In addition to beautiful views, a waterfront home offers relaxing water activities, such as boating, fishing, and kayaking. Living on the water also brings different responsibilities and risks that buyers may not consider before purchasing a new waterfront home. With that in mind, here are eight common mistakes you should avoid when buying a waterfront property.
1. Not considering the property’s location
When buying any home, researching the location and its impact on insurance is an important task. A home’s location has the greatest impact on its insurance costs. You’ll need to know if your potential home is in an area prone to hurricanes, tropical storms, or wildfires. Other factors like crime, can have an impact on insurance rates.
2. Failing to consider flood insurance
Homeowner's insurance, which covers the cost of fixing damages caused by natural disasters, is essential for every home. In addition to homeowner's insurance, flood insurance is a necessity for homes by the lake or ocean. Waterfront homes are more susceptible to flooding. Flood insurance will cover your house and belongings from water damage due to flooding. By researching what flood zone your potential property falls under, you can determine the type of flood insurance you’ll need. You may also need to consider flood mitigation if the sea level is rising in the area.
3. Not being proactive with financing
Waterfront homes are typically more expensive than other homes due to their appealing location. Many lenders place waterfront properties in a specialty loan category. You’ll likely need a jumbo mortgage, which is a type of loan used to finance the purchase of properties that exceed the typical loan limit. These loans take longer to underwrite, so it would be best to obtain financing as soon as possible to avoid compromising the sale.
4. Being unaware of bulkhead responsibilities
A bulkhead is a wall or barrier, typically made of rock and stone, that separates the water from the property. The buyer may be responsible for repairing or building it. In that case, it would be best to hire a certified bulkhead specialist to conduct an inspection and provide you with an estimate.
5. Failing to inspect the property
You’ll want to avoid buying a house that was not built to withstand the waterfront. An ill-equipped house is more susceptible to expensive damages. Inspect the property for features that can protect it from the weather, such as storm shutters or a high foundation. It is also important to discover whether or not you can swim in and boat on the water near your home.
6. Being unaware of the responsibilities of a waterfront homeowner
Your potential home may be a part of a POA (property owner’s association) or an HOA (homeowner’s association). If this is the case, you will have specific responsibilities expected of you. These rules and regulations include what color you can paint your home and what type of landscaping is allowed.
7. Not obtaining permits on docks and outbuildings
Although the waterfront home you’re considering has a dock, does not mean it was permitted or can be used by the homeowners. Docks and any attachments to the land need to be properly permitted so you can enjoy them without any issues.
8. Neglecting to check community rules and regulations
You may be considering improvements or additions for your new waterfront property, like a new dock or pool. Keep in mind that additions to your home may increase your homeowner's insurance. Removing trees or brush is another project that needs to be approved by the city. By researching local laws, you can determine if buyers can improve the home.
Waterfront properties require extra maintenance and protection. Proper flood insurance, inspection, and learning your new responsibilities can prevent costly mistakes when buying a waterfront home.