7 tips for buying beach real estate in Del., Md.

EDITOR’S NOTE: The housing bubble before the recession drove prices up at the Delmarva beaches. Then prices sank. It’s been nine years since the end of the recession. So have the beach communities recovered? In the series, Beach Real Estate Guide, WTOP’s Colleen Kelleher brings you advice on buying, selling and renting at the Delaware and Maryland beaches.

DELMARVA BEACHES — The words “normal” or “stable” may sound bland, but for anyone looking to buy beach property in Delaware or Maryland, that’s what you want to hear your real estate agent say nine years after the end of the Great Recession.

“I consider this to be a normal market,” said real estate broker Allison Stine of The Allison Stine Team at Long & Foster. Stine sells properties in Delaware, including in Bethany Beach and Rehoboth.

Beach umbrellas dot the landscape of Bethany Beach on a sunny day.
Beach umbrellas dot the landscape of Bethany Beach on a sunny day. (WTOP/Colleen Kelleher)

“At the moment we’re up 15 percent in year-over-year pricing, which I keep saying is not an insignificant number. We’re starting to see the inventory heading down and the prices heading up,” said Stine as she reviews data in Long & Foster’s Bethany office.

Real estate agents in Ocean City, Maryland, agree with her assessment.

“I would say the prices are probably around 2003-2004 prices because we had an abnormal price increase in the 2004 to 2007 era, and now prices are back probably where they should be,” said Long & Foster real estate agent Steve Mastbrook, who sells in Ocean City and in Delaware.

Because there aren’t lots of properties on the market, “people are not able to be as choosy as they used to be,” said Joe Wilson, an agent with Condominium Realty, Ltd. in Ocean City.

Long & Foster closely tracks real estate trends in the beach markets. Click on each link for specific monthly data:

Stine said she expects the beach market will continue to tighten and prices will rise because the feeder markets, the markets from which new buyers come — like D.C. and Wilmington, Delaware — are seeing multiple offers on properties, and they are only on the market a few days.

Making a six- or seven-figure investment in a beach property requires a good bit of thought. WTOP interviewed real estate agents in Delaware and Maryland to get some tips on buying a vacation home at the beach. Agents outline a few things that are specific to coastal properties and Delmarva.


Why are you buying a beach property? Is it to create family memories? Is it to relax and get away from the everyday stress of urban life? Is it as a future retirement home?

Buyers Mike and Natalie McEwan have two young children. They wanted to keep making memories and to relax.

Mike McEwan said “quality of life” and having a “stress-free” way to come to the beach on weekends, during the summer and in the offseason mattered as they searched for an Ocean City property last summer.

“We definitely knew what neighborhood we wanted to be in because we’ve been coming down here for 10-plus years and we’ve rented very close to here,” McEwan said as he sat in his bayside condo near Northside Park. The condo is located three blocks from the beach.

Photo shows flip flop art on a wall
Have an idea of why you are buying. Is it to relax? To spend time with family? To have the grandkids visit? “One of the most important questions we have for people is: Is this going to be your primary home? Are you going to live here full-time, part-time? Are you looking to get some rental income, which a lot of people do. They’re buying these second homes and using rental income to offset some of the expense of the home. That’s a very key point. People need to understand how are they going to use this home. You need to be able to explain that to an agent,” said Allison Stine of Long & Foster. (WTOP/Colleen Kelleher)
Mike McEwen, an athletic director for a public school in Baltimore County, bought a place in Ocean City after years of renting. His advice to fellow buyers: "Definitely shop around. See as many places as you can possibly see. Weigh your options carefully and go for it." (WTOP/Colleen Kelleher)
Mike McEwen, an athletic director for a public school in Baltimore County, bought a place in Ocean City after years of renting. His advice to fellow buyers: “Definitely shop around. See as many places as you can possibly see. Weigh your options carefully and go for it.” (WTOP/Colleen Kelleher)
The McEwan family's property is within walking distance of Ocean City's popular Northside Park. The park has softball fields, a playground, a recreation center and a pier where you can go crabbing. (WTOP/Colleen Kelleher)
The McEwan family’s property is within walking distance of Ocean City’s popular Northside Park. The park has softball fields, a playground, a recreation center and a pier where you can go crabbing. (WTOP/Colleen Kelleher)
Photo shows Steve Mastbrook on a beach porch
Steve Mastbrook, a Long & Foster real estate agent, said today’s buyers are more savvy than they were years ago. “Typically, the people who come in and want to buy and drop their stuff, they want to buy a place that’s totally done, renovated, where they don’t want to have to worry about fixing it up. A lot of investment buyers don’t mind buying a place that needs new cabinets, countertop, carpeting, tile, that sort of thing, maybe even an upgrade on the HVAC system, because they know their investment is going to grow over time.” (WTOP/Colleen Kelleher)
Real estate broker Allison Stine of Long & Foster said a lot of times, buyers will opt to rent their Bethany properties but should not expect to make money. “I don’t often see a property that covers itself. Our rental season is 10 weeks long. I don’t often see a property that will pay for itself through rental income. It will definitely cover the taxes. Some do it to cover the fees.” (WTOP/Colleen Kelleher)
Sea Colony in Bethany Beach
Sea Colony is the largest condominium development in Bethany Beach. The community is on both the oceanside and bayside. Condominium fees are specific to building phases. In addition to condo fees, there are recreation fees. Some properties also have ground leases. (WTOP/Colleen Kelleher)
new homes in Sussex County are seen
New home developments are popping up across Delaware’s Sussex County, which is known for its poultry or broiler industry. “I see a lot of new construction selling because I think they are coming from areas where you don’t get a lot of new construction, and this is an area where there is an abundance of new construction,” said Allison Stine of The Allison Stine Group with Long & Foster. “There are communities that have real resort-style amenities, with kids’ splash zones and infinity-edge pools and indoor pools and tennis and pickleball. They are so many of these communities to choose from. I think my clients, at a minimum, they want to see a clubhouse and a pool. I think that’s important. It almost gives them a way to meet people right away.” (WTOP/Colleen Kelleher)
headshot of TJ Redefer
T.J. Redefer, a broker in Dewey Beach, says ground leases can be an emotional issue for some buyers. But many buyers in Dewey Beach come from states where property owners are used to high taxes. “We have a lot of New York and New Jersey influences now. Those folks are so used to paying high taxes and high condo fees, that for them it’s like pft, it’s no big deal. This is an easy one for me. The phrase I hear often: ‘I was paying more in taxes back in whatever town in New Jersey or New York.'” (WTOP/Colleen Kelleher)
Realtor Grace Masten
Grace Masten, owner/broker at Sea Grace at North Beach, Realtors, said Ocean City buyers need to plan for future costs. “If they are buying a condo, you always want to have x-amount of dollars set off to the side for that upcoming assessment. If that assessment is talked about in the documents, then you kind of know. You have $2,500 that’s coming due by next July. If there’s no talk about it in their documents of an assessment, and you’re looking at the parking lot. You’re looking at the roof, and you’re looking at the siding, and you’re going, ‘Hmm, it looks like there is work that is coming down the pike.’ In your mind, you should put aside money, knowing you are going to be assessed. It may not be in the documents now but it’s coming down the pike.” (WTOP/Colleen Kelleher)
When it comes to upkeep, be aware that with beach properties, there may be unanticipated upkeep costs because of the location. “You are in the salt air. In Ocean City, appliances go faster. Water heaters go faster because it’s not being used as regularly,” real estate agent Grace Masten said. If the heating and cooling system is outside, plan for a 15-year life span, rather than 25. If your water heater is in a locker under a condo building, the life span may be even shorter. (WTOP/Colleen Kelleher)
Joe Wilson sits in front of a computer with a flood map up
You will need a homeowner’s insurance policy if you buy property at the beach. “If you are buying a single-family home down here, Ocean City is a barrier island, you are more than likely going to have to get flood insurance. When you get flood insurance, the first thing you need to do is ask the seller if they have a flood elevation certificate or you’re going to have to get one on your own. That will be a factor in what you pay,” said real estate agent Joe Wilson with Condominium Realty, Ltd. (WTOP/Colleen Kelleher)
Ocean City waterfront is seen.
Like-kind or tax-deferred 1031 exchanges, also known as Starker exchanges, that allow you to postpone paying tax on the gain if you reinvest the proceeds in similar property still exist. Real estate broker Allison Stine is surprised buyers don’t know about them. “Let’s say you have an apartment building or a condo, an investment property in Northern Virginia or wherever you are coming from … If you can sell one investment property and purchase another investment property with the proceeds from the sale and defer the capital gains taxes on the sale of the first one. If you are selling an investment property and let’s say a future primary home, you rent your new property for a couple of years and then you move into it. And then when you sell it, you claim the one-time exemption for a single person of $250,000 or a married couple of $500,000, and you avoid paying the taxes on that original sale all together. It’s a wonderful, wonderful program.” (WTOP/Colleen Kelleher)
graph shows why people buy vacation properties
The 2017 National Association of Realtors Investment and Vacation Home Buyer’s Survey found 34 percent of vacation homebuyers had incomes in excess of $100,000, while another 28 percent made between $75,000 and $99,000. Among vacation properties, beach properties were the most popular (36 percent), followed by lake front properties (21 percent). The survey of 2,099 people who bought residential real estate in 2016 said that 72 percent of vacation property buyers and 64 percent of investment property buyers used mortgages to buy those properties. NAR tells WTOP it no longer plans to publish the annual survey because of the cost of and challenges in collecting vacation and investment home sales data, which make up less than one-fifth of home sales annually. (Courtesy National Association of Realtors)
Photo shows flip flop art on a wall
Mike McEwen, an athletic director for a public school in Baltimore County, bought a place in Ocean City after years of renting. His advice to fellow buyers: "Definitely shop around. See as many places as you can possibly see. Weigh your options carefully and go for it." (WTOP/Colleen Kelleher)
The McEwan family's property is within walking distance of Ocean City's popular Northside Park. The park has softball fields, a playground, a recreation center and a pier where you can go crabbing. (WTOP/Colleen Kelleher)
Photo shows Steve Mastbrook on a beach porch
Sea Colony in Bethany Beach
new homes in Sussex County are seen
headshot of TJ Redefer
Realtor Grace Masten
Joe Wilson sits in front of a computer with a flood map up
Ocean City waterfront is seen.
graph shows why people buy vacation properties
“It was within our reach. It had the space we were looking for. It had the perfect location for the fact we had young kids,” McEwan said. “You could literally park your car when you get down here and the furthest thing away that you need is five blocks away.”

Kitchen of a home for sale in Milton, Delaware
Determine early how much space you need and what your must-haves. (Courtesy Long & Foster)

Knowing the type of home and location will help narrow the search.

“Some people want to be on the bayside because they want to have a boat. Some people want to be on the oceanside because they don’t want to cross Coastal Highway with their kids to get to the beach,” said Wilson about Ocean City buyers.

But not all buyers know what they really want.

Both Long & Foster’s Stine and Grace Masten, broker/owner of Sea Grace at North Beach, realtors in Ocean City, say you need to be able to explain to an agent how the property will be used.

“The most important question that we can ask as realtors is: ‘What do you want to do with your property? What do you want to accomplish? Do you want to just come down on the weekends? Are you coming down in the offseason? Do you want to make some rental income for a couple of weeks to pay your condo fees and your taxes? Or do you want to purchase as a full investment where you rent it out continuously?'” Masten said.

New owners, Masten said, often change their minds about how they will use their condos.

“I think their intention when they first purchase is to use it themselves a lot. Then the realize after the second year, baseball games come up at school, or they’re traveling somewhere else. So the first two years, it’s their honeymoon period. Then after that, they go, ‘Maybe I should consider renting a couple weeks. What harm would that be?'”

She said once they get the taste of the rental income, some buyers then think about buying another property “because it’s a good investment.”

Whether you will use your beach property as a rental property is important, Stine said.

“You can travel 2 1/2 miles from the beach to a resort-type neighborhood. Let’s say like a Bare Trap Dunes that has golf and tennis and pool and clubhouse and restaurant and pro shop, and you can buy a condo, a townhome, a single-family home. They will all be great rental properties if you decided you wanted to get some rental income. You could step 10 feet outside the neighborhood, in a random home, in a random neighborhood, and probably not do any rental income,” Stine said.


Most buyers experience a “wow” moment where they fall in love with a property.

sunrise over ocean city with a bird flying by
Sometimes the view is the “wow” moment. (WTOP/Colleen Kelleher)

When buyers get caught up in the “wow” moment — seeing the seagulls flying overhead and hearing the ocean waves in the background — Masten said she makes sure she tempers the moment with a little reality.

“I tell my clients, ‘You can get emotionally attached to this, however, let’s look at the numbers.’ If the numbers aren’t making sense, let’s back away. Let’s move in a different direction because I don’t want you to be that seller who comes to me 10 years down the road and say, ‘I can’t afford this.’ Or five years down the road. ‘I can’t afford this. What do I have to do?'” Masten said.


One cost that can pack a big whammy in coastal towns is flood insurance. It’s a cost that is continually rising.

Bryan Baker, Long & Foster regional insurance manager, recommends buyers talk with their lenders or their insurance agents early in the process to see what type of flood zone the property is in.

“As of now, there is no contingency to allow someone to get out of a property contract simply because it’s in a flood zone,” Baker said.

“If somebody qualifies for financing and there are no other contract contingencies, they’re kind of locked into the contract, regardless or not of whether they want flood insurance.”

heavy surf in ocean city
Nor’easters can cause floods and a lot of property damage. (WTOP/Colleen Kelleher)

Baker cautions buyers to not make assumptions by using online mapping tools to determine a property’s flood zone. The online data may be wrong and it could cost them money.

“The challenge is with high-risk flood zones. I have personally seen policies range anywhere from $500 a year to up to $7,000 or $8,000 a year. It just depends on the home, the replacement value, the age, obviously, the actual flood zone that it is in,” Baker said.

Older properties, Baker said, could see flood insurance costs rise 15 to 18 percent a year.

“If you do not have a mortgage, you are not compelled to purchase flood insurance,” said real estate broker Stine, who also has investment and rental properties. “You can buy it as an option, which I always did because I’ve seen floods. There’s nor’easters. They’re a little bit scarier than hurricanes.”

Flood insurance, for some six- and seven-figure buyers in high-risk areas, may not be a big deal.

“For the most part, my clients who could afford the mortgages in those locations, they don’t really care about the flood insurance. It’s the cost of having an oceanfront home or a bay front home,” Stine said.


While the process of getting a loan hasn’t changed much since the mortgage crisis, what has changed is the amount of documentation required. Expect to be asked a lot more questions about your financial wealth.

Dewey Beach Mayor T.J. Redefer is a broker with Rehoboth Bay Realty.

“The process is painful,” Redefer said, describing the undertaking involved with loan documentation.

“They literally want to know how many sheets of toilet paper you use in the morning. I am just teasing. No, they don’t. But they do need to get to the bottom of how they can make sure you can afford this house today, where they didn’t in the past. It is a more difficult process to go through,” Redefer said.

The documentation process is among the biggest complaints Stine gets about any transaction.

“The loan application itself hasn’t changed much over the years, to me,” Stine said. “It’s just the supporting documentation. They ask for your income. They verify your income. They verify your income one more time before you go to closing. They just seem to be asking for the same things over and over again.”


While property taxes are lower in Delaware, buying property in the First State will cost you more at the outset. The state’s realty transfer tax, which is based on the purchase price, is higher than the realty transfer tax in Maryland.

Transfer taxes are part of closing costs and add thousands to the property’s bottom line cost.

Delaware increased its transfer tax to 4 percent in 2017. It had been 3 percent. Buyers and sellers split the cost of the tax that pays for state and local services.

“The transfer tax is one of the reasons why the property taxes are able to stay so low because every time a house transfers, the state and the county collect a transfer tax — 2 1/2 percent to the state and 1 1/2 percent to the county or a municipality, depending on where you are,” said Stine.

Buyers and sellers split the cost of transfer and recordation taxes for Ocean City, Worcester County and Maryland. The tax is 1.66 percent of the property’s cost.

“Take a typical $300,000 home. If you were buying in Ocean City, you would be paying $2,500. It would be $6,000 in Delaware,” said Mastbrook.


You may not own the land below your home, if you buy in parts of Sussex County, where the Delaware beaches are located. You may pay a land lease.

“There are ground leases throughout the county,” Stine said. “Dewey Beach has ground leases in Rehoboth by the Sea. Sea Colony has ground leases. There’s a little community in Bethany called Bethany Proper, which is real beautiful, affordable townhomes but they’re on ground leases.”

Dewey Beach cottage
Dewey Beach has a population of fewer than 300 people in the offseason. (WTOP/Colleen Kelleher)

Land rent is based on the value of the land and can cost tens of thousands of dollars a year for some properties.

Paying to lease the land where your home sits can be a sensitive issue. Some buyers dismiss it immediately, Stine said.

At Sea Colony in Bethany, where there are 2,200 condominiums, the cost of the ground lease, which is in addition to condominium fees and recreation fees, can be up to $2,000 a year. A lease can be purchased for 12 ½ times its price. In a resale, it has a value of $25,000.

In Dewey Beach, land rent started in the 1950s when Redefer’s grandfather and his grandfather’s father-in-law worked with a developer to build those rustic, knotty pine cottages in the north end of the 2-mile-long town.

But for a buyer who can see beyond the emotional aspect of making a purchase, Redefer said it may be cheaper than the debt load on a huge mortgage or less expensive than taxes the buyer paid in other states.

“The perfect buyer in Dewey Beach is a million-dollar buyer that went to Rehoboth and was very disappointed in what that would get them, five blocks back, kind of looks like a mobile home but it’s a modular home. That million-dollar price range is going to be quite a distance from the beach, and they’re disappointed,” Redefer said.

“And they come to Dewey Beach, and they say, ‘So I can have that whole cottage for $300,000 or $400,000?’ Yeah, you will have land rent, and the land rent is substantial, but it is much cheaper than the debt load you would have had on a $1 million purchase in Rehoboth or Bethany or any of the other towns. For a lot of people, it’s the most affordable way to get to the beach.”

T.J. Redefer explains how ground leases started in Dewey Beach



With 30,000 condominiums in Ocean City and thousands more in lower Delaware, you will likely pay a condo fee.

Know exactly what those fees cover and look at whether they are in line with fees in similar buildings, real estate agents advise.

Steps are repaired at a condo in Ocean City
Some condo associations manage themselves and get owners to do work around the building to save money. (WTOP/Colleen Kelleher)

“Condo fees aren’t necessarily a bad thing. The fees actually cover the exterior of the building. And you are really splitting the cost of the roof, railings, steps. If you were just paying for it all yourself, it would be a lot more expensive,” said Mastbrook, who owns in both states and sits on a condominium board of directors.

Condo fees, also known as dues, will be higher in buildings that have elevators, pools, clubhouses, game rooms and tennis courts. Upkeep on these items comes from that money.

“Usually, if somebody doesn’t want a pool, they don’t even want to look at a building with a pool because they’re going to be paying for an amenity that they’re not even interested in,” said Wilson.

Realize that the type of building the condominium is located in could affect whether you are able to get a conforming loan or have to look at other financing options.

Condominiums that have offices or tiki bars or other businesses on their first floors rely on the income of those businesses, and lenders take that into account.

“The way lenders look at it is if that business pulls out of that building, it’s that much money — $20,000 a year income that that building loses. So there are only certain banks that will lend on those buildings, and … it’s the local banks,” Masten said.

“To get a conforming loan on the properties is going to be a challenge. It’s not that financing isn’t available. You’re going to pay a different rate, a little bit higher rate for a shorter term,” Masten said.


A real estate listing will tell buyers what the condo fee is for a year, but it’s not until they are under contract that they get the details.

Condominium resale documents will include the condominium’s budget, bylaws, rules and restrictions. Agents recommend reading them closely.

“Sometimes the condo fees may seem high but the condo is probably putting money aside in a reserve fund for future expenses,” Mastbrook said. “A lot of time, people don’t realize that that is helpful in the future. That is covering you so you might not have to worry about special assessments in the future.”

man paints a condo in ocean city
Property owners can reduce costs by handling maintenance and repairs themselves. (WTOP/Colleen Kelleher)

Special assessments occur when condominium associations don’t have the money needed for capital projects and deferred maintenance, and have to quickly raise the money from the owners.

“The biggest thing is checking to see how much money is in their reserve account. Each building should have a reserve fund. So if there is an elevator that needs to be replaced or something like that, they’re not going to hit you with a special assessment. The money should just come out of reserves,” Wilson said.

Reserves also impact whether you get a mortgage.

“If you are going to buy in a condominium, most people think, ‘Oh, they’re just looking at me as the buyer and approving me in the mortgage process.’ Most people don’t realize they also have to approve the condominium building. They have to make sure there is enough money in the reserve account. There’s a lot of standards that revolve around approving the condominium building, in addition to the buyer,” Wilson said.


The nitty-gritty information in those resale documents could make a difference on whether you back out on a sale.

Masten said buyers need to look at the condominium association’s minutes and check for any pending lawsuits. She recommends checking for restrictions and anything that would hinder how you may want to use the unit.

For example, there may be restrictions on the type and size of dog owners are allowed to have, or whether the condo can be a rental.

“If you are not happy with what those documents state, you back out of the contract,” Masten said.


Some association bylaws date back to the 1960s and haven’t been updated, so they may have clauses that harken back to a time when society was less inclusive.

“Probably one of the worst ones that’s down here is the right of first refusal from the building. What that means is if somebody has a property up for sale and a buyer comes in and says he wants to buy it, the rest of the condo owners may have a chance to buy that unit and stop that potential buyer from buying the property,” Mastbrook said.


WTOP turned to real estate professionals for advice and buying tips — now that the market has normalized — nine years after the recession. WTOP's Colleen Kelleher reports.
You love going to the beach. But should you buy? It’s a tough question and one of the hardest decisions you may make. With summer almost here, WTOP's Colleen Kelleher went to the beach to get tips from real estate professionals about buying a resort condo.


The interactive chart below, provided by Long & Foster, lets you compare home sales across Delmarva, going back to 2009.

Colleen Kelleher

Colleen Kelleher is an award-winning journalist who has been with WTOP since 1996. Kelleher joined WTOP as the afternoon radio writer and night and weekend editor and made the move to WTOP.com in 2001. Now she works early mornings as the site's Senior Digital Editor.

Federal News Network Logo
Log in to your WTOP account for notifications and alerts customized for you.

Sign up