Tips for Selling a Vacation Home
Late summer is the time to dream. As Labor Day and the back-to-work season of autumn creep closer, it’s not uncommon to soak up the waning days of summer and wish we could be on a permanent vacation – or at least have the option for one.
Which is what makes the idea of a vacation home so seductive. And the market, if you can tap into it, is huge and lucrative. According to this Inman article from a couple of years ago, 21 percent of home sales in 2014 were vacation homes… and the economy has only improved since then. Inman recommends focusing your efforts on the first seven months of the year (January-July). So, while we may be just outside that window for 2017, you could get a nice jump on your planning for next year.
A few other things to consider:
Location matters, but don’t count yourself out
Obviously the coasts and warm-weather areas are going to be the most popular. The Inman article highlights Seattle, New York, Chicago, Houston and Atlanta as hot returns when searching “vacation home” listings (likely due to income levels in those areas). Beaches and many mountain areas are no brainers, as are retirement hotbeds like the Arizona desert and south Florida.
But a vacation home can be sold near any body of water – if you have a lake in your vicinity you’ve probably got a property that would be of interest as a second home, even if you’re in a cooler climate. A well-kept cabin in the woods is as attractive to some vacation buyers as a beach condo. It just requires looking at the inventory in your area — and marketing it – in the most advantageous light.
Realty Today has a helpful article that not only provides some guidance for you, as a listing agent, but also some sellers’ psychology. A vacation home was likely purchased with a lot of excitement, and either through time or circumstance has become underused or a financial liability to the family. Patience and understanding on the part of the agent is important. From the practical side, it will take the right buyer -one who understands the area and has similar needs to the seller – to make the sale happen.
From the article:
“The key here is to find the right family who also has the same dreams that you had before. “[Buyers] are looking to fulfill a lifelong dream,” says Gayle Rich-Boxman, a Vernonia Realty & Insurance realtor in the Fishhawk Community (South Carolina).
Plan for Uncle Sam
Another thing to consider when helping clients sell a vacation home: taxes. Unlike primary residences, the sale of a vacation home will likely result in capital gains taxes.
“The proceeds from the sale of any home that you own are considered capital gains. Although the IRS will cut you a break when you sell your primary residence (the first $500,000 in profit for a married couple is exempt from taxes, $250,000 for a single person), that’s not the case for a vacation home. You’ll pay a capital gains tax just as if you had sold some stock shares.”
The article is very helpful in suggesting some offsets for that tax burden, including depreciation (if they’ve been renting the property out to others), writing off the cost of improvements and even leaving the home to your children by bequest in your will . Recommend your clients take this side of things seriously, depending on the value of the property and the anticipated earnings on the sale.
If you’re seriously looking at making vacation homes a large part of your portfolio, you likely either live in a haven of real estate action or have grown your business to the point where you can focus on this lucrative niche market. So: Have some fun with both your marketing and your networking. Much of the stress that comes with families buying or selling their primary residences doesn’t exist when it comes to vacation homes: This is a luxury, a place to relax and enjoy the life they’ve built, and clients will want an agent whose vibe – and expertise – meshes with that mindset.