Waterfront Property: Three Factors That Determine Value - Part I
That’s a great question, and it’s a common one. Americans desire waterfront property more than any other home feature. We pay approximately 116% more for real estate at the shore’s edge. So how do real estate brokers, sellers and buyers assess market value of waterfront property? Here are the three most important valuation factors for waterfront property. This is Part I -
I. Access: How do you get to the water, and how do you get to the home? This factor has far more variability than you might imagine because, of course, the waterfront is at sea level which means that waterfront property has some degree of slope to it. First, consider a walk-out waterfront home in Miami, Florida. Imagine walking, all on one level, through the front door, through the living room, through the backyard sliding doors, onto a backyard patio, and then directly onto the beach. At the beach, eventually, you will walk down several steps to sink your toes in the surf. This situation has the highest access value, a "10 out of 10" for accessibility. It is almost completely flat.
Now, consider a waterfront home on a bluff in Malibu, California. Park at the home, walk around the side, enter the backyard, and enjoy the panoramic view of the Pacific Ocean. Imagine getting to the water. Can you? Maybe or maybe not. Value is impacted by, first, if you can get to the water, and second, how you get to the water: short walk, long walk, easy walk, steep walk, or motorized tram. The access value of this property is less than that of the one in Miami; all other things being equal (if these two homes were in the same city), this home would be worth less than the first.
"Access," is valuable to us not only by foot, but also by automobile - including vehicles used to bring workers and products to the home. Consider a waterfront home in Seattle, Washington that is on the water but down a very steep driveway. How do you get to the home when it snows? Can you bring large commercial trucks down your driveway to deliver material, or do you have to hire a tugboat (really) to ship to your backyard? The access value of this property is the least of the three mentioned here. In short, this property is difficult to get to.
Perhaps the simplest (but inarguably the most important) way to assess the access value of a property is to ask this question: If I rented the home for a vacation, how easily could I get my surfboard to the water? The easier it would be, the more valuable the property. Part II: coming soon in the next entry.