Looking to buy a Northern Michigan lakefront property in this hot and crazy market? Realtor Kimberly Bork shares insider advice for buyers AND sellers.

The Northern Michigan real estate market has been crazy in general—low inventory, inflated prices, bidding wars and short-term rental opportunities have all fed a frenzy of buyer interest. Potential rentals and in-town listings are hot, as the effects of the pandemic have influenced buyers who are location-neutral to seek out their dream towns with income opportunities to offset the cost of ownership.

But the hottest houses on the market right now are waterfront properties. Since the pandemic, buyers are shifting focus toward outdoor space and outdoor living, taking advantage of remote working options, and moving to places where they can enjoy their residence more—all of which has led buyers straight to the beaches of Northern Michigan.

The crush of interest is driving prices up and creating competitive transactions as buyers compete for limited inventory. “We’re seeing the prices on lake homes and small in-town cottages up 30 percent or higher year over year,” says Kimberly Bork, broker/owner of Venture Properties. Bork, who herself recently completed her own waterfront property renovation, is a waterfront property specialist. For several years running, she has been involved in the highest number of waterfront properties sold on Lake Leelanau and Lake Michigan.

Photo by Venture Properties

Photo by Venture Properties

The Market at a Glance

Buyers today are frustrated as new listings often never hit the market or go under contract in an instant. Relatives, neighbors or friends often purchase waterfront homes before a buyer can have a chance to put in a bid. “I typically encourage homeowners to put it on the market and do showings for two weeks, allowing buyers to come through and put in offers. Today this process generates multiple bids for sellers. However, sometimes sellers receive proposals that are just too hard to turn down. That is what happened with a recent N Lake Leelanau waterfront home sale. The sellers couldn’t turn down a deal almost too good to be true. It saved the effort of preparing for multiple showings, the uncertainty of the inspection process, etc. The buyer bought the home without conditions and will close quickly at a price the sellers are thrilled with,” Bork says.

Bork points to one of her recent in-town listings as an example of the state of the market in general. A three-bed, two-bath 1,175-square-foot new-construction cottage in the Village of Leland was listed at $499,000. The property received multiple offers and ultimately sold for $50,000 over asking within six days—plus the buyers opted to purchase the furnishings at an additional charge.

Photo by Venture Properties

Photo by Venture Properties

Another in-town property sold in just two days at the asking price of $850,000 and those buyers also purchased the furnishings separately. “These two off-water sellers were ready to hit the market, leaving not one thing for the buyer to do except move-in and enjoy. It paid off big time,” Bork says.

“A year or two ago it was crazy to think of an $850,000 cottage that did not include lakefront; now we’re seeing people willing to spend that to be in a desirable in-town location and just walking distance beaches,” she adds.

Photo by Venture Properties

It’s a great time to sell any property, new or old, developed or not. High demand has encouraged owners on the fence to finally sell, and a host of buyers are waiting, often with cash in hand. What this means is intense competition with bidding not only going over the asking price, but sellers also snapping up bids that offer the least hassle and fewest conditions.

“We’re seeing buyers not just offering cash, but also waiving inspections,” says Bork. “This certainly makes your offer attractive, but it’s definitely a big risk, in particular with waterfront.” Waiving inspections shortens the closing time and the risk that a deal will go awry due to revealed inspection issues, but they put a buyer in the position of having to repair costly problems down the road. “We’re talking about $10,000, $20,000 or more for a failed septic system,” Bork says. “That can be an expensive gamble.”

Fortunately, there are strategies both buyers and sellers can use to put themselves in the best possible position in a tough market. Here’s how Bork advises her clients when dealing with buying real estate today:

Tips for Buyers  

  •     Show you are qualified. Be sure you have a pre-qualification letter ready to go. Or, if paying cash, be able to show proof of funds available to purchase. A buyer will need to evaluate your ability to pay at the time you submit an offer. If you’re not pre-qualified or do not have available cash-in-hand, you are not ready to compete in this market.
  •     Write a letter. A short letter letting the seller know your family has been visiting the area and/or lake for years, or your sister lives up the street might pull at a seller’s heartstrings. Or perhaps, compliment updates they’ve made.
  •     Find out what is important. Do the sellers need time after closing to rent back? If so, offer them more time, perhaps rent-free, or at a greatly reduced rate. Always have your agent talk to the listing agent to find out what is important to the seller. Incorporating those details into your offer can help you create a winning bid.
  •     Shop in the spring. “The best time to buy waterfront is in the spring, so you can see the property after a winter thaw,” Bork says. Or, when shopping in the summer, perhaps visit the property after a big rainstorm. This gives visibility of where low-lying areas may be and how water levels impact the lawn, the basement/crawl spaces, the beach, and dock areas.
  •     Think about the rise and fall of water levels. Even if you shop in the springtime, you’ll need to consider the longer-term cycles of the rise and fall of lake levels. Currently, water levels are receding, so it will be harder to tell what rising levels will look like. “Look at past high-water marks,” Borks explains. Another hint? “Check to see if there’s a lot of water-loving foliage, like cedar trees, or cattails in the area. If so, that land may not be usable land or deemed wetland.
  •     Analyze the septic situation. Is it a conventional septic system, or on holding tanks? If the property utilizes holding tanks, that means all waste and gray water—from toilets, shower, washing the dishes, laundry—heads to those tanks, which can fill up quickly. “In some cases, you may be pumping the septic monthly,” Bork says. “The good news is holding tanks do not fail, they just fill up and need to be emptied more often. This can be expensive and may or may not be a good fit for your lifestyle, especially if you’re thinking of renting the property. Most people are used to municipal water systems and just don’t think about wastewater,” she adds. Property with holding tanks do not command the same value as a conventional, alternative, or mounded systems.
  •     Get the skinny on rentals. Find out if the township or neighborhood allows rentals. And keep in mind that hyper-local neighborhood restrictions trump municipal allowance. “Just because the township allows short-term rentals (STR’s) doesn’t mean that overrides community bylaws. You may have to do a title search to see if there are recorded restrictions in that neighborhood or even on just that street,” Bork warns. It’s important to check with the zoning administrator whether rentals are allowed and dig for the details thoroughly before purchasing.
  •     Consider smaller lakes. If lakes Michigan and Leelanau are out of reach, you can still find a cottage in your price range. “Don’t overlook homes on smaller lakes like Little Traverse or Lime Lake,” Bork says. “I have a lot of buyers who simply need that little slice of paradise, just toes in the sand, it doesn’t have to be ‘big water.’

Read Next: Tips, Hot Properties & How to Buy a Home in Northern Michigan

Tips for Sellers 

  •     Don’t overprice. The flip side of a hot market is that as prices have spiked, would-be sellers have been encouraged by area comparables to put high price tags on their properties and see what sticks. “Some inventory that is popping up is popping up at a very inflated price,” Bork says. “Then sellers get very disappointed if their listing sits. But those overpriced properties are sitting, and buyers are not willing to step up to the plate.” The answer? Price your home at a fair value, even last year’s value instead of the going rate, and you’ll watch interest soar and buyers flood in the door. “Once buyers fall in love, you’ll likely end up with a price point you never anticipated,” Bork says.
  •     Do a pre-sale home inspection. Fix the items you know will be an issue upfront! This will cut down on negotiations, time under contract and should get you to the closing table faster.
  •     Get a survey. Where are the property lines? This is one of the most important questions when buying real estate. Be prepared, have a survey completed in advance so there are no surprises regarding boundary lines, encroachments, easements, etc.
  •     Share recent repairs and warranties. Let buyers know that your newly installed roof is still under warranty, and they’ll be less likely to worry or push for nit-picky inspection items.
  •     Hire an appraiser. Know your value in this crazy market. “Also, know that you are going to have financed buyers and the house might not appraise at that bid-up price,” Bork explains. “If there are multiple bids and we don’t think it’s going to appraise for those inflated offers, the buyer has to be willing to cover that gap with cash, and the seller will need to know the buyer has funds available to do that.”

All of these new normals in the Northern Michigan real estate market can feel discouraging, and Bork admits there are a lot of intimidated buyers out there. It’s hard to lose what you think is the perfect property. But, as she points out, even in the most unpredictable markets, people do land their dream homes, every day. “Make a plan with your Realtor, have a sound strategy, get pre-qualified with a local lender, know what you can afford, then ultimately the right situation will come along,” Bork says.

Photo(s) by Venture Properties