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.