Buying Tips
A Better Buyers Agent
How to Buy a Beach House
Buyers FAQ

Selling Tips
1031 Exchange
Sellers FAQ
Why list your home with me?

A Better Buyer's Agent

What is a buyer's agent?
Simply put, a buyer's agent works for you rather than the seller. Since the seller will always have an agent working for them (the listing agent) it makes sense for you to have an agent on your side to balance things out. As a buyer's agent, we work to get you the best deal.

Why should I work with you exclusively?
I can commit much more time to buyers who are willing to commit to me in return. I will work hard to find you the right property, negotiate the best price, get the seller to fix as much as possible, and make sure you are getting good service from the home inspectors, loan officers, and attorneys. If for some reason you decide that I am not the right agent for you after you sign a buyer agency agreement, I will let you terminate the agreement. I am pretty confident you'll like me though.

How do I get started?
Just call or email me. First, we should talk about what you want, what you have seen, and what your price expectations are. I will be happy to email or send you listings and answer your questions before you make me your agent, but I do require at least a short-term buyer agency agreement before I will actually show you property.

For more information, or if you would like to come down to look at properties, please call or email me: 1(800) 318-4679

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How to Buy a Beach House

What to do, what to expect, and what to watch out for
Buying a beach house really isn't that complicated, and in a perfect world, quite simple. You call an agent, find a house, make an offer, secure a loan, have the house looked over, and go to closing. Easy right?

There are a few things you should watch out for though, and that's why we're here. The purpose of this section is to take you through the process, step by step, and discuss possible pitfalls and difficulties so you are not surprised if one should arise when you are in the process of buying your beach house.

Step One: Determine your price range
Decide how much money you have for a down payment, and what kind of loan you can afford. The best way to do this is to speak with any of our local lenders (click here for recommendations). Local lenders are quite knowledgeable and experienced with financing rental homes, and getting prequalified is the best way to let agents and sellers know you are serious.

You will need at least five percent of the purchase price for a down payment, ten percent is better, and twenty percent the best. Keep in mind that when you finance more than 80% of the purchase price, mortgage insurance will be required, adding another expense.

How much income do you need to buy a beach house? Your income should be about double your current mortgage payment, your monthly debt expenses (credit cards, car loans), and the beach house mortgage combined. To get a rough idea of how much the beach house mortgage payment will be, figure about $800 dollars per month for every $100,000 financed, or $900 a month per $100,000 if you plan to put less than 20 percent down. I would be happy to run the numbers for you. Just call or email.

Step Two: Finding an agent:
Of course, I think I should be your agent, but I know that you will most likely have talked to several before you have found me, so it is important to know what to look for in a buyer's agent so you can make a fair comparison. You should have an agent before you start looking, as just a couple of conversations with a good agent can save you lots of time over looking on your own. Of course, most people like to shop first with no pressure to buy, so I keep our approach fairly low key with no weekly phone calls to see if you are ready yet. I let you take your own time, and consider it my initial function to be nothing more than a provider of information.

1.) Look for someone you like and can trust. I can't emphasize this point enough - your agent will be your representative during price and repair negotiations, there are many difficult situations we have observed that could have been avoided by both the agent and the buyers if they had just been able to trust each other and freely share their thoughts and concerns. If you are worried about your agent's motives when you are just looking at homes, imagine what a difficult negotiation will be like.

2.) Make sure he or she is technically proficient. This is fairly easy - if the agent can answer your questions with detailed, accurate responses, you most likely have found someone who has been at it long enough to have heard most of the questions before. Agents need to know about financing, law, construction, negotiating, appraising, and most importantly the local market.

3.) Make sure he or she is flexible. Sometimes people tend to get stuck doing things the same way, year after year, which is fine when nothing changes. However, every piece of property is different, and every client unique. Rather than force one way of doing things upon my clients, I try to adapt to the situation as much as possible while still doing the things I know make sense. By keeping an open mind, I can predict and handle situations that might catch others off guard.

Step Three: Finding a house
What do you want? Cash flow? Close to the beach? A home in perfect condition, or a fixer upper? While it is a good idea to ask yourself these questions before you get started, realize that what you want most likely will be determined when you see it, so don't worry too much about coming up with the perfect formula beforehand.

Avoid the cash flow pitfall. Most people justify buying a beach house by looking for one that will pay for itself - a fine approach if you want nothing else. Problem is, there are other things to take in to consideration. Do you like the house? Will it appreciate? How far do you want to be from the beach?

Ask yourself if you are looking for cash flow or appreciation. Higher rents are generated by improvements such as bedrooms, hot tubs and pools. So, the less you spend on land, compared to the improvements, the better your cash flow will be. However, improvements do not appreciate in value. The buyer who hopes to sell for a profit some time in the future will be much richer if he or she forgoes the positive cash flow now in favor of a prime location.

Finally, don't be afraid to look for a house you like - after all, rental income can be improved by adding things that renters like, or by simply waiting as rents have shown a tendency to increase up to 5% a year. Your mortgage payment will stay the same or go down, improving cash flow in the long run. After all, why own a beach house if you don't enjoy spending time there?

Step Four: Let me take it from there
As part of my philosophy, I take care of all the details in your closing: from arranging inspections to coordinating with lenders to setting up repairs. I understand that many of my buyers are from out of town and simply don't have the time to coordinate all these things over the phone. My goal is to make the process easier than you ever thought it could be.

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Buyer FAQ

Can I get hurricane insurance?
Yes, policies that insure against damage by wind are available, in fact, required by most lenders. Flood insurance is also required in most areas, and is backed by FEMA, a federal government program to insure against losses due to flood waters including storm tides.

What are typical price ranges for waterfront property?

South Nags Head has the least expensive oceanfront, Corolla the most expensive. You may occasionally see oceanfront homes for less than $500,000, but usually the property has very little land to buffer erosion. Colington Harbour , behind the Wright Memorial, has the least expensive sound and canalfront properties, and the only canals suitable for sailboats with deep drafts. Southern Shores, just north of the Wright Bridge, has the most expensive sound and canalfront property, and is the premier residential community on the Outer Banks.

Can I get a loan to buy a beach house?
Yes, I have local lenders who are well-versed in mortgages for first, second, or investment homes. They use both local banks and national mortgage companies depending on the situation, and their rates are very competitive. Some of my clients have financed through their credit unions as well, but this often takes longer since the credit union does not know the local appraisers, attorneys, insurers, etc.

How much do I need to put down?
First home buyers may be eligible for 100% financing, but usually need at least 3% down. Second homes require at least 5% down, and you must qualify on your income alone. Investment loans require 20% down (some A.R.Ms allow 10%), but they let you add the proposed rental income from your investment to help you qualify.

How much can I borrow to buy a home?
First home buyers need to fit their mortgage payment within about a third of their pre-tax income. For second home buyers, the sum of your current monthly payments (first mortgage, credit cards, car payment, etc.) plus your second home mortgage must be within about 45% of your pre-tax income assuming good credit. Investment home buyers follow the same rule, but they can add the rental income to help qualify, or, if the house supports itself, offset the mortgage payment entirely. This means that if you have 20% down and good credit, you will need very little personal income to get a loan on a house with a positive cash flow.

Are there homes that pay for themselves?
Yes, but they are becoming scarce. Right now, homes with pools in the $500,000 to $800,000 range and year round investment properties are the most likely candidates for a positive cash flow. Be careful when evaluating a cash flow statement to make sure the income is realistic and all expenses are included. A good buyer's agent is the best defense against an optimistic cash flow statement.

What is the advantage of Buyer Agency?
Having a buyer's agent means the agent works for the buyer rather than the seller, usually at no extra cost to the buyer since the seller pays the fee. Buyer agency has become the standard practice for most transactions, and is beneficial to all parties since it is clear from the start who represents who. For more information, see the Buyer Agency page.

Where can I see properties currently for sale?
Just email me price range and location preferences, and I will search for the best listings from all the local Realtors for you. If you want to look online, check out my Featured Listings page.

Are you available to show properties on weekends?
Yes, if you would like to plan a weekend on the Outer Banks, just email or call me at (252) 207-8050. Sometimes I am able to find my clients last-minute accommodations at reasonable rates, but I still recommend that you try to book a hotel as early as possible. They have been booked solid even during the off season lately! I would be happy to email you a list of phone numbers for good hotels.

When is the best time to buy?
Spring is the standard answer since all rental deposits (typically half of the total rent) on vacation homes for the coming summer rental weeks will be paid to the buyer at closing. This can provide a huge cash cushion for the buyer, as well as an effective discount on the home price. However, with prices on the rise, this strategy may no longer be effective if waiting until spring means paying a higher price.

What is the difference between a second and investment home?

There are two different criteria - one for a lender, and one for the IRS.

Lender's definition:
If this is your only home on the Outer Banks, and if you can qualify for the loan without using the rental income, your property can be classified as a second home. If you need rental income to qualify, or if you already have a second home on the Outer Banks, then your property will be classified as an investment home.

IRS definition:
The IRS has two categories, the first is "second home as a vacation property", which applies if you rent it for fewer than 15 days per year. You may deduct property taxes and mortgage interest, but you may not deduct operating losses, repairs, or depreciation. Rental income for up to 14 days is tax free.

The second category, which most homeowners fall under, is "second home as a rental property". You must rent the property, and you may not personally use the home for more than 14 days per year. However, time spent in the fall and spring maintaining the home, preparing the home for rental, and closing the home for winter, does not count towards the 14 days. So if you want to use your home in the off season, bring a hammer. You may deduct depreciation (one of the best reasons for owning), operating losses, and repair expenses, subject to certain restrictions if your income exceeds $100,000. For more details, please consult your tax adviser.

Why should I work with you?
I know the market, and will try to help you learn the market so you can make an informed choice. My goal with every client is to develop a relationship based on mutual trust and respect, so you know you are getting good advice, and I know what you are really looking for. I don't believe an agent has to be pushy, mean, or overly aggressive to be successful, just honest and hardworking. I have a tendency to become friends with those I work with, and to me there is no higher complement.

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Why list your home with me?

When you need to list your property, you want an aggressive agent who will stop at nothing to make sure you get every bit your property is worth. You need intelligent representation and advice, with a minimum of "sales talk" to get in the way of effective communication.

Here is what to expect when you contact me:

1.) I will go to your home or lot, and provide you with a comprehensive market analysis to base your price on.
2.) Many owners have a price already in mind. I never want to lose a potential listing over price issues, so if you prefer to set your own price, I will accept it and work just as hard to sell your property.
3.) I will send, fax, or email you a listing agreement, and have your property on the market the same day you return it.

My Marketing Plan
Your home or lot will be featured on this website within one week of listing.

Advertisement in Homes & Land Magazine every month until property sells. For year round homes, repeated advertisements in The Coastland Times.

Multiple Listing Service listing will include color interior photos, and I will make sure the exterior photo shows your home at its best.

I will personally call and network with Realtors from other companies who have recently shown property similar to yours in case their buyers have not yet bought.

I will use an electronic lockbox to track showings of your home.

I will be available at any time to answer your questions and report on the progress of your home sale.

Our office will be staffed seven days a week with an agent to set up appointments to view your home, and all calls will be answered by a human during business hours.

I will assist you in negotiating any offers, never pressure you to take less than your home is worth, calculate your net sale proceeds, help you prepare for the home inspection, negotiate any repairs, help you find an attorney, and make sure it closes on time. In short, I will be there every step of the way to make sure your interests are taken care of.

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1031 Exchange Information

What is a 1031 Exchange?
A 1031 Exchange, also known as a "Starker" or "Tax-Free" Exchange, is a way to avoid paying taxes by reinvesting gains from the sale of investment property.

What this means is that you can sell your property to a buyer, then through a "qualified intermediary" use that money to purchase another property of "like kind". The intermediary holds the funds from the sale until you use them to buy another property. There are several companies that will act as an intermediary for a fee, usually around $500 to $1000.

What kind of property qualifies?
Any real property (land, homes, commercial property) held as an investment qualifies for the exchange. (1031 Exchanges are not for primary homes, but in most cases, at least the first $250,000 of gain on your home will be tax-free.) You must re-invest the entire sales price, not just the gain, but you may re-invest in multiple properties so long as the total price meets or exceeds the sales price of the property you are selling.

How long do I have to re-invest?
You must identify the property that you intend to purchase within 45 days of closing on your sale. What constitutes "identifying" can change depending on whom you ask, but an MLS printout on the properties you are considering should suffice. More importantly, you have six months from the date of the closing on your investment property to close on the replacement property, or the due date of the next year's tax return, whichever comes first.

Where can I find more information?
This IRS has a website with information on the 1031 Exchange, and there are several internet-based intermediary companies which have informational websites as well. A note of caution here: I have not had good experiences with internet intermediary companies; I would highly recommend using whichever company your closing attorney typically uses.

What's with all the names?
Although "1031" refers to the section of the IRS code that addresses "like kind" exchanges, it was really created by a court case between Charles Starker and the IRS, when the IRS sued Starker and lost. Starker had put a twist on the normal 1031 like-kind exchange in which investment property can be traded for another investment property with no tax ramifications. Starker had the potential buyer for his property, in this case a lumber company, buy another property which he desired. Then the two simply traded properties. The IRS tried to stop him, but lost every time it was brought to court.

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Seller FAQ

What is your fee?
My fee for listing improved property (homes, condos, etc.) is 6% of the sales price. Vacant land is 10% of the sales price. I will share half of my fee with any agent who brings a ready, willing, and able buyer.

What is the duration of a typical listing agreement?
Six months is the standard listing term. Shorter or longer terms may apply to different situations depending on expected price and market conditions.

Why should I list with you?
First and foremost, I will work hard to sell your property. I am liked and trusted by other agents, which is more important than you might think when it comes to showings and negotiations. I am familiar with and use technology to assist us in selling your home including developing this web site to attract buyers, encouraging prospects to make a trip to see your home or lot. I understand real estate law, and know how to keep myself and my clients out of trouble. I understand real estate finance, such as the 1031 tax free exchange. I also have a written a cash flow program that helps buyers know what to expect when considering an investment home. I will take the time to help you price your property accurately, using a detailed market analysis including color pictures of sold properties comparable to yours. And once your property is priced properly, I will use the marketing plan outlined on the previous page to make sure it sells quickly, and as close to the asking price as possible. Above all, I will never pressure you to take anything less than your property is worth.

What do the terms listing agent, selling agent, and sub-agent mean?
The listing agent is the agent who pays to advertise the property, arrange showings, and represents the seller during negotiations. The selling agent is the one who brings a buyer for the property. A selling agent can be either a sub-agent of the seller, or a buyer's agent. If the selling agent is a sub-agent, then it means he or she still works for the seller, and must try and get the seller the best price and terms. Sub-agency has been mostly replaced by buyer agency.

What is a buyer's agent, and why should I pay one?
A buyer's agent represents the buyer rather than the seller. You should still offer the same compensation (allow us to split our fee) as you would a seller's sub-agent, since you only pay if the buyer offers terms which you find acceptable. You are really better off when the selling agent represents the buyer, since you are not liable for that agent's actions as you are with a sub-agent of the seller. If you find this confusing, email me and I will explain further.

What is Dual Agency?
Dual Agency is the situation that arises when the listing agent, or another agent at the listing firm, brings an offer on your property while working as a buyer's agent. The agent must not divulge any information which could be damaging to either the buyer or seller, since a dual agent works for both. RE/MAX Ocean Realty offers Designated Agency, which alleviates some of the problems of Dual Agency by designating an agent to represent each side in the transaction.

How long does it normally take a property to sell?
If your home is priced properly, it should sell within two months of the listing date. Lots should sell within a month of listing. However, the time on the market is very dependent on the number of buyers looking for property in your particular area vs. the number of sellers. For instance, if you have a vacant lot in the dunes of Southern Shores to sell, we could have it under contract in a matter of days since there are very few on the market.

Why should I list the property with a Realtor instead of selling it myself?

1.) Exposure. The more buyers who know about your property, the greater the chance that one of them will be willing to pay top dollar. I am able to expose your property to many times the number of buyers than you would be able to through our MLS system and advertisements.

2.) Realtors have the best buyers. When buyers refuse to enlist a Realtor's assistance as a buyer's agent or otherwise, it usually means they are looking for a "steal" that I, because I price my properties at the market value, do not have. This type of buyer is looking for a seller who has mistakenly priced their property too low, or they bargain away the fee you were trying to save by selling it yourself.

3.) Access. Realtors are always available to show your home, at a time convenient to the buyer. Buyers are also more comfortable working with a Realtor rather than directly with a seller, as they can voice their concerns and objections without fear of offending the homeowner.

4.) Liability. In this ever more litigious world, Realtors know what we must do to comply with the law, and know how to spot trouble before it turns more serious. For instance, did you know that you must furnish a buyer with a Residential Property Disclosure, even if you are selling the home yourself?

Surveys show a majority of homeowners who managed to sell their own home would enlist a Realtor the next time. I really do earn my fees by getting you more money for your home in less time, and with less hassle than you would experience selling it yourself.

Please email me if you want to sell your property - you will be glad you did.

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