Buying a Nantucket Home
UNDERSTANDING THE NANTUCKET REAL ESTATE MARKET
From the turn of the last century, Nantucket has been a popular place to vacation and own a second home. Since the 1960’s, Nantucket has developed into one of the premier second home markets in America. As the island’s popularity increased, a few forward thinking individuals started the Nantucket Conservation Foundation, whose sole purpose was to obtain land to preserve forever. Today, the NCF and other local (Nantucket Land Bank) and national organizations own and hold under permanent conservation almost 50% of the land on island.
As popularity for Nantucket has not diminished over the years, this coupling of intense conservation efforts and steady demand has created one of the most stable real estate markets imaginable.
Great Point Properties’ real estate agents make Nantucket their home. We have lived here a long time and are actively involved in not only the incredible recreational opportunities that Nantucket has to offer, but the non-profit and local government as well. As a result, we have a wealth of personal knowledge that will assist you in better understanding the Nantucket real estate market and ultimately the decision process.
In the Commonwealth of Massachusetts, all Real Estate agents are required to disclose to sellers and buyers their agency affiliation through the Massachusetts Agency Disclosure forms. Great Point Properties offers both Buyer’s Agency and Seller’s Agency. When you list your home with Great Point Properties, we will act as the Seller’s Agent representing your property and interests. When we represent you in your search for the perfect property, we will act as Buyer’s Agents.
There are occasions when we represent both buyer and seller, this is referred to as Dual Agency. In this situation, it is our obligation to work to provide all the information that we can to both parties so that they may make informed decisions. We will not be able to provide guidance on any negotiations but we are able to provide a buyer or seller the information that they may need to proceed from a position of knowledge of the Nantucket Real Estate market.
First, determine your budget, considering the necessary down payment and amount you are able to spend monthly. Consider monthly expenditures such as your mortgage, common charges and real estate taxes, utilities, property managers, landscaping, etc. It makes sense to establish a relationship with a lender and seek pre-approval to help expedite the purchase process. At Great Point Properties, we have a number of trusted connections with local lenders and are happy to make introductions.
The Nantucket market for homes begins at $500,000 for a condominium and runs to $30,000,000 for some waterfront estates. We have every product, from multi-family condominiums to beach cottages, historic homes, or contemporary residences. Our site, www.greatpointproperties.com, is connected to LINK, Nantucket’s multiple listing service. You can register with Great Point Properties for access to LINK to view all that is for sale on the island by going here and filling in your information. As licensed real estate brokers, the agents at Great Point Properties have access to all that is for sale on island and are happy to show you any properties that might seem interesting.
The amount you decide to offer is your decision ultimately, but we advise you to use your real estate agent’s expertise to help you determine a reasonable offer for a property. Your Great Point Properties agent knows the market and island very well and will look at comparable real estate sales and the improvements on the property to help you establish the market value of the property you wish to purchase.
OFFER TO PURCHASE
This legal document is drawn up by your agent. The offer is typically accompanied by a check made out to the listing real estate office’s firm. This money is referred to as the Binder or Earnest Money. The offer will specify:
- Purchase price
- Timing for the closing
- Buyer’s, Seller’s and Agent’s Obligations
- Contingencies that you might need to have a better understanding of the property
If the Offer to Purchase is accepted, this is a legally binding document that will commit both buyers and sellers to the deal detailed in the offer.
Offers are often made contingent upon issues that may not have an immediate answer. Contingencies can range broadly, but some of the more typical are:
- Mechanical, Structural and Pest Inspection Contingency
- Septic Capacity Contingency
- Buildability Contingency
- Potable Water Test Contingency
- Massachusetts Endangered Species Act Contingency
These are just a few of the contingencies we see in offers. Do not let them daunt you: most properties require a reasonable due diligence period which will allow the buyer to ascertain the suitability of the property for their needs.
We recommend working with a local lawyer who will know the ins and outs of our little island. At Great Point Properties, we have a great working relationships with a number of on island attorneys and are happy to make an introduction.
PURCHASE AND SALE
This document, often referred to as the P&S, will elaborate on and take the place of the Offer to Purchase when executed. The P&S is typically drawn up by the seller’s attorney within 14 to 21 days of acceptance of the Offer to Purchase. Upon execution of the P&S, the buyer typically writes a check for the balance of 10% of the purchase price, keeping in mind the binder check. The deposit will be held in escrow which is an interest bearing account held by the seller’s agent or their attorney.
NANTUCKET LAND BANK
Property transfers on Nantucket are assessed a fee of 2% of the purchase price at the time of transfer. This money is then used by the Land Bank to purchase properties that are considered beneficial to the public and that are, more often than not, vacant land. To view a map of the conservation land on Nantucket see here. First time homebuyers are exempt on the first $500,000 of their purchase. The Land Bank will place a lien on the property of buyers who take the first time homeowner exemption. This lien is recorded on the deed of the property at the Nantucket Registry of Deeds stating that there is a debt on the property and that the 5-year occupancy obligation must be satisfied. If the buyer stays in their home for a period of five years, the lien is removed; if the property is sold within 5 years, then the buyer must pay the fee plus accrued interest.
PRIOR TO CLOSING
- Utilities – The seller should arrange to have all utilities taken out of their name or terminated on the day of closing. To ensure you have uninterrupted service, you will want to set up new accounts or transfer of accounts with all utility companies.
- Property Manager – We also strongly recommend retaining a Property Manager/Caretaker. Closings often happen in the off season, and arriving in the Spring to use your new house and to be greeted with burst outdoor shower pipes does take away from the fun.
- Walk through – The day of closing, the buyer, or their Great Point Properties agent, will do a walk through of the property to ensure it is in good order and delivered as the P&S details.
- Insurance – You will also want to line up homeowner’s insurance
- Flood Insurance – You will need to determine if you property is in a Floodplain. If it is and the seller has flood insurance, that policy may be assignable and may be less expensive than buying a new policy. If the property is in a flood zone and there is no flood insurance, such insurance is available through Federal Emergency Management Act (FEMA). If you have concerns, you should talk with your real estate agent and your insurance broker.
Assuming all contingencies are met or have acceptable results, the property can proceed to closing. Many people have an image of buyers and sellers sitting round a table hammering out the final parts of the deal, but Nantucket is an island and more often than not the buyers and sellers will never meet and never attend a closing. A vast majority of deals are done via wire, FedEx and the buyer’s attorney and seller’s attorney meeting in their office to exchange documents. So while you may want to attend the closing, most likely you will not have any reason to be there other than to come and enjoy your new Nantucket property.