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Buying And Selling Vacation Homes

Carla Ayers5 minute-read
February 25, 2022

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If you’re a real estate professional who is interested in expanding your skill set to include buying and selling vacation homes, now is a great time to explore the options in your market. In 2021, vacation home sales grew from 5% to 6.7% of the total market share, the highest growth we’ve seen in recent history. Much of that growth can be attributed to the need for more room during the pandemic for a home office space, homeschooling and entertaining at home.

Many employers are offering remote options to their employees long term and with this newfound flexibility, more home buyers are ready to commit to an additional property. Read on to learn how you can grow your business with vacation home and second home transactions.

What is a Vacation Home?

The U.S. Census Bureau defines vacation homes as “seasonal, recreational, and occasional-use properties.” When you think of a vacation home, you might imagine a seaside villa with a stunning view of the Pacific Ocean. A vacation home buyer may be thinking of their family’s cabin deep in the woods of northern Michigan. Vacation home buyers will have a specific idea in their minds. So, pay close attention to your clients’ needs and wants – it's vital to finding the right fit for their second home. Ultimately your location and client needs will dictate the type of properties you will work with.

Current Market Conditions

Vacation home and second home sales rose to 6.7% of the total market share in 2021 for the year. By the end of January 2022, vacation home sales were still trending upward, hinting at continued growth in the segment. While it’s still a small portion of the overall real estate market, there is great interest in owning a vacation home. During the pandemic the workforce shift allowed city renters the chance to move from cramped apartments to purchasing their own home in the wide-open spaces of suburbia while building equity.

NAR graph of vacation and second home market share trends.

Who Purchases Vacation Homes?

Vacation home buyers and sellers are typically better prepared, having been through the process of purchasing their primary residence. In 2021, 77% of vacation home buyers were able to contribute 20% or more to their down payment. Meaning vacation home buyers are typically better qualified financially and tend to be better prepared mentally to get the deal done.

Clients can range from a group of friends purchasing a hunting cabin to a successful young entrepreneur that needs a place to unwind in luxury.

Vacation home buyers are savvy and have experience searching for the property they want and making a swift decision. Because this is their second home, many vacation home buyers aren’t in a rush to get under contract. They may be willing to wait for the right property to come to the market. Be patient and pay close attention to their preferences. Being two steps ahead of the process with properties that meet their search criteria will help you attract and maintain a steady flow of vacation home and second home clientele.

What Motivates Vacation Home Buyers?

Lifestyles and life stages make buyers gravitate toward certain locations and types of properties. The chance to engage in their favorite recreational activities is a major factor in choosing a location. Get to know your market from a fresh perspective and think about what draws people to your community. 

Below are lifestyle and recreation activities that may influence someone to purchase a vacation home and some of the concerns they might have as they begin their search:

  • Golf courses and resorts: Well-designed golf courses can attract players from around the country who want to play the course. It’s helpful to know how much membership dues are and any area services a serious golfer might need while in town.
  • Waterfront: If you plan to buy and sell waterfront property, you’ll need knowledge of riparian rights, area flood plains, and how to find out more specific details about the body of water connected to the property.
  • Ski resorts: For those who thrive in the wintertime, homes located near ski resorts and snowmobile trails are highly sought after. Become familiar with the areas that have ski-in/ski-out access to the slopes, area shuttles, and local entertainment like breweries and fine dining.
  • Hunting and fishing: Home buyers who hunt and fish and love the outdoors will want to know about the area’s game and fishing seasons, regulation of those seasons, permits required to participate, and the types of equipment that can be used.
  • Wildlife watching: Birding and wildlife observation is a growing hobby across the country. Knowing the area’s parks and natural resources will be helpful when working with a home buyer who enjoys the great outdoors.

Personal Branding

Now is the time to evaluate your marketing efforts and determine whether your brand and advertising will attract vacation home buyers and sellers. Your branding should focus on the types of properties and clients you wish to work with. Consider what is important to this demographic and begin developing a message around those topics. Being an accurate and authentic source of information is one of the best ways to build a relationship with potential clients.

You may already have common interests with some of your potential clients. Do you love to ski and live near a ski resort? Your firsthand experience and passion make you an ideal candidate to show potential vacation home buyers the slopes. Make sure your branding and social media reflect your expertise.

Being new to a niche market can be intimidating, but with a little preparation you can get started on the right foot. Below are a few tips to getting yourself established as a vacation home real estate professional.

  • Product knowledge: Get to know your market and learn what draws people to your community. To credibly represent an area and its amenities and be seen as a reliable source of information, a real estate professional has to be up to date on market trends, community development, demographics and local culture.
  • Embrace the competition: Vacation homes can be highly sought after, and the market can be aggressive. It’s not unusual for a vacation home to have several cash offers on the table for consideration by the time you’ve submitted an offer. Don’t be discouraged, continue to focus on your client’s needs and doing good business.
  • Network Intelligently: Getting involved in your community is a great way to learn more about what it has to offer you and potential vacation home owners. If you’re someone who loves the lake life, consider joining the local yacht club. If golf is more your speed, join the local country club and get involved. Working alongside community members is a great way to expand your sphere of influence and get yourself positioned as the go-to agent for all things vacation.
  • Financial literacy: Take time to become familiar with how a second home can impact a client’s financial outlook. Homeowners who purchase a vacation home can receive tax breaks for mortgage interest and property taxes if the home is being used as a second home. Vacation home sellers can take advantage of a 1031 exchange to help mitigate capital gains taxes they could be responsible for. Understanding how these financial strategies work will come in handy.

The Bottom Line

Interest is growing in the vacation home and second home market, and you can be a part of that growth. If you don't live near the beach, don't worry, vacation homes come in all shapes and sizes. Take some time to evaluate your branding and make changes that will attract the type of clients you want to work with. Stay focused on your clients’ vision and your business will be rewarded with referrals.

Want to increase your knowledge and stay on top of market trends, check out the Rocket ProSM Insight Learning Center.

Carla Ayers

Carla is a Realtor® with a background in commercial and residential property management, leasing  and arts management. She has a Bachelors in Arts Marketing and Masters in Integrated Marketing & Communications from Eastern Michigan University.