is in great condition when it is marketed for sale. Complete any deferred maintenance and tout any recent improvements. The goal is to minimize signs of wear and tear. Buyers love to look at vacation homes that don’t look like they will be (or need) a lot of work. The house will generate more interest on auction day if it looks turn-key and hassle-free.
4. Freshen up the decor
Another key for sellers is to pack away personal mementos, family photos and collections. In order to appeal to the most buyers, it’s best to present the home as a neutral, depersonalized space. If it’s going to be sold for the most return, understand that not everyone will have the same vision for the space. Now is a great time to sell excess furniture, decorative items, collectibles and art if those items aren’t going to be moved into your primary residence.
5. Emphasize the ‘Big Draw’
Think about this: When you first bought the home, what was it that drew you in? That is often the best feature to highlight for buyers. When possible, set up some evocative staged vignettes. For instance, set up a chair next to a ski locker with some ski boots and gloves, or stage a gardening bench with a watering can and a sunhat. Leave a bit of tack in the stable, or a paddleboard near a dock. One or two minimally staged scenes are all that are needed to set a mood.
6. Remove items that are to be kept
Because vacation homes often come furnished, be sure to take out the things you wish to keep before potential bidders view the property. Removing these items will avoid confusion and can also help depersonalize the home. Let the bidders see the space and imagine how they would use it, instead of thinking about who owns it now.
7. Show off every potential
If the property has been a great rental over the years, provide rental and occupancy rates to bidders. Include contact information for a preferred management company or handyman, when available. Bidders like to know the property from every angle when they are bidding. If there are local plans to develop amenities nearby, provide that information, too. When homes are seen as seasonal (as in a ski or lake property), give bidders an idea of things locals like to do in the off-season.
8. Give bidders a vision
What would you have added or changed if you were keeping the home? If your home needs updating, or the neighbors all have a certain feature that the subject property is lacking, consider having preliminary sketches drawn by a designer to show buyers what they could do with the space. For instance, have a landscape designer draw up a pool or outdoor kitchen. Ask an interior designer to create a board with suggestions for kitchen updates. Show bidders the possibilities and give them a reason to dream.
9. Reach the right market
Partnering with a firm such as Heritage Auctions gives you exclusive access to a pool of highly qualified buyers. You also gain the expertise, research and datamining skills of the firm’s marketing team, who can determine who the buyers are in the area and where they own their primary homes. That knowledge, coupled with a professionally designed advertising and marketing campaign, will reach the most potential bidders at the precise time they’re thinking about buying.
10. Pay attention to market trends
American buyers don’t tend to buy vacation homes in times of uncertainty. Traditionally speaking, the market for second homes drops sharply close to presidential elections and picks up again between election cycles. Indeed, the National Association of Realtors 2017 Investment and Vacation Home Buyers Survey reflects precisely that trend: Vacation home purchases in 2016 fell 21.6 percent from 2015 and were the lowest since 2013. The good news for sellers now is that buyers are more active when the stock market is trending upward in the long-term and when interest rates are low, as they are now. If they want to sell, they should do so quickly, before the uncertainty of the next election cycle begins to take hold.
Lawrence Yun, NAR chief economist, says of 2016 sales, “In several markets in the South and West – the two most popular destinations for vacation buyers – home prices have soared in recent years because substantial buyer demand from strong job growth continues to outstrip the supply of homes for sale.
“The volatility seen in the financial markets in late 2015 through the early part of ,” Yun adds, “also put a dent in sales as some affluent households with money in stocks likely refrained from buying or delayed plans until after the election.”
Experts from Forbes, Wall Street Journal and The Economist predict that high-net-worth individuals will find new incentives to pull money from a more volatile stock market and buy second, third or fourth homes in the coming months as tax reforms begin to take effect. Remember that luxury real estate bidders could come from all over the world, so even if the local housing market isn’t ideal, there may be a market for your property with buyers who live in a booming economy.
11. Listen to the experts
When it comes to selling your vacation property, it pays to listen to market analysis data from people who do this sort of thing all the time. Expected selling prices can vary widely when it comes to vacation properties depending on many things, including location, customization, finishes, condition, nearby amenities and the solvency of the HOA. A careful analysis of these and other factors will help you understand what to expect from the sale.
12. Select a selling partner carefully
When you partner with a firm such as Heritage Auctions to sell your luxury property, you can rest assured that the company will keep you apprised of the level of interest in the property, and you’ll know you are getting expert marketing from a large team dedicated to a successful sale. In some cases, auction houses may partner with your local broker to market and sell the home.
This article appears in the Winter 2019-2020 edition of The Intelligent Collector magazine. Click here to subscribe to the print edition.