Real estate broker Terry Hilgenberg said the complexities of buying a home on a lake or river make it almost too challenging for first-time home buyers.
“If you’re a first-time home buyer, you’re probably better off looking at more of a conventional type of property than a waterfront property,” said Hilgenberg, the co-owner of Hilgenberg Realtors in Shawano, Wis.
That’s not to say Hilgenberg would turn away a first-timer who had the money and was determined to get on the water.
Neither would Steve Peterson of Coldwell Banker The Real Estate Group Inc. in Waupaca, Wis.
They just find that most waterfront buyers have bought several homes before heading for the lake. And that first-time home buyer just has more to absorb from his broker and other sources so he or she can make an intelligent purchase decision.
What Hilgenberg and brokers like Petersen are saying is that buyers have many more considerations when buying on the water.
These range from the kind of lake bottom and boating restrictions to building restrictions to the value of the property based in part on the neighborhood.
And nothing ranks higher than sewer and water services. If an area has no sewer service, buyers, they say, must be certain the septic system is in working order or that there’s an acceptable alternative.
If you must replace your septic system, you need two acceptable sites, one for the new system and a second, also a “perc-able” site, for a possible down-the-road replacement system, Hilgenberg said.
Waterfront properties aren’t a big chunk of Wisconsin residential sales because of the relatively limited number of properties, but they are among the most expensive home sites. That means they are a big investment for the buyers. Price growth for waterfront homes has been moderate in recent years, but its rapid rise in the 1980s and early 1990s has driven up prices well above most other properties.
The only way to hold down the cost of a waterfront property is to spend less on the house, real estate brokers say. However, they consider it unwise to put a $75,000 house on a $200,000 lot. It hurts resale value, they say.
To meet the challenge of a waterfront purchase, Hilgenberg and other real estate brokers offer warnings and guidance, and sources of information for buyers.
Bob Karisny, president of Acre Realty of Appleton, said waterfront homebuyers should be careful about evaluating the neighborhood.
“We (as real estate brokers) can’t say one neighborhood is better than another,” he said. “All we’re saying is that knowledgeable homebuyers are looking for supporting value,” namely, homes of consistently equal value in the area.
Karisny said neighborhoods tend to be more diverse in value in the Fox Cities of Wisconsin.
“In lake properties, it’s probably more profound,” he said. “You see tremendous differences in the types of houses that are there.”
He said a high-priced house might be next to or near an old cottage that has little value as a structure.
The common denominator is the high land value. Karisny said lake front is going for $1,000 to $2,000 a front foot.
So, how much should one pay for a lake lot with a modest house in a nice neighborhood? Or for a lot with an expensive house in a modest neighborhood?
“That where there’s real difficulty in (appraising and) buying a water property,” Karisny said.
He said paying fair value is important because resale is important.
People are moving more, especially corporate transferees, who tend to be those who can afford an expensive lake property.
“Overall, today I think more buyers than ever are looking at the potential of selling more quickly than they did 15 or 20 years ago,” he said.
Julie Jedwabny, a sales person for Coldwell Banker The Real Estate Group Inc. in Appleton, said waterfront home hunters should first find an acceptable location. Find what you want in a location first, she said.
She said buyers should be aggressive and watch updates weekly because there are more buyers than properties for waterfront property.
Hilgenberg agreed.
“My recommendation would be that they get as much information as possible on the type of property that they are interested in and that they then do a good search of potential candidates, and not just fall in love with one property,” he said.
Buyers must be especially careful about properties with septic systems because sellers don’t necessarily reveal failing septic systems. If they don’t know the system is failing, they can’t report it, he said.
He said a new system can cost several thousand dollars and a mound system even more, up to $8,000. And if a buyer is forced to put in a holding tank, he or she could be paying $40 to $60 a month for getting it pumped out.
