While some agents are concentrating on finding buyers in general, others are focusing on a special niche that could bring in more business, and at a higher price point: second homes. Focusing on selling second homes might take a little more effort, education and hustle, but in the end it can pay off – and be fun in the process. We spoke with a number of Realtors who work with second-home buyers in Chicagoland to find out how to be successful in this specialized field.
By Clare Pierson
When the term “second home” or “vacation home” is mentioned, what comes to mind? Perhaps images of a lake house complete with its own boat dock or a chalet perched on the side of a ski hill. While both of these ring true, another concept that might not immediately come to mind is a high-rise condo on Michigan Avenue — yet Jean Hagerty, a Resort and Second-Home Property Specialist (RSPS)-licensed agent and luxury home specialist with Keller Williams, sells homes in the Loop and Gold Coast areas to second-home buyers on a regular basis. Seeing Chicago or another urban metropolis as a viable second-home market is a fairly newer concept, but it is indeed a growing niche and it makes sense.
Certainly Chicago’s Broadway-caliber theaters, expansive lakefront and nationally recognized dining scene help this concept along. “I love our city and what it has to offer, so for me to tout how great it is to live downtown is easy and exciting,” says Hagerty. “There is always something new going on here.”
According to Hagerty, a broad range of buyers look to buy second homes in downtown Chicago – a family with a large home in the suburbs might want a downtown getaway, or a parent will buy a child going to college a city condo with the expectation they will use it after their budding student graduates. Additionally, entrepreneurs and retired people with flexible schedules like to split their time between Chicago and someplace warm.
“Buying in Chicago is a little more deliberate,” she says. “We attract people with season tickets to ball games, the opera, the symphony. They are foodies, sports fans and cultural devotees. In other words, people who spend their time here are doing a variety of things. Some have business here frequently, some have family. The Chicago second-home buyers intend to split their time between here and somewhere else. So, it is easier to justify than a home you would use only during one time of the year.”
Staying Locally Connected
Of course, the more traditional notion of a vacation home is still present and thriving. Many Chicagoland residents long to find second homes in areas where they feel thousands of miles away from any skyscraper, yet don’t want to literally drive thousands of miles to get there. Whether an agent is selling a high-rise condo with a view of Lake Michigan away from the hustle and bustle of the city or a cottage with a boat dock on the Chain O’ Lakes, it is important for an agent to possess detailed knowledge of the area in their market.
Caren Cole, a Coldwell Banker agent in New Buffalo, Mich., does her primary business largely in second homes, in the towns of Michiana, Grand Beach, New Buffalo, Three Oaks, Union Pier, Lakeside, Harbert and Sawyer.
Like Cole, many agents themselves are passionate about a particular vacation area, some were even born and raised in these spots, or choose to move there once they decide to dedicate themselves to selling in that area.
“I live in Sawyer and initially purchased my home as a second home,” says Cole. “I have lived here full-time for five years and just love it.”
Keith Keating, who recently started Keating Real Estate near Powers Lake and Twin Lakes in Wisconsin, a few miles from Lake Geneva, was born and raised near Powers Lake. After living in Chicago and working in development and construction for the past 17 years, he recently decided to move his family back to the lakes and sell vacation homes there.
Having local knowledge and connections can be a powerful advantage.
“This area has been my second home for the past 30 years,” says Keating. “I know what the buyers are looking for. They want to know where they can have a glass of wine or where they can sit and read a book and I can recommend places. I have been a homebuyer in Chicago and on the Lakes, so I know what it’s like.”
Larry Fales, an agent with RE/MAX Advantage in Antioch, grew up near Fox Lake and has lived in the area his whole life. “Some of the people who buy up here have never boated in their life,” Fales says. “There are some idiosyncrasies they need to know before they buy a boat and start riding around the Chain and my knowledge can be pretty helpful to people. I can give advice on where to take kids, where not to take kids, etc.”
A Particular Breed
Although the second-home market is struggling in a similar manner as the primary home market, agents interested in selling second homes should heed the fact that these special buyers usually have the monetary resources and past experience that will help them make these purchases.
“There’s less hand holding [with a second-home buyer],” says Keating. “More than likely, they have bought a home before. They know what they want, and they will give me specifics. Also, you don’t have to feel guilty asking them for a down payment. Money is not an issue. People looking for second homes have already talked to their banks.”
Most experts agree that second homes are not a necessary purchase, and some are interested in turning a profit down the road. Ultimately, no one wants to lose money in this process, and many are considering these purchases as a lifestyle investment, instead.
“This buyer is buying a lifestyle,” says Hagerty. “They are investing in that. Yes, it has to make sense, but it is to be enjoyed as well.”
Across the board, this is a great time to buy, whether it is a client’s first, second or third home. “More and more of our buyers are clients who are looking for an area and home to retire in eventually,” says Cole. “Since it’s a great time to buy, they are buying now as part of their retirement plan, and in the meantime, they can enjoy their home on weekends or rent them out some of the time to help with the expense. This is a luxury buy as well as an investment.”
Fales says the substantial difference between buyers looking at primary homes and buyers looking at vacation homes is the emotion factor.
“This is more of an emotional purchase than a logical purchase,” says Fales. “These buyers are looking for a view; they are buying for a certain sized boat. There are a lot of variables when somebody is buying lakefront property, and they are substantially different criteria than if they were buying for a primary residence. They don’t care about schools when they’re buying a secondary home — one of the main concerns for a primary.”
Additional Education
Like any specialty niche, added education can help you to be your best. Earning the RSPS certification is not required to sell in this market, but it will help an agent deepen his or her knowledge tremendously, and provide an edge to his or her business. Whether an agent wants to sell vacation homes on the side, or dedicate their practice full time to second homes, either way an RSPS certificate can reap many benefits and isn’t too difficult to obtain.
“I think it is for seasoned Realtors that want to dedicate their practice to a sophisticated audience,” says Hagerty of the RSPS certification. “These buyers are savvy investors and can buy anywhere.”
“[The certification] gives me another edge in front of another Realtor out there,” says Keating. “With my building and development background, this helps me have a leg up when I’m working with the buyer.”
What does it involve? Cole says the requirements for the designation are having good standing with the National Association of Realtors, completing the required course for the Resort & Second Home Property designation, a two-day course, as well as having an ABR (accredited buyers representative) designation.
“Since I work primarily with clients who are looking for second-home property, I wanted additional education and skills in this area,” says Cole. “I believe regularly acquiring new education and skills is paramount to being a top-notch Realtor, and I’m very happy to have earned this designation.”
Hagerty says she attended these classes and learned more about catering to luxury/second-home buyers who tend to be savvy negotiators and extremely knowledgeable about real estate in general. The classes she attended also covered 1031 real estate exchanges and how those could help someone exchange their property in one place for another. “The networking with other RSPS Realtors at our conventions has definitely paid off, too,” says Hagerty.
Finding Success
It’s safe to say most successful second-home agents find ways to identify with the buyer. These agents love resort towns, and some even live in these areas full time, putting them in the same social circles as their buyer.
“I have been on a personal quest to find the perfect lifestyle, the perfect place for a long time,” says Hagerty. “I met a lot of people along the way also on the same quest and we traded stories of our findings. I am that buyer, so, specializing in this area was very comfortable for me.”
If you are interested in pursuing this niche, start by building on past experiences with selling primary homes. Be prepared to thoroughly research the area in which you want to sell, and consider selling in an area you personally enjoy. The key is to make sure to understand the needs and wants of the second-home buyer, and it might be a good idea to obtain an RSPS designation.
It may take a bit of hard work and hustle, but agents with enough passion for this market can be successful without a doubt. CA
CONTACTS:
Caren Cole
Coldwell Banker
New Buffalo, Mich.
269.469.3950
caren.cole@cbexchange.com
Larry Fales
RE/MAX Advantage
Antioch
847.812.9500
call@larryfales.com
Jean Hagerty
Keller Williams
Gold Coast
312.280.4840
jhagertykw@aol.com
Keith Keating
Keating Real Estate
Powers Lake, Wis.
312.617.3333
keith@keatinggroup.com