Property Value Factor #7: Lot Size

We often get first inquiries from people asking for the typical price of property per acre here. While there are rare individuals who really want more acreage, most buyers value the factors discussed above so much more that the size of the lot really doesn’t matter. Exceptions are a lot so small that it is unworkable, or a prime lot with a great view and slope in a great part of the lake that also had a few acres. This could be a benefit.

As evidence of what I am saying, my waterfront lots website used to have two correctly priced lots . One was a 46-acre tract with more than a half mile of shoreline priced at $612,000. A second lot had about 1.4 acres with 811 feet of shoreline and was priced at $1.375 million.

As another example, a few months back I sold a waterfront lot with more than five acres and 300 feet of shoreline for $210,000. In the same month I sold a 1.5 acre waterfront lot, also with over 300 feet of shoreline, for $825,000. In both these situations, the higher priority factors listed above drove the price, for good and for bad.

There may be specific situations in which acreage is a big plus, as for a developer for example. However acreage is not usually a high priority when looking for a waterfront home.

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Property Value Factor #6: Cove versus Main Channel

This issue is not completely cut and dry because there are varying degrees of land in coves, on the main channel, and in between. Many first timers here at the lake assume that they will want to be on the main channel, which often provides the longest and widest water and mountain views. Most, but certainly not all, experienced homeowners and renters here seem to prefer to be in a cove, however, at least to some degree. Cove homes typically provide more solitude, less boat noise, and a better spot for swimming.

A great spot for both views and solitude can be near the edge of a cove with views out to wide water. There are many spots like this on the lake. One note: There are homes positioned in coves in such a way as to greatly limit their views and water quality. These are properties that you want to avoid in most cases.

Both cove and a main channel homes have great value and opportunity for appreciation. You just need to decide what is best for you and your family.

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Property Value Factor #5: Location

This issue is way down the list here at Smith Mountain Lake because location is already established. Everyone choosing to buy at Virginia’s Jewel of the Blue Ridge already has THE location, wherever they are on the lake! So the specific area of the lake is typically less important in the valuation of the home.

That being said, there are still various reasons why owners may want to be in a certain part of the lake or in a particular subdivision. For example, buyers who want to live in a private country club community with one of the top golf courses on the East Coast would want to buy a home at The Water’s Edge. Buyers looking for upscale homes in a private wooded community may choose Waverly, among many others. A buyer looking for a Nantucket style home that gives a feeling of being at the beach may look at The Boardwalk. Someone wanting to sail may try to be near the Pelican Point Yacht Club. Others may want a more rural feel, a subdivision feel, be close to certain amenities, be in an area of many rentals, or be away from rentals.

Driving time is also an issue. However, buyers often find that this is less important once they truly time the drive from home to various parts of the lake. It seems the spots that appear least convenient have the straightest access roads, so the actual drive times are similar from many locations to most lake destinations.

For example, it is about the same drive time from the south (say from Raleigh, North Carolina) to parts of Huddleston, in the northeast corner of the lake, as it is to parts of Union Hall, in the southern part of the lake. One would not guess this when looking at a map. Similarly, it is about the same time to drive from north of the lake (say from Roanoke) to both Huddleston and Union Hall. In fact the drive time from D.C. to many parts of the lake is about the same, though one would not guess this from a map. As George Clooney said, “This is just a geographical oddity!”

The issue of a property’s location on the channels may also come up. Some buyers prefer to be right in the middle of the action, say in the area of Smith Mountain Lake State Park on the main channel. Others don’t care about wide water and would rather be in a private location way up the Blackwater or Roanoke Channels. All else being equal, home values are often higher in a more central part of the lake.

Another issue is the proximity to shopping and other services. When the Westlake Corner area of the lake, in Franklin County, was one of the few with shopping and other commercial services, that area experienced booming growth. Now that a public sewage system is installed in Bedford County and the south side of the lake is getting more retail and commercial development, this is not as much of an issue.

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Property Value Factor #4: The Home

If the property has a house, and it is a house that the buyers intend to keep and/or remodel, this is often #4 on the list. Most buyers here are already risk-takers. Many own businesses and/or have built or substantially remodeled homes and see that the previously mentioned items (view, slope, waterfront) are more permanent in nature, while the home can be remodeled, added onto, or bulldozed. This explains why I am showing a lot with a single-wide trailer on it next week priced at $1 million, and am showing lovely new homes to others for half that price.

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Property Value Factor #3: Waterfront

What does “waterfront” mean in this context? This is a catch-all phrase. This issue is often third on folks’ lists, but is sometimes first or second. Factors may include:

Length of Shoreline

Though many buyers dream of having a great deal of shoreline for privacy and recreation, I often find that most owners use only a small area anyway. A typical lot here at the lake has about 100 feet of shoreline. Note that if there is not a dock on the property, you will need to be sure that there is enough shoreline (and that the angles are right if you are in the back of a tight cove) to construct the dock you desire.
Water Depth. Most buyers want deep water off the end of their dock. This provides a great opportunity to launch your boat, the depth needed to jump from the top of the boathouse (my kids love this!), and the depth in the unlikely event of a large drop in the lake level. While deep water is nice, and it is common here, I have seen many homes with only a few feet of water that have worked out fine for the most part.

Note that it is often (but not always) the case that deep water and a gently sloping lot conflict with one another since the slope of the land often continues out into the lake. Also note that there are some advantages to having shallower water, especially for a swimming area for younger children. My ideal waterfront lot is shallow at the edge then drops off where the dock will be.

Water Quality

This is not a big issue here in general, since the water is outstanding throughout most of the lake. There are a few places that have murky water from time to time, especially after winter and spring rains. Conversely, there are also some places on the lake that are known for having especially crystal clear water regardless of the weather or other factors. The former case, since it is the exception, has more effect on price than the latter.

Beach

Beaches are uncommon here, but owners and their children enjoy them. A thorough MLS search can often turn up properties with a beach if this is important to you.

Erosion Control at Shoreline

Most properties at the lake use rip-rap erosion control. These are rocks, fist-sized or larger, that are put above the water level and down into the water to hold back the shore and prevent erosion. This can be done attractively and can enhance the value of a waterfront lot. This should generally not be done on flat areas that do not experience much erosion.

Dock

The quality, style, size and general appearance of a dock can certainly impact the value of the property. Though docks are important, they can usually be altered or replaced. I haven’t seen docks as a critical driver or deterrent in the price of a home or lot in most cases.

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Property Value Factor #2: The Slope

We’ve looked at factor #1, the view, so now it’s time to see a second factor that effects how waterfront real estate is valued. “The Slope” often runs a close second behind view, and for many buyers it is first.

Smith Mountain Lake’s boundaries are made up of beautiful Blue Ridge Mountains that rise up from the water. Many waterfront lots are on old ridge tops or even peaks. Some of these lots are only 5 or 10 feet above the water level, which can result in nearly flat lots with a very gentle slope to the water. Some slopes are too small to even allow a walkout basement. A large number of lots have a gentle or medium slope to the water, and a home can be well situated with a nice view, a basement, and a reasonable driveway in front and walk to the water behind. There are other lots, however, that are steep. A few homeowners have actually added an electric tram to get from the house down to the water! Some homes require a golf cart or many steps.

Typically, the value of a waterfront property is directly affected by the slope. For instance, yesterday I showed a waterfront home with charm and privacy. It seemed like the perfect lake home, and the couple was very excited as they walked through it. That is until they looked off the back deck. This was an unusually steep lot, and there were 105 steps down to the boathouse. They eventually walked down to the dock, and this confirmed that this was not the home for them (I had warned them before we went!).

Often, you will be able to get a nicer home in a nicer area with a better view if you are willing to sacrifice on the slope. And who knows – you may be able to stay in great shape by doing the stairs!

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Many people looking at home listings over the web are surprised when they see the wide variation in home prices here at Smith Mountain Lake. They wonder why a beautiful, large waterfront home is priced hundreds of thousands lower than a run-down cottage in the same area. Or why some vacant lots are more expensive than nearby homes.

A number of factors contribute to property values here. As a result, values are not intuitively obvious, as they may be in a neighborhood in town. I have seen very costly mistakes on both sides of a transaction, and one of the main motivations for me to write this blog is so that you don’t become a victim.

In my opinion, it may not be enough to get a professional appraisal of a waterfront property you plan to buy or sell.

Just last week I met with an owner whose property had just been appraised at $900,000 by a seemingly competent appraiser. Four realty agents he called independently valued the property around $700,000. The discrepancy was based on the fact that the appraiser’s work was technical and “objective,” while all of the agents also took into account the critical subjective issue that the home was right across the cove from a busy campground for RVs. The appraiser admitted he had not taken the marina into account.
Another seller I met with just last night told me how his home had recently been appraised for $800,000, yet it did not sell in six months on the market at $595,000.

In my opinion, agents who work with home buyers every day often have a better grasp of actual market values on the street than many appraisers. Market value of a widely exposed property is based on the price that a willing buyer will pay and a willing seller will accept, which may be different from an appraiser’s opinion.

Through interacting with many property owners, prospective buyers and actual buyers here on Smith Mountain Lake over the years, I have observed that there are seven major issues that affect the value of a waterfront home. Though there is obviously not a universal order, it seems that the following order is common for buyers of waterfront properties here.

Property Value Factor #1: View, View, View!

If you’ve been to the lake, you already know there is a marvelous variety of views here. Mountains, sunrises, sunsets, wildlife, wide-water and long-water views abound. There are properties that have virtually all of these components, but, as with anything in life, there are usually trade-offs. Whatever view is most valued by property buyers is often the #1 single issue that drove their purchase. Of course coveted views usually mean higher prices. While it is possible to enhance your view, as we will discuss in the section about tree removal and trimming, view is usually a factor that remains important regardless of what other factors are in play.

“Location, Location, Location”? All Smith Mountain Lake properties have that. The Lake itself is the location! Here at the lake, we say “View, View, View”!

One quick note: There are a few waterfront properties here that have no view of the water from the home. Of course there are many offwater properties that have no view of the lake. If you can avoid these properties and get a home with a view, it will benefit the appreciation on your home as well as your enjoyment of the lake. If you can’t afford a home with a view, you can still enjoy the lake from your boat on hot summer days.

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