Of course, you’ll want to locate your luxury mountain home in an area that is most appealing to you, whether that’s a ski in, ski out Breckenridge home or a luxury equestrian property north of Silverthorne. But there are a number of additional considerations – and important questions to ask – before you make an offer on a luxury mountain home.
I am a Summit County Realtor, certified Resort & Second Home Property Specialist (RSPS), and a long-time Breckenridge local. Additionally, I work alongside my husband, Ty Cortright, who has been involved in the construction of fine luxury Breckenridge homes since 1997.
Today I want to share with you some questions to ask before buying a luxury home in a mountain community, whether you plan to make it your primary residence or to occupy it as a second home or a rental/investment property.
Question 1: What is the real estate market outlook for luxury homes in this particular area/subdivision?
Generally speaking, luxury homes in resort communities, such as Summit County, are poised for long-term appreciation. After all, they are located in areas that are consistently popular among visitors and other second homeowners, so there’s consistently high demand.
In addition, the supply of homes in resort areas like ours is limited. Of the 619 square miles that make up Summit County, about 80% is public land – managed by either the Forest Service or the Bureau of Land Management. That leaves just 20% of land in Summit County to be privately owned and managed.
So, when you own a piece of property in Summit County, you buy something with great appeal and strong potential for resale value. You can realize strong appreciation over the long term. And, in the meantime, you get to enjoy the property, the vacations, and the tax advantages.
Of course, no one can predict the future and what the real estate market will do, but we can have a good understanding of the past. As of this writing, prices are trending upward. See today’s market stats.
Of course, all of our luxury properties and luxury subdivisions have statistics individual to them. Please know that you can always request the latest Market Report for the subdivisions you are most interested in. I personally create these reports, which feature properties currently for sale, properties under contract and sold properties, along with year-to-date and historic sales and trends. (Simply email me to request these.)
Specifically, you’ll want to understand the absorption rate for the luxury home market in the area you’re looking. Many times, the absorption rate for luxury homes is different from the market as a whole simply because you are among a smaller pool of buyers. It’s very possible for there to be a seller’s market for homes under $1M, while homes of $2M are experiencing a buyer’s market. A buyer’s market means a greater likelihood that you can negotiate on price and inspection items. You may even have more say over contract dates and deadlines.
Question 2: Have you considered all of the neighborhoods and areas that might appeal to you?
A good Realtor will be able to provide information and guidance about additional communities and subdivisions that may fit your criteria, simply by learning about your lifestyle and the type of homes you are looking for.
Here in Summit County, we have impressive luxury homes in Breckenridge, Keystone, Copper Mountain, Dillon, Frisco, and Silverthorne, as well as north of Silverthorne and south of Breckenridge. Each of these subdivisions and communities has a different feel.
When we first start talking, expect to have a long conversation about exactly what you are looking for. Are you interested in a historic property? New construction? In town or on a larger land parcel? Are gravel roads okay? I have a series of about 20 questions to get us started. We’ll talk about the real estate market trends in each of these various subdivisions as well as any new development and revitalization projects that may be on the horizon so you can get a sense for not only the current value but the future value, as well.
You’ll also want to make sure that you are considering the needs of everyone who will be using the home. Especially if you have in mind that the home will be in your family for generations, it’s important to consider the needs of all. If you have a number of older people in your party with any health concerns, you might want to choose a home at a slightly lower elevation, for example, or you might wish to look at properties with at least one bedroom on the main floor – or perhaps an elevator.
Question 3: Who designed the home, and who built the home?
Ideally, you’ll be working with a luxury agent who is familiar with the work and the reputation of the area’s custom home builders and architects. When I preview new luxury homes that come on the market, it’s the first question I ask, if I don’t know already – because it’s important.
Even if the home is not new construction and is outside the warranty, a luxury builder with a stellar reputation will do what’s necessary to keep that reputation and will often, at the very least, help you troubleshoot and solve problems. If you ever want to add on to the home, or do a remodel, it’s nice to have this information, as well.
Question 4: What community amenities/features are most important to you?
Just as with any property, when shopping for luxury, the “bones” of the home are going to be of utmost importance. You want solid, quality construction on a parcel of land that offers good exposure. You want a good floor plan, perhaps a timeless design.
Beyond these basics, there are bound to be particulars that the home does not have, but if these are easy to integrate, it doesn’t have to be dealbreaker. A home can often be retrofitted with modern technology (see below.)
It’s common in our luxury market to have stellar views and premiere locations, along with home theater, fitness room, wine room, gourmet chef’s kitchens with top of the line appliances (Viking, Subzero, Wolf), private hot tubs and outdoor seating areas with gas firepits. Expect to see outdoor kitchens, spa baths and steam showers.
Heating on luxury homes in Summit County is nearly always in-floor radiant and the building process here so prizes environmental building standards that you can expect to see a number of ecological considerations and features, especially in newer construction. These include passive and active solar, as well as “smart” features that allow owners to control lighting and window shades, temperature and humidity, electronics and entertainment, security systems and more either remotely or via an ipad on site (or both).
Again, some older luxury homes can be retrofitted with this technology fairly reasonably, but this might be something you want to get an opinion on before you purchase. One thing that can be difficult to retrofit: an antiquated heating system. If the luxury home has older heating systems or even certain in-floor heat tubing (a couple have had class action lawsuits), you might want to opt for a home that’s newer and potentially more efficient.
New construction is very popular in our luxury market, in part because it provides the latest in trends and technology, which can be particularly useful if you are not occupying the home full time.
A good luxury agent will help you understand what to look for in a luxury custom home, from the mechanical room to the roof design, and what problems you could potentially run into down the line.
And that leads us to another question: Nearly all luxury buyers have grappled with whether they would be better off buying land and building a custom home themselves. Your luxury realtor will be able to give you an idea of the current building costs and timelines as well as the general procedures you can expect in your area.
More Great Resources on Buying a Luxury Home:
Tips for Buying a Luxury Home, by Ryan Fitzgerald in Raleigh, North Carolina
8 Things That Must be Considered When Selling a Luxury Home, by Kyle Hiscock in Rochester, New York
Ten Tips for Buying Luxury Homes, by Debbie Drummond in Las Vegas, Nevada
Question 5: What are your likely costs for home care?
The HOA fees for single family homes will likely be fairly minimal, as there is often little in terms of common amenities and services. There are luxury subdivisions in our Colorado resort market with higher HOA fees, charged monthly (Cottages at Shock Hill, Columbia Lode, Angler Mountain Ranch cabins, Peak Ten Bluffs, and Muggins Gulch, for example) because they provide true lock-and-leave convenience and some even provide an on-site property manager. Services vary for each of these communities but they can be a nice option for luxury homeowners who come and go frequently throughout the year.
Keep in mind that, with so many second homes in our area, property management and home care is big business, so it’s fairly easy to make any property into one you can easily lock-and-leave – as long as you have a contract with a good caretaker who can make sure to take care of heat tape, snow removal, roof inspections and basic maintenance on your home. You can even have someone stock the fridge before you get here. I’ll help you with recommendations on professionals like this when the time comes.
Question 6: Do you wish to rent the home when you aren’t here, and, if so, what is the potential for rental income?
Luxury mountain homes in Colorado make for popular short-term rentals, and this rental income can help to offset the expenses of your mountain home. Among luxury homes in our community, it’s not unusual to see gross rental incomes in the six figures, and there are a great variety of vacation rental management companies and home care companies that can help you maintain and easily facilitate your mountain rentals, for a fee.
If you think you might want to rent your luxury home on a short-term basis, make sure you talk to your Realtor about this before the search begins. Some of the exclusive luxury subdivisions in our market restrict short term rentals, per the HOA.
And don’t forget to read my article “Luxury Subdivisions in Summit County with Strong Short Term Rental Income.”
In a resort market like ours, rental income can vary greatly, across the seasons and across the years. When we start looking at luxury mountain homes together, I can provide you with historic or projected rental income and we can talk about the outlook for the future in a particular subdivision. Read more about potential rental income or download my Summit County Buyer’s Handbook to learn more.
Question 7: What are the potential tax advantages of owning a luxury home?
I’m careful not to give tax advice, but it’s important to discuss your plans for buying a luxury mountain home with both your financial advisor and your tax professional. Purchasing a luxury home in Colorado may allow you to take advantage of certain tax deductions, and – if you rent the home, you’ll be able to take advantage of even more. (Read my explanation of potential tax deductions for your mountain property.)
Question 8: Has the home been tested for radon?
Radon is an odorless and colorless gas from granite deposits in the earth that contain uranium. This radon gas can move into your home, causing potentially serious health effects, including cancer. Many homes in Summit County already have a system installed to mitigate this problem (read more about radon from Colorado Department of Public Health & the Environment), but if the home you’re looking at does not, it’s important to make a note of that ahead of time and to understand the likely costs and strategy for mitigation. Radon mitigation is routinely done on new construction, and there is generally a way to mitigate on existing homes, but costs and effectiveness will vary, depending on the way the home was constructed. Summit County has free radon test kits, and you can have a radon inspection as part of your inspection process before closing. We can talk about that more as the time comes, as well.
Question 9: Is the luxury home located in a Wildland Urban Interface (WUI)?
A number of luxury homes in Summit County are in the Wildland Urban Interface: that zone that exists between unoccupied land and developed land where there is an increased risk of wildfires. If your home is located here, you could be subject to higher insurance premiums or even non-renewals or cancellation of homeowner’s insurance policies. We will make sure that your purchase offer includes a property insurance contingency, so you can verify that you will be able to find affordable insurance on the home.
As we look at homes, we will be looking at certain items to evaluate the home’s potential wildfire risk. The state of Colorado has published a comprehensive document with details on exactly how individual homeowners can reduce their risk, and we’ll talk about these details more as we start looking at prospective properties, but – among the considerations:
1. Roofing material. Wood and shake shingle roofs can be highly flammable. Instead, you’ll want asphalt shingles, metal sheets and metal shingles or tile, clay, concrete or slate shingles. Da Vinci and CeDUR are two companies that make synthetic shingles that closely resemble cedar shakes, and we are increasingly seeing these on new construction – and on roof replacements of high end luxury homes.
2. Defensible space. This is the area around the home that has been changed or modified to reduce the fire hazard. Wildfire experts set recommendations for tasks a homeowners should complete in Zone 1 (from 0 to 30 feet from the home); Zone 2 (from 30 to 50 feet), and Zone 3 (100 feet from the home.) See the publication noted above for specific recommendations in these areas in regard to tree spacing, pruning of tree branches, etc.
If you see that the home will require some fire mitigation after you take possession, it doesn’t have to be a dealbreaker (provided you can get reasonably priced property insurance on the home), but it’s a good idea for you to know what tasks may lie ahead. These tasks can range from simple and free to complex and costly – especially considering the cost of cutting and removing a single tree on your property can exceed $100.
Question 10: Are you planning to pay cash or finance?
Approximately 43% of the transactions in our market are paid in cash, but with interest rates low, many people choose to leverage their investment and finance. As a luxury buyer, you likely have existing relationships with loan professionals, but if you need a recommendation to a few good local lenders, just say the word.
With luxury condos, a local lender can help make for a smoother transaction in part because the underwriter will need to approve the complex and a local lender will already know which buildings are approved. Luxury single family homes in our market do not tend to have the same hurdles. Still our market does have its idiosyncrasies when it comes to financing. For example, right now, appraisals are taking an unusually long time so you want to make sure your lender is aware (and that your Realtor and lender are communicating), so everyone can understand what is realistic in terms of appraisal dates and closing dates.
It’s important to talk with your lender early in the process – even before you start looking for your second home – because a pre-approval letter will strengthen any offer you write. It’s highly likely that you will need to furnish some kind of letter from a lender early in the process of buying a luxury mountain home, or a proof of funds if you are paying cash.
As you know, with loans on a luxury property, even a fraction of a point can cost you or save you thousands over the life of the loan, so it’s nice to have some time to shop around, and perhaps get a recommendation on a lender who is based locally.
Question 11: Who will you be using as your Realtor?
Ideally, you will work with someone who understands the unique trends in the luxury home market. A realtor with contacts and experience in the luxury homebuilding industry can help you after the sale, as well, in case you’d like to do some future updates. A Realtor who is constantly showing and previewing luxury homes will help you to know where the best homes are for your unique situation and needs.
Again, I work alongside my husband, Ty Cortright, a great deal. He has 20 years of experience with some of the finest luxury homes in Summit County and, as we narrow down the choices on a custom home, it’s nice to call him in to walk through the homes with us. He lends a very valuable perspective on everything from the mechanical room to the roof design and everything in between. He can help point out the advantages and disadvantages of various features and is a great resource for my clients, from that initial walkthrough to long after the sale.
Please feel free to reach out to me anytime and we can discuss the possibilities for you in Summit County.
Here’s a little more information on how I work with buyers:
You might also like:
Breckenridge Luxury Homes Explore the luxury and ultra-luxury communities of Breckenridge.
Breckenridge Luxury Condos Learn more about the most luxurious buildings in Breck and see today’s listings. (Many of these units deliver exceptional rental income).