THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, June 8, 1996 TAG: 9606070392
SECTION: REAL ESTATE WEEKLY PAGE: 04 EDITION: FINAL
COLUMN: About the Outer Banks
SOURCE: Chris Kidder
LENGTH: 104 lines
An on-line request arrived shortly after I wrote about Hatteras Island a few weeks ago.
``I have learned more about that area of North Carolina since I started reading your articles a year ago,'' wrote my correspondent. ``A couple of us are looking to build in that area.
``Could you give me some info or someone to contact on lots available. We are looking for something we can enjoy and also rent out.''
The idea of combining personal use with a rental income property is a common one in resort markets like the Outer Banks. Most buyers today rent out their properties for at least part of the year.
Although in the 1970s and early 1980s it was sometimes possible to ``break even'' on a beach cottage, today's market won't cut you that kind of deal. Owning an investment property will cost you money; the rents will simply make it easier to afford.
Without the element of personal use and enjoyment, investing in beach property is nothing more than a highly speculative - and, in recent years, not very profitable - gamble for most buyers.
But when you buy property here because you love the Outer Banks and want to spend time here, when you have friends and family that can make use of the property, then the investment takes on a new dimension.
It's important to keep in mind, however, that your personal use of investment property is limited by the Internal Revenue Service to 14 days. Days spent occupying the property to perform maintenance and upkeep are not counted in the IRS limit.
As a general rule, if your beach home is not claimed as an investment - or rental - property, then it is treated as a second home for tax purposes.
There are no limits on the days your home can be owner occupied or rented out. As a second home, under current tax rules, rental expenses are not deductible; mortgage interest is.
I've written several columns in the past about choosing a real estate agent and copies of those columns - or any others - are available upon request. I'll repeat the basics. None of this is gospel, of course, but it's my best advice for someone who's truly starting from zero in the selection process.
Do your homework before you contact an agent: Identify the neighborhoods in which you have an interest and then identify agents who are familiar with the area.
Ask people in the neighborhood which agent they used and if they recommend that agent for you; look at For Sale signs currently posted and see who has the most representation and who has offices nearby.
You may want to limit your selection of agents to those belonging to the Outer Banks Association of Realtors. This is not to say there aren't good agents who are not association members; there are some fine ones who, for one reason or another, choose not to join.
But OBAR members offer some serious advantages. Most members subscribe to the association's Multiple Listing Service, which puts 99 percent of all the existing homes for sale at their fingertips. Generally speaking, members spend more time keeping up-to-date on real estate practices, procedures and products than non-members.
Realtors (and only members of the National Association of Realtors and their affiliates, including OBAR, can use this trade name) are also subject to the association's code of ethics which is stricter than the rules of ethics imposed by the North Carolina Real Estate Commission.
If you have a dispute with a Realtor, you may be able to get mediation help from the association.
Decide upfront if you want to work with a seller's agent or a buyer's agent. Unless you sign an agreement with a real estate agent binding him to work for you, the buyer, the agent works for the seller because the seller pays the commission.
Hiring a buyer's agent doesn't necessarily mean you have to pay the commission the seller normally pays, but in some instances that may be the case.
If you're unsure how this works, talk with the agents you interview about this. Each will probably have his or her own take on the issue; most seem to prefer the traditional seller's agent relationship.
Talk to the agents you identify as good prospects. I've heard complaints from real estate agents about ``shoppers'' who waste their time. But no good agent will mind spending a brief time discussing the real estate market with you while you both get a feel for whether or not you can develop a working relationship.
This shopping process requires sensitivity and honesty on your part. Be upfront about what you're doing. Lay out what you expect an agent to do for you and how you intend to conduct yourself as a customer. Set a time limit if necessary for achieving your purchase goal or for reviewing how the relationship is working.
Don't ask for a lot of research and time consuming help at this point. Real estate agents are not hourly employees; they're paid based on what they list and sell, not by how many inquiries they field.
And, once you find an agent you can work with, stick with that one agent. Don't go talking shop with every other real estate person you run into.
Now, about finding an agent on Hatteras Island in particular.
North of Oregon Inlet, realty agents tend to work the entire beach - or at least very large chunks of it. On Hatteras Island, this is often not the case. An agent may specialize in the Rodanthe-Waves-Salvo area and know very little about Hatteras Village and vice versa.
And each area of the island - Rodanthe (north), Avon/Buxton (mid), Hatteras Village (south) - is a unique community very much unlike the other.
On Hatteras, you may find it beneficial - and maybe even necessary - to work with more than one agent if you haven't narrowed your search to one geographic area. Some agencies - Sun Realty and Midgett Realty, for example - have offices in all three areas and can be expected to have the resources to help you shop the entire island. MEMO: Send comments and questions to Chris Kidder at P.O. Box 10, Nags
Head, N.C. 27959. Or e-mail her at realkidd(AT)aol.com by CNB