Blog : Vacant Lots

South Shore Club Sale

South Shore Club Sale

As recently as last year, it wouldn’t have been easy, perhaps not even possible, to fetch $2.1MM for a vacant lot in the South Shore Club.  That’s not because the broad market wouldn’t have appreciated an offering of a rare, lakefront lot in the Club. Nor is it because the market hadn’t yet appreciated to such a wonderful extend that the sale price would have been possible.  That price wouldn’t have been possible one year ago because the supporting sales that prove that particular value hadn’t yet printed.

There’s something interesting about what’s happened in the South Shore Club over these past several months. First, a lakefront listing, last August. I closed that listing for $4.175MM, making it the first sale in the SSC to exceed $4MM. Plenty of owners have investments in their homes that exceed $4MM, but never before had the market validated those outlays. Following that sale, another owner sensed the timing might be right for his family to make a move and he listed, also with me. We closed that sale this spring for $4.6MM (plus $100k for personal property). With those sales cemented, it was this vacant lots turn.

I listed this lakefront lot last month for $2,195,000. I didn’t feature it on this website, in large part because the buyer presented quickly and was ready to roll. The lot closed last Friday for $2,100,000, making it the highest vacant land sale in the SSC, ever. But was it some unique marketing spin that I employed to sell this property? Other agents might have you semi-convinced that they have some proprietary blend of marketing wiz-bang, but they don’t. And neither do I.  It’s not hard to place an ad in a newspaper and have no one call you from it. But it is hard to print two sales within 10 months that successfully prove a segment’s market value and then introduce a piece of inventory that falls nicely in line with that newly affirmed market.

And that’s the real secret to this recent SSC success. It’s not in the marketing, though if I’m involved that’s pretty nice stuff, indeed. It’s in the timing of it all. It’s in understanding how a certain piece fits into the greater SSC puzzle. Yes, an owner can list his property whenever he or she feels like it. But is this approach smart? Or is it better to understand the process, to understand the inventory and the competition, and apply a rare dose of sensible timing to the process?  This seems simple, but timing an offering within the greater context of an association market is anything but common. Thankfully, these past three properties sold because the sellers listened to me, and the result was perfect.

To the seller of this most recent property, I thank you. To future buyers and sellers of properties within the South Shore Club, work with me. Since 2012, when I was hired by the developers of the SSC to represent several of the homes and remaining lots there, I’ve closed on 8 of the 13 single family home sales (including the top two sales), and 11 of the 13 vacant lot sales. If your aim is the South Shore Club, you’re in luck. The market couldn’t be healthier, the future more secure, and your choice in agent more clear.

South Shore Club Lot

South Shore Club Lot

Increasingly, buyers build what they want, where they want, oblivious, either ignorantly or happily so, to the fact that their build is pricing them right out of the market they’ve chosen. This happens on the lake quite often, but it doesn’t matter. If you’re a lakefront buyer and you wish to build a $12MM home that you might someday wish to sell, it might not matter that you’ll only get $8MM for your home.  There was a recent article in the Wall Street Journal on this topic, and to spare you the click, it basically explained that if the super rich want a $2MM workout room, or a $1MM master bath, then that’s what the super rich get. In the same way, wealthy folks might buy a yacht for $20MM that they’ll someday trade in for $7MM, assuming they’ve kept good care of it.  This is why the super rich can do what they please; because it just doesn’t matter.

But when you tear down a home in Cedar Point that you paid $300k for, this should be something we first think about. If $300k is the land basis, that’s fine, assuming you’re on the parkway or somewhere otherwise special. If you’re in the back of Cedar Point, that’s nice, but that’s not a location that I’d like to cement $300k in land cost.  Then, with $300k locked, you build the home for another $400k. It’s a nice enough home, after all, and those marble counters aren’t free.  When the house is done your neighbors gather and everyone gushes. They might not have done that black tin ceiling in the kitchen with those red accent walls, but still, they applaud your remarkable, or at least memorable, sense of style. You’re proud, but you’re also $700k into your home, so when you come to me to sell it I’ll get to deliver the news: No one feels like paying over $500k for a far off water home in Cedar Point.

This is why we have to be smart, and we have to be aware of our surroundings. The South Shore Club might have a higher price point than most associations around the lake, but the theory remains. Take into consideration your surroundings and build accordingly.  When I was selling the vacant lots in here like so many free hotcakes, some existing owners were none too pleased. Why would I undercut the market like that? How dare I! But what they didn’t realize was that the market dictated those vacant lot prices based on the ability to resell the built inventory.  When I sold a built home near the pool for $1.8MM, how could the lot next door be worth much more than $500k? If the home cost $1.2-1.6MM to build, the vacant lot couldn’t really be worth $1MM anymore. The market set the prices and we responded accordingly. The result was a market that has since benefited tremendously from market based pricing.

Today, I have another vacant lot in the South Shore Club coming to market. It’ll be available next week, but because you’re smart and aware, you know about it today. The lot will be priced at $649k, and it’ll be the only lot available in the South Shore Club. Because it’s the only lot available, some owners would like to think the lot could be worth $1MM. It’s the only one available! If you want to play ball in this stadium, this is the price you’ll pay! If you can’t afford it, look somewhere else! These are the utterings of sellers who don’t understand markets. These are the words of sellers who would rather price something at an unattainable level because they have failed to separate their intense love of their own property with the actual conditions affecting their property.  I don’t like sellers like that, but I like sellers like this one in the South Shore Club, because our pricing, even when offering something that is otherwise unattainable, makes complete market sense.

So there you have it, the South Shore Club, back in play. If you thought you missed it, you didn’t. Get in now. You could buy some existing house in the South Shore Club, sure, in some boring location with some odd features and strange this mingled with absurd that, or you could buy this lot and make your own retreat.  If you love huge master suites, go for it. If you need a dedicated ping pong room, who am I to argue? If your wife needs a quilting room because she quilts, so does mine! Once, for a few minutes.  Whatever your aim, bring it here. To the South Shore Club, where I’m offering you a mulligan.