July 2021

5 ways to help guide vacation home shoppers

It’s summer, a peak vacation time, when many people dream of owning a vacation home. If your territory is at the beach, in the mountains or in another attractive getaway spot, vacation home sales could be a significant niche. It’s also an area where your expertise can be key to your client’s satisfaction.

Here are some steps you can take to help make sure your clients will be confident they made a great choice in buying a second home — and in choosing their agent.

Ask if they've considered the costs

There are many costs involved in a vacation home, including a mortgage, insurance, maintenance and utilities, as well as property management for when the owners aren't there. Preparing for these up front can help ensure their future satisfaction. Plus, if they plan to get a mortgage, advise them to contact a lender for a preapprovalFootnote1 so they know what they can borrow, since it can be more difficult to get a mortgage on a second home.

Discuss their goals for the home

Will the home be exclusively for them, or do they plan to rent it out part time? If they want to rent, let them know what your local rental market is like, so they can be realistic about how much income they could expect. If they plan to retire to the home one day, help them consider how particular homes will meet future needs. And don’t neglect to discuss resale value, in case they eventually decide to sell.

Review local rental laws

Since local rental regulations vary, make sure you're on top of current rules. If your clients are planning to rent the home part time, you can let them know what kind of rentals are permitted. Keep in mind that homeowners associations may have rules about rentals too, in addition to state and municipal regulations.

Encourage them to consider taxes

Also, be sure they've considered taxes and understand that they may not be able to deduct all their mortgage interest, property taxes or local taxes. What they can deduct will depend on whether they rent the home out and how much time they spend there each year, as well as what they already deduct on their primary home.Footnote2 If they haven’t discussed their plans with a tax professional, encourage them to do so before they buy.

Introduce them to best features of your location

Clients who buy a vacation home want to make the most of it. Make sure they're familiar with the area so they're confident they will enjoy visiting again and again. Ideally, they should have stayed in the area several times at different seasons. Help them explore local activities, including shopping, dining out and other attractions. Your knowledge could help them make a good choice that they will enjoy for years to come.

A note from your lending specialist:

Whether they're buying their second home or their first, I’m here to help your clients with their home loan needs.

1 Final loan approval is subject to satisfactory appraisal and title review and no change in borrower credit and financial condition. Preapproval is subject to terms and conditions and timely submission of required documentation; ask your Lending Specialist for details. Preapproval does not commit to the continued availability of the loan program. The interest rate shown in a preapproval is based on our current pricing and is not locked. You may choose to lock an interest rate after we receive the complete and executed purchase contract. Borrower must submit purchase contract within 90 days of preapproval. If the rate at time of lock is higher, or a rate lock expires prior to funding, or for adjustable-rate loan programs when the index value rises, we must determine your ability to repay the loan at the higher rate, which may lower the loan amount or invalidate the preapproval. Not available on all loan products. Not available on refinance loans.

2 Real Estate 101: Here's What You Need to Know Before You Buy a Vacation Home, Matt Frankel, Millionacres, Fool.com, August 2019.

MAP3629818 | 06/2021

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