Buying Coastal NC Property: FAQs

Looking for property near the ocean? With more than 300 miles of ocean shoreline, North Carolina boasts some of the most spectacular beaches in the nation. But before buying, you should be aware of other factors that accompany the pleasures of owning property at the beach.

Most oceanfront real estate in North Carolina is located on one of the state's many barrier islands. These narrow strips of land between the sea and the sound are particularly vulnerable to ocean forces such as storms and beach erosion which can pose a threat to your prospective property and undercut its value.

Below are answers to Frequently asked Questions

  1. Should I buy a vacation home?
  2. When is the best time to buy?
  3. How is a home's value determined?
  4. Difference between list price, sales price and appraised value?
  5. Are low-ball offers advisable?
  6. What are some tips on negotiation?
  7. What contingencies should be put in an offer?
  8. How do building codes work?
  9. What unusual hazards can affect real estate along ocean shorelines?
  10. What causes shoreline erosion?
  11. Do North Carolina's ocean beaches experience "long-term" erosion?
  12. What is the typical erosion rate of a North Carolina shoreline?
  13. Will I automatically be informed about erosion and erosion rates?
  14. If I purchase undeveloped oceanfront property, where should I build on the lot?
  15. What building construction features help reduce or prevent storm damage?
  16. If my oceanfront property becomes threatened by erosion can I:
  17. Can I rebuild or repair my structure if it is damaged by a hurricane?

Should I Buy a Vacation Home?

Today a vacation home can be purchased for investment purposes as well as enjoyment. And yes, there are tax benefits.

Some people buy a vacation home with the idea of turning it into a permanent retirement home down the road, which puts them ahead on their payments. Another benefit is that the interest and property taxes are tax deductible, which helps to offset the cost of paying for a second home. A vacation home also can be depreciated if you live in it fewer than 14 days a year, or 10 percent of the rented days - whichever is greater.

When is the Best Time to Buy?

Here are some frequently cited reasons for buying a house:

  • You need a tax break. The mortgage interest deduction can make home ownership very appealing.
  • You are not counting on price appreciation in the short term.
  • You can afford the monthly payments.
  • You plan to stay in the house long enough for the appreciation to cover your transaction costs. The costs of buying and selling a home include real estate commissions, lender fees and closing costs that can amount to more than 10 percent of the sales price.
  • You prefer to be an owner rather than a renter.
  • You can handle the maintenance expenses and headaches.
  • You are not greatly concerned by dips in home values.

How is a Home's Value Determined?

You have several ways to determine the value of a home.

  • An appraisal is a professional estimate of a property's market value, based on recent sales of comparable properties, location, square footage and construction quality. This service varies in cost depending on the price of the home. On average, an appraisal costs about $300 for a $250,000 house.
  • A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents offer free analyses in the hopes of winning your business.
  • You also can get a comparable sales report for a fee from private companies that specialize in real estate data or find comparable sales information available on various real estate Internet sites.

What is the Difference Between List Price, Sales Price and Appraised Value?

The list price is a seller's advertised price, a figure that usually is only a rough estimate of what the seller wants to get. Sellers can price high, low or close to what they hope to get. To judge whether the list price is a fair one, be sure to consult comparable sales prices in the area.

The sales price is the amount of money you as a buyer would pay for a property.

The appraisal value is a certified appraiser's estimate of the worth of a property, and is based on comparable sales, the condition of the property and numerous other factors.

Are Low-Ball Offers Advisable?

A low-ball offer is a term used to describe an offer on a house that is substantially less than the asking price.

While any offer can be presented, a low-ball offer can sour a prospective sale and discourage the seller from negotiating at all. Unless the house is very overpriced, the offer will probably be rejected.

You should always do your homework about comparable prices in the neighborhood before making any offer. It also pays to know something about the seller's motivation. A lower price with a speedy escrow, for example, may motivate a seller who must move, has another house under contract or must sell quickly for other reasons.

What are Some Tips on Negotiation?

The more you know about a seller's motivation, the stronger a negotiating position you are in. For example, seller who must move quickly due to a job transfer may be amenable to a lower price with a speedy escrow. Other so-called "motivated sellers" include people going through a divorce or who have already purchased another home.

Remember, that the listing price is what the seller would like to receive but is not necessarily what they will settle for. Before making an offer, check the recent sales prices of comparable homes in the neighborhood to see how the seller's asking price stacks up.

Some experts discourage making deliberate low-ball offers. While such an offer can be presented, it can also sour the sale and discourage the seller from negotiating at all.

What Contingencies Should be Put in an Offer?

Most offers include two standard contingencies: a financing contingency, which makes the sale dependent on the buyers' ability to obtain a loan commitment from a lender, and an inspection contingency, which allows buyers to have professionals inspect the property to their satisfaction.

A buyer could forfeit his or her deposit under certain circumstances, such as backing out of the deal for a reason not stipulated in the contract.

The purchase contract must include the seller's responsibilities, such things as passing clear title, maintaining the property in its present condition until closing and making any agreed-upon repairs to the property.

How do Building Codes Work?

Building codes are established by local authorities to set out minimum public-safety standards for building design, construction, quality, use and occupancy, location and maintenance. There are specialized codes for plumbing, electrical and fire, which usually involve separate inspections and inspectors.

All buildings must be issued a building permit and a certificate of occupancy before it can be used. During construction, housing inspectors must make checks at key points. Codes are usually enforced by denying permits, occupancy certificates and by imposing fines.

Building codes also cover most remodeling projects. If you are buying a house that has been significantly remodeled, ask for proof of the permits involved before you purchase to avoid future liability for fines.

What Unusual Hazards can Affect Real Estate Along Ocean Shorelines?

The greatest difference between real estate adjacent to the ocean or an inlet and inland real estate is the hazard of shoreline erosion. For inland real estate, property lines are generally unchanging. However, property on the oceanfront or adjacent to an inlet has a moving property line along the shore that is determined largely by the forces of nature. This moving boundary, called the "mean high water line," can change from day to day.

What Causes Shoreline Erosion?

Shoreline erosion is caused by a variety of factors. Along the oceanfront, hurricanes, northeasters and other storms cause seasonal fluctuations of the beach.

As a general rule, North Carolina's beaches erode more in the stormy fall and winter months than in the calm summer months. It is not unusual for the mean high water line to move landward temporarily by 75 to 100 feet during the stormy season. Of course, when an ocean shoreline is hit directly by a hurricane, beachfront erosion can be even more dramatic. Inlets are also affected by seasonal storms and can change configuration rapidly and severely as tremendous amounts of water and sand flow through them. In severe storms, it is even possible for new inlets to form and existing inlets to close. Erosion associated with storms is often severe because large quantities of sand can be moved quickly offshore from the beach and dunes. This type of erosion is usually called "short-term" because the shoreline can return to its original profile as conditions calm.

Do North Carolina's Ocean Beaches Experience "Long-Term" Erosion?

YES. Long-term erosion can be caused by a variety of factors, including rising sea levels. The ocean has risen about 6 inches during the last century, causing North Carolina's barrier islands to migrate landward.

Although this process can cause erosion along the entire oceanfront, areas adjacent to inlets are often the most profoundly affected. Some "migrating inlets" are constantly moving in one direction. Others may stay in the same general location but expand and contract constantly. These inlets are often called "oscillating inlets." In addition to its natural causes, erosion can be set in motion by human activities. For example, a jetty constructed to stabilize an inlet or a structure built to stabilize a beach can trap sand on one side but increase erosion on the other. Such erosion will continue until the structure is removed or the beach adjusts.

What is the Typical Erosion Rate of a North Carolina Shoreline?

Studies by the N.C. Division of Coastal Management show an average long-term erosion rate of 2 to 3 feet annually for the entire coast over the last 50 years. However, the annual erosion rate is more than 20 feet for some shoreline areas, while others have been relatively stable. Ocean shorelines near inlets and inlet shorelines usually experience the greater fluctuations.

Oceanfront property is also subject to seasonal storm-related fluctuations that can result in short-term erosion of between 75 and 100 feet. Although most of this erosion is temporary, some land area lost to storms may not return. [For information on erosion rates, contact the Division of Coastal Management or the local building official in the jurisdiction where you plan to purchase or build. There are also a few private companies that analyze shoreline hazards for a fee.

Will I Automatically be Informed About Erosion and Erosion Rates?

NOT NECESSARILY. Although the original developers of oceanfront property are informed of erosion hazards when they apply for a building permit, North Carolina law does not specifically require that the information be disclosed to subsequent buyers. Purchasers should be sure to research coastal hazards.

If you are working with a licensed real estate agent, the agent has a duty to disclose material facts that the agent knows or reasonably should know. Although real estate agents may not always know the erosion rates for particular oceanfront properties, they should advise you of the possibility of erosion and direct you to available sources of information. If the agent knows the erosion rate of a particular property, the agent must disclose it to you.

If I Purchase Undeveloped Oceanfront Property, Where Should I Build on the Lot?

North Carolina requires that new construction be a certain distance from the ocean. However, because the state's ocean shoreline is volatile, it may be in your best interest to build farther landward than the minimum distances allowed.

The Coastal Area Management Act (CAMA) authorizes the Division of Coastal Management to establish oceanfront setback lines for all development. The setback is measured landward from the line of stable natural vegetation nearest the sea, usually near the base of the frontal dune system. All single-family homes and buildings of 5000 square feet or less, and their septic systems, must be located 30 times the historical, long-term erosion rate from this line, with a minimum setback of 60 feet. For example, if the long-term erosion rate is 3 feet per year for the shoreline of a particular lot, then the setback would be 90 feet (3 x 30) from the first line of vegetation. For large buildings (over 5,000 square feet), the setback is 60 times the long-term erosion rate or 30 times the erosion rate plus 105 feet, whichever is closer to the ocean. For such structures, the minimum setback is 120 feet. Other requirements may also apply. Local building officials are familiar with these and can locate the minimum setbacks on your lot.

Please note that the required setback does not guarantee a safe location. In fact, it implies that if erosion occurs as expected, a building could be destroyed in 30 years-or about the time the structure is paid for under a traditional 30-year mortgage. If possible, it is generally wise to build well landward of the state's minimum setback requirements.

What Building Construction Features help Reduce or Prevent Storm Damage?

Several features can prevent or substantially reduce the likelihood of damage from severe storms or erosion. Pilings can raise the first floor above expected flood elevations and waves. In many areas, embedding the tip of pilings deeper than five feet below sea level can help a building stand during severe erosion. Any walls constructed between pilings should be designed to break away when hit by waves to prevent damage to the elevated portion of the building.

Elevating a building to protect it from storm surge and flood increases its exposure to storm winds. The key to reducing storm wind damage lies in the quality of the building's design and construction. For new homes on the beach, consider employing a professional engineer to help ensure adequate structural design. If buying an existing home, an engineer can help assess the structure's strengths and weaknesses, and suggest modifications to make the house more damage-resistant.

Modifications may include: addition of hurricane clips to improve the roof's ability to withstand uplift forces of high winds; installation of storm shutters to protect window and door openings from wind-driven rain and debris; improved attachment of roof shingles; reinforcement of gable end roofs; reinforcement of the attachment of plywood roof decking to roof rafters with additional nails, screws or adhesives; and reinforcement of the attachments of porches and decks.

Sand dunes also provide significant protection during the most severe storms. You can protect and enhance frontal dunes by keeping vehicles and people off these areas, and planting additional dune grasses. Keep in mind that sand dunes protect against short-term erosion caused by very severe but infrequent storms and offer little protection from long-term erosion.

If my oceanfront property becomes threatened by erosion can I:

  • (1) Construct a Seawall?
    • Answer: No. Seawalls, bulkheads, revetments, groins, jetties or breakwaters are not allowed along the beaches of North Carolina. These "hard" erosion-control devices can damage the beach and adjacent properties.
  • (2) Construct Temporary Erosion-Control Structures such as Sand Bags?
    • Answer: If a building is severely threatened by erosion, the property owner may apply for a permit to place sandbags or build artificial sand dunes with bulldozers to allow more time to move or relocate the building. Both are temporary measures and require permits from the Division of Coastal Management. A sandbag structure must be removed within two years and may be constructed only once per oceanfront lot, even if ownership of the lot changes.
  • (3) Replenish the Eroding Shoreline by Placing Sand from an Outside Source onto My Property?
    • Answer: Yes. Beach replenishment is allowed in North Carolina. However, it is expensive and generally provides only temporary relief. Also, to be effective, it must extend beyond the beach in front of a single property and include long stretches of ocean shoreline.
  • (4) Move My House Away from the Eroding Shoreline?
    • Answer: Yes. House-moving is an allowable and cost-effective means of getting a structure out of harm's way. If space allows, a structure can be moved landward on the same lot; otherwise, it can be relocated to new property. Regardless of where the building is moved, it must meet existing setback requirements. [NOTE: As of 1993, new development permits for oceanfront structures require owners to move or dismantle buildings threatened by erosion; i.e., buildings that are less than 20 feet from the line of stable dune vegetation nearest the sea. For information on site-specific erosion control projects, contact your local building official, the U.S. Army Corps of Engineers or the N.C. Division of Coastal Management.

Can I Rebuild or Repair My Structure if it is Damaged by a Hurricane or Other Coastal Storm?

It depends upon the extent of the damage. If damage is less than 50 percent of the building's value, you may be able to repair it at its original location. But if the building is more than 50 percent damaged, repairs are considered substantial and must meet both new setback requirements and other new building code requirements. Rebuilding is prohibited if erosion has left insufficient space on the lot to construct landward of the setback.