Couple Sells Summer Cottage
After 12 Months and a Price Cut

Editor's Note: This is the 12th installment of "Resale," a feature that profiles vacation-home owners and their residential investments. We'll take a look at homeowners' purchases, expenditures for improvements and/or mortgage costs and their final gains upon resale -- and compare their profits to home-price appreciation rates in the area.

Purchased: Summer 1979 for $34,500

Sold: September 2006 for $449,000

Home price appreciation: 1,201%

Area price appreciation: 483%

The area: Hyannis, a Cape Cod village in the city of Barnstable, Mass., is adjacent to the affluent Hyannis Port community where the Kennedy family has maintained a residence for decades. Cape Cod is a popular East Coast vacation spot for its beaches, golf, yachting and whale watching and is about 75 miles from Boston. The Hyannis Harbor is an access point to Martha’s Vineyard and Nantucket.

The property: The summer home, a circa-1850 shingle-style cottage on an approximately 15,000-square-foot lot, has three bedrooms and one and one-half baths. Upon its sale in September, the two-story 1,950-square-foot former farmhouse had no central heating, central air-conditioning or fireplaces. However, "The house's shell was in good condition," says seller Jim Owers. The appliances were basic and the home lacked a garage, but there was a sun porch.

The sellers:  Jim Owers, 59, a litigation attorney with Sulloway & Hollis in Concord, N.H., and his wife, Leslie Ludtke, 54, also an attorney, bought the home in 1979 just after they finished law school. They subsequently moved to Alaska, but decided to buy in Cape Cod so they could have a home base in the contiguous U.S. and because Ms. Ludtke enjoyed several family vacations there. The couple used their Cape Cod home about three weeks every summer from Alaska, and then approximately every weekend when they moved to the Concord area a few years later. The pair didn't make any significant income from renting because they rarely leased it out, Mr. Owers says. "We had all of our personal stuff in there and I didn’t want to rent it out," he explains. When the drive to the Cape became a "real chore" and they were using the vacation house infrequently, they decided to sell, he says. In January 2005 they bought a vacation property closer to home, on Lake Sunapee just north of Concord. The purchase of the additional vacation home "killed" their use of the Cape Cod residence, Mr. Owers says.  "I cannot maintain two second houses," he adds.

Improvements: The couple made approximately $100,000 in repairs and upgrades over 27 years. The couple replaced the roof twice -- shortly after they purchased the home and again about two years ago. They replaced several water-damaged exterior walls, rebuilt the kitchen and removed a second-story attic. The couple replaced most of the windows and sills, sanded and painted floors, sheetrocked ceilings, rewired much of the residence, installed a septic tank and added landscaping. "We did a lot of the work ourselves," says Mr. Owers, who paid off the mortgage six years after the home's purchase.

The transaction: The house went on the market for $525,000 around Labor Day 2005 and sat on the market for almost a year with "no action," Mr. Owers says. The homeowners put the property on the market "at the wrong time," he says. "It was the time of Hurricane Katrina and high gas prices and it poured rain all October." The taxes also had gone up on the property.  For years, their property taxes hovered around $2,000 yearly and then about a year before listing the property, taxes jumped another $2,000 to about $4,000 yearly, he says. In January 2006, the pair reduced their asking price to $489,000 and received two offers about seven months later. The first bid was $379,000. The sellers negotiated it up to $449,000. The second bidders offered $450,000, but since the first bid was a cash offer with no contingencies, the owners sold to the first couple, who closed on the home about a month later.

Bottom line: "It was a good investment," Mr. Owers says, especially for his wife, whose family owns property in the Hyannis Civic Association, where the Kennedy's own a home. Non-residents can have access to the association's pier and the beach club if they have family living there, he says. However, if his home had been one ZIP code over in the Hyannis Port 02647 ZIP code, it would have fetched at least a million dollars, he says. His property's appreciation rate of 1,201% significantly outpaced the 483% home-price increase seen for the Hyannis area between 1979 and 2006. The discrepancy between the two can be attributed to the "wide range of land and home sizes" in the Cape Cod area, says Jack Cotton of Sotheby's International Realty in Osterville, Mass., which listed the property. Smaller homes bring down the average sale price in the area, where homes sell for $500,000 to $600,000, he says. Adding to the value of the couple's summer cottage was that it had "a lot of charm and character and it really felt and looked like Cape Cod," Mr. Cotton says. "After the price was brought down to its value, the buyers came."

Have you recently sold a second home that you think would make a good Resale profile? Email a description and a photo of your property.

-- Ms. Curry is a free-lance writer in Maple Grove, Minn.

Email your comments to rjeditor@dowjones.com.