What To Know Before Buying a Vacation Home

Be sure to tune in to FOX Business' network-wide special: "The Real Estate Story," featuring reports on real estate and the economy all day Friday, February 8.

Thinking of buying a vacation home? If you're in the position to consider making a down payment on another property, now's the time to do it.

So says real estate mogul Barbara Corcoran. Over the years, Corcoran has brokered countless deals, so she knows a thing or two about navigating the real estate landscape for a second property.

We asked The Corcoran Group founder to share a few of her top tips:

I’m still paying off my first house but would like to buy a weekend home. Is that a smart investment or a risky move?

"It's the smartest thing you can do right now," Corcoran says, adding that the the second-home market is "the last area you can still get a steal of a deal." But if you're thinking of taking the plunge, Corcoran advises you act fast. "In the second home market, the homes are abundant but [they're] starting to shrink up."

What’s one immediate red flag to look for when walking into a home that I might want to purchase?

"Great decoration," Corcoran says without hesitation. "Most people are misled by a beautifully-decorated home and don’t look past the surface," she explains. When it comes to purchasing a vacation home, people tend to be less discerning about the property and less likely to look at the practical considerations that are the focus of buying a primary residence.

"I'm convinced that people looking for a second home are in a less critical state," she says. "They don’t have a practical head on their shoulders."

She advises buyers to not get distracted by things like the view or different amenities, and instead ask important questions: How old is the wiring? Is there asbestos? What about the plumbing?

What are the most common mistakes made by second home buyers?

One of the biggest mistakes Corcoran sees people make is "buying where their friends live."  Too often, she says, people fantasize about vacationing with or near friends and end up making a purchase that isn't right for them.

Next on the list?  Setting a budget and sticking with it.  "Look over your budget," Corcoran says. She also adds that it's a smart move to make a low bid on a property that is out of your price range, especially if it has been languishing on the market for months. "People who have the nicest homes always overprice, and it just sits on the market," she adds.

Finally, don't  buy into a community because of its amenities, she advises. If you're not a squash player now, you won't become one because your new development has a court. "Most people generally won't use the extra stuff and they get blinded by all of that," she explains.