Sevierville home is conveniently located
If you’d like to schedule a time to see this Sevierville home, contact our office at 865-429-2121.
When home and cabin owners make the decision to sell, the first thing they want to know, of course, is what the correct sales price for their property should be. Working every day with the market, I watch what’s happening with sales prices and I keep up with the trends of what’s happening. Right now, we are in a sellers’ market due to the low number of properties for sale, so the demand for homes and cabins is continually driving up the sales price.
Before most clients contact me, however, they’ve already turned to the internet for their research into setting the correct sales price. Real estate marketing websites use computer generated figures based on a total sum of properties without any input from a human. So they don’t take into account all the little things that appraisers are going to care about when they come out to see if the lender should finance the purchase. As a result, the internet estimates are generally incorrect. Sometimes, they are too high. Other times they are too low. For cabins, this number is derived by including all the very expensive log cabin construction in our county – lumping every kind of construction together. To the computer there is only one category and it is called “residential,” whether it is overnight rental cabins or true residential like your house. Clients who list with me will ask if the estimated sales price will hurt the sale of the home if it doesn’t match what we have priced it at based on market comparisons that are more “apples to apples.”
Well, here’s the good news, sellers: the online sales price estimate isn’t going to hurt us.
As a matter of fact, we’re going to use it as a marketing tool! We have estimates like this all the time and we make them work in our favor – even though you and I know that the estimate is not accurate (and actually buyers and buyers agents do as well).
In the Great Smoky Mountains Association of Realtors Multiple Listing Service, there is no division for the type of properties we have in Sevier County. If it has bedrooms, it’s a residence – even if it is a 12-bedroom log lodge bringing in an income of $300,000 a year.
The sold numbers that throw this off are our new construction log home cabins which run $170-$280 a square foot. (True residential properties are still running right at $100 a square foot to build.) When the computer picks up these log cabin numbers it just creates estimates that are well, not accurate. It doesn’t fit the programming pattern, so it messes it up. Some computer programs also don’t seem to be able to keep up with the pace of the market, which can be a problem for someone who is selling their house based on today’s sales prices and not on a price from 90 to 120 days ago.
Until we’re all replaced by computers, sellers and buyers still need people who can look at all of the data and not just one piece of it to help determine the correct sales price for a listing on the market.
The gorgeous views on the over sized lot of this 4-bedroom Sevierville home provides the perfect backdrop for entertaining family, friends, neighbors, and other guests.
You can learn more about this 4-bedroom Sevierville home here.
The most common type of phone call we receive from buyers looking for real estate in our market usually starts out something like, “I’ve never really owned vacation rentals before but I want to buy one with great rental history!”
The conversation then turns to identifying what exactly they are looking for in an investment property and what their budget is for buying real estate. Once we have those parameters figured out, the next point to focus on is understanding what their long term plans are with buying real estate. Always be looking for real estate property with the expectation that you will sell at some point. This is the first, most important step in the process of buying real estate. We have found that it is fairly common for investment cabin owners to relist their cabins within five or so years. Either their investment strategies evolve leading them to buy other cabins or to invest in other ideas, or life happens and their focus on where they want to spend their investment dollars changes. So, always buy with the sale in mind. What does that mean? Well, it means there are several criteria you want to do your best to meet as you search for the best investment.
- It’s got to be in a great location. Location is everything, as I’m sure you know. You’ve got to buy something in a great location. You can change almost anything about a home but you can’t change the location. You can’t move a house if it’s in a bad location. So how do we define “great location?” Well, in the Smokies, a great location is generally something that has a beautiful view of the mountains, is close to attractions, and is relatively peaceful. If your investment property doesn’t meet at least some of those criteria, it had better offer something incredibly unique that renters will find appealing.
- Buy the lowest priced property of the best quality on the block. You definitely don’t want to own the most expensive home or cabin in the resort, and the reason is this: when you get ready to sell, you will have a hard time getting that piece of real estate to appraise for what you want from it. Appraisers look at similar properties in the same area of the property for sale as much as possible, and often times a property that is priced higher than the ones around it sold for has trouble getting approval for the price you are being offered. Without an appraiser’s stamp, a lender won’t be able to authorize the deal unless the buyer is willing to pay the difference up front. Most buyers using a lender usually can’t (or won’t). By going after something that is less expensive, you have enough room to maneuver as it appreciates in value.
- Buy as high quality of property as you can afford. People are always looking for the best deal, and I personally love helping them finding someone else’s mistake that they can turn into a win. But even with that goal it’s important to remember that the cheaper something is, the more you will have to spend to turn it into a gold mine. You want to buy real estate property with good bones that will hold up better without much maintenance. On that subject, don’t buy something with an outdated, obsolete floor plan. You want to buy something that can be changed to keep up with the interior design trends. So buy something with potential to be great without having to completely rebuild from scratch.
Remember, the goal in real estate investing is to make money with the property, both on the front end over the years as you rent it and on the back end when you sell it for a profit. If you’re not striving to reach those two goals, it might be someone else buying your mistake instead!
Next month, I’ll take you through some of the strategies I encourage my buyers to use once they’ve found the “diamond in the rough” so that remodeling the home increases their profits rather than cutting into it.
In the meantime, if you have any questions about the local real estate market, my team and I are always here to help and answer questions.
With a focus on main floor living, this beautiful Cedar Falls log home has a open floor plan perfect for family and guests.
To learn more about this Cedar Falls log home, click here.
If you’d like to schedule a visit to this Cedar Falls log home, call me at 865-765-6157 or my support line at 865-654-2111.
Our first “House of the Month” for 2018 is this almost 3,400 square foot country home on Topside Drive in Sevierville.
To learn more or to schedule a showing at this country home, call us at 865-654-2111.
We are finally reaching the end of 2017 and wow, what a year it’s been! We started with one of the worst tragedies our region has seen as we watched the Smoky Mountains and parts of Gatlinburg burn just over a year ago. So many vacation and rental cabin owners were devastated by the wildfires and we worked with many of them as they made the tough decision to either build back or buy something else. As the costs of materials and construction climbed over the year due to catastrophes in other parts of the country, even people who planned to rebuild their rental cabins slowly abandoned those plans because the price of doing that was just too much.
The rental cabin market in 2017
Not everyone who owned a cabin was eager to sell, though, so what we ended up with was a market of anxious buyers without enough cabins on the market to meet the demand. And many of them had cash from their insurance checks, so they were willing and able to pay a little more than someone who was new to the idea of buying a cabin, or who was working with a lender. The result was that prices of existing cabins began to steadily climb as well. The price to buy remained lower than the price to build throughout the year, and we still haven’t reached the point where building and buying are equal in price.
The number of residential properties, including rental cabins, didn’t quite reach the number sold in 2016, but the average price of such properties increased roughly $25,000 on average and our total sales for the Great Smoky Mountains region passed $540,000,000. Nearly 1,100 of the properties sold were vacation and rental cabins. With the flurry of buyers, we saw properties on the market sell very quickly, sometimes in less than a week if they were competitively priced or in a fantastic location for the right buyer.
So what does all that mean for 2018? Well, the number of residential homes and rental cabins for sale in our market will continue to be down and the market for buyers will remain a competitive one. This is good news for sellers but not good news for buyers. If you are thinking about buying a cabin, sooner is better than later. The longer you wait, the more difficult it will be to find a property within the price range you want to be in and the more competition you will have for what’s available. The market price for residential property will continue to climb until it reaches a point where the cost of building is a reasonable option. The most important thing to understand in that statement is that the cost of building isn’t likely to go down in the foreseeable future, either. So as the price of building climbs, it will be that much longer before building and buying are the same price.
Finally, none of this is exact science. In fact, there’s a lot more art to it than science. But what we do know is that the vacation rental cabin market is booming and because of that, cabin owners generally aren’t likely to sell their investment properties as long as they can make more with the rental income than they can from the sale of the cabin. The other factor for owners is the tax depreciation. Until that is used up, they will keep going. (Talk to your tax attorney if you want to understand more about how tax depreciation can be beneficial to you in the vacation cabin market.) And, the increasing number of buyers, especially people who are moving their investments from the coast line to the mountains, is expected to continue. This high number of buyers will drive the market.
As always, my staff and I are here to answer any questions you have about the rental cabin market.
Our featured ‘Cabin of the Month’ for December has incredible mountain views of the National Park!
To schedule a visit to see this cabin and its amazing mountain views, call me at 865-765-6157 or my support line at 865-654-2111.
Nestled on more than 12 acres, it is the perfect retirement home, second/vacation home, or overnight rental! With three bedrooms, two full baths and two half baths, this nearly 4,000 square foot home utilizes a large open floor plan encompassing a great room with kitchen and dining areas perfect for hosting guests and family. You will be dazzled by the gorgeous wood floors, tongue and groove throughout, custom build all brick fireplace, hand carved wood, and cathedral ceilings with wall of glass. The custom kitchen has stainless steel appliances, striking artistic solid wood bar top, granite counters, custom cabinet finishes, large pantry closet, and tree rack to display all of your mugs! Enjoy your morning coffee in the dining area while taking in the views or take a step right out onto your over-sized back deck to experience all of the peace and quiet nature has to offer. The master suite with fireplace perfect to cozy up to on those cold nights, jetted tub and shower, walk in closet, and private entry to laundry.