The time has come and you are ready to sell your land.  You might wonder if listing with a real estate land agent really makes a difference.  You can certainly go it alone but of those that do (about 85%) end up eventually listing the property for sale with an agent. It is generally said by most real estate folks that properties do not sell for two reasons either price or exposure.  Let’s look at price.

The LandOwner newsletter recently reported that discrepancies as high of $1000 to $1500 per acre were being found when doing appraisals on land. Why such a difference in price?

We did an informal analysis of some land sales over the last few years. It showed that of all the land sales that we found that were sold directly from owner to owner – the sold price yielded was approximately 25% less than similar sales that had been listed with a land broker.  Taking into account that most likely at least half of those were sales to family members and discounts can be expected in family exchanges that it is still a surprising number of sales that were substantially less than going market rates at the time. The lower priced properties maybe were not exposed to the market via a listing or auction.

So how could listing with a broker get you so much more money?  First and foremost is market knowledge.  Land agents and brokers work with land values every single day.  We are reading land reports, real estate market reports, land analysis surveys, following farmland and commodity markets, plus following all the ins and outs of the real estate on top of all the land information.  It can be overwhelming at times the amount of data and information that is spilling out daily even for those of us in the business.  All of that information helps to price a property in the right range.

The land market is changing rapidly …. probably faster than any other time in recent history.  Farmland prices are skyrocketing, recreational land sales seem stagnant and development land sales are nearly non-existent in most areas. However, each of those markets has changed almost overnight when local, national and international events cause the local price values to fluctuate. As an individual selling a single piece of property it can be challenging to find current land market information and know how to price the property. This might be why so many of the non-listed land sales are lower.

Another issue that comes up with pricing is the news cycle. Media stories tend to focus on one news breaking story when it comes to real estate sales.  They want the WOW factor and they report the sensational facts of one abnormal sales price that usually that happens at an auction and then it goes through all the news outlets over and over again until most people think that is reality on property sales.  Unfortunately, most of the time it is not reality or normal and sellers are faced with disappointment when they see the real market values and averages.

So how do you know what to do?  Unless you are committed to spending an enormous amount of time following the markets (not just a few sales here and there) and spending at least several hours a day marketing your property then you might want to consider hiring a professional.  Almost all land agents we know live, eat and breathe the land market just like we do and that is what you need to bring you the higher price for your property. Find a land specialist, list it, and then relax.

Are you new to the real estate business or just new to selling rural land and farms? Are you not-so-new and finding it difficult to stay in the real estate business in the current market? If you are either of these, I have a few suggestions that might help you be more productive in selling rural properties. OK, so you are probably asking, “Why would I share that information with you?”. It’s simple. The better you are at doing your job, the easier mine becomes. Self-motivated really, but you stand to benefit too. I’ve been around this business for a good while. I’ve seen agents come and go. I’ve seen agents come and stay. Here are a few tips that I have picked up along the way:

1. Don’t be afraid to NOT know something. Some of the worst problems I have seen in selling land arise from an agent being afraid to say, “I don’t know.” As a young agent in particular, you are afraid that it will make you look unskilled and unprofessional. Let me assure you, professionals say “I don’t know.” a lot! The key to this is being able to follow that “I don’t know.” with a sincere, “But I will do my best to find out.” No one knows everything about real estate. Once you get this concept, you are on your way to becoming a good agent.

2. Specialize in a few particular markets within the real estate business. Do not try to be all things to all people. Selling a gas station is a world away from selling building lots on a lake. Your network of buyers, sellers, and supporting professionals will be very different for those. You can’t be great at doing one or the other if you cannot fully immerse yourself into that market. Many agents make the mistake of trying to list whatever is available to list. This is a recipe for burn-out. Again, you can’t be all things to all people. Take time to learn what markets are available to you. Markets may be geographically limited and some may not. They are all dynamic and nuanced, which is why you cannot professionally participate in all markets real estate.

3. Once you have established the markets that you want to work in, communicate with the people in that market. No, I do not mean put the sales pitch on everybody in the market. Get to know them. Get to know the other agents in your market. Be a service to the other professionals in the market. They are a great source of referrals.

4. Get to know the individual properties you are marketing. The important aspects of ownership vary with the type property you are selling. Figure out what these are for your market and have that information readily available when you are asked about it. Again, please, if you don’t know it, don’t make it up! If you are working as a buyer’s agent, you have to know that buyer in the same way a listing agent needs to know his properties.

5. You are better off with a few good, marketable listings than you are with a hundred over-priced, unmarketable properties. Don’t be afraid to walk away from a listing that you do not think is salable. Don’t shy away from letting a client know that his or her expectations are not in line with the market. This will save you a great deal of angst in the long-run.

6. Track your results from your marketing efforts. This will help you spend your limited marketing dollars more wisely. Avoid the shotgun approach. Find out what methods and sources work best for the market you are in. Then concentrate on doing the best job with those avenues that work best. Sellers will want you to go with the shotgun approach. You can be a better agent for them by being able to explain that you spend your efforts maximizing proven methods rather than trying to cover all possible options.

7. Ask for help when you need it. Sometimes new agents get in a deal that’s over their heads. If they are not smart enough to ask for help, many times they will bumble around until they loose the entire thing. You are better off bringing in a seasoned pro to help you and to share your commission with them than you are to loose the whole thing. Be quick to partner with an experienced, successful agent and learn from them in the process.

8. Do not take rejection as a personal affront to you. Business is business. Once you see something is not going to work out, move on to something that shows more promise. Be careful not to jump to quickly though. If you are having problems deciding if a deal is worth working on, talk with your broker. Good brokers want you to be spending your time working on good deals too.

These are a few things that a new agent can do to help themselves be more effective and profitable. There are many, many more aspects that new agents will have to learn. New agents will not know everything there is to know just because they have a real estate license. As with anything worth learning, it takes time and experience. As a new agent, you will have to learn to persevere in order to obtain that knowledge and experience.

One tool that I would like to suggest is the LandThink Community. There are seasoned land professionals participating in the forums there that will be glad to help you and offer their experiences. You will be more likely to get good responses from them if you participate in the forum so go there and start posting today!

I talked with him on Saturday morning. We agreed on what I should do and the pay. He struck me as a decent, knowledgeable individual in his mid-50s who was looking for a place to retire in a few years. He lives about eight hours from the property in question. I live about a three-hour drive away and knew some folks in that county.

I started immediately, reviewing the legal documents and timber cruise the seller’s broker provided. I saw nothing in the deeds that were yellow lights—the minerals conveyed with the surface; no easements; no problems with boundaries; no acreage issues or disputes. Most of the property was covered by a recorded survey; a small parcel had been tacked on five years ago.

The timber cruise was different. The seller’s forester had counted all the volume in 12 and 14” diameters as fully priced sawtimber. The majority of sawtimber volume was in these two classifications. The cruise showed about $65,000 in merchantable value. Deducting the phony value of the 12s and 14s, I came up with maybe $30,000 as the real merchantable value of the property’s timber. I asked this forester whether local mills paid full value for 12s and 14s and which specific mills they might be. He did not respond to my email, which answered my questions.

I checked out the dirt with the USDA NRCS soil scientist in the county. The dirt would easilyperc if things came to that. The site indices for the timber dirt were between 60 and 80 for red oak, as the marker species. This was fair to good productivity, and better than I expected. The site’s characteristics fit my client’s long-term timber plans.

I put a phone call into the county’s sanitarian to determine whether the house was hooked up to an approved septic system, and, if so, its capacity, age and design. A cess pool or a pipe straight into the creek are not approved septic systems.

I looked into comps, to see whether the property was priced at market. The seller had about $250,000 in the property over ten years and was asking about twice that. I checked out tax-assessed values, adjusting as necessary. The asking price was in the ballpark, and the client and I talked over an offering price.

On Monday morning, my client phoned the broker. He was informed that another offer was coming in. My client then called me and said that he wanted to get an offer in too. He asked me to help pull the offer together.

I found a local lawyer. I liked the guy. Lawyers hate getting cold-called from people they don’t know and asked to start doing work on the assumption that the client will pay. But I provided enough information to make this lawyer comfortable. The broker used his own contract that was, the lawyer said, heavily biased in favor of the seller. We came up with a contract that protected the buyer.

I emailed the broker at 11:34 a.m. on Monday. I introduced myself, telling him that I was a consultant, not a broker or agent, working on an hourly basis and had no claim on his commission. In addition to asking him some questions, I wrote:

[My client] has hired me to help him research the [property]. In your conversation with him this morning, you indicated that an offer had been submitted.

[My client] would like to submit an offer as well. That is what we will be working on today and tomorrow.

We need to know the time limit on the other offer so that we can get ours in front of the sellers at the same time. So, the first question is, how much time do we have to submit an offer?

…[my client] is prepared to submit an offer without a financing contingency….

I followed this email with several phone calls, all of which went unanswered. My client and I were puzzled. The broker did not seem interested in seeing a second offer. I emailed the broker again, later in the afternoon. He said by email that he would respond at 4:30 p.m.  That deadline passed. I phoned again, asking for him to contact me that night.

I phoned again the next morning. The broker informed me that the seller had accepted the other offer on Monday. He did not say whether the seller had been informed that my client’s offer was being prepared on Monday [and was ready on Tuesday morning]. His reason for not communicating with me or my client on Monday was that his secretary, he said, had the swine flu.

What conclusions might be drawn from this broker’s behavior? I don’t know the facts on his side, only that he knew my client was getting an offer together and that he stone-walled that effort until it was too late.

My client’s lawyer had seen similar behavior from this broker in the past.

We were angry. My client’s offer was close to the asking price and would have contained a vanilla house-inspection contingency and a timber contingency. We already had a good sense of the timber value.

An all-cash offer close to the asking price with a buyer who would have paid the asking price was blown off by a broker who was supposed to be acting in the best interests of the seller. While the buyer got screwed, it’s likely that this broker also screwed his own client, the seller. Two offers would only put the seller in a more advantageous position.

A buyer in this position can complain to the state’s real estate board or the seller directly.

But few of us like to get mixed up in something that’s likely to be a big, time-consuming mess. So my client moved past.

This broker pulled a fast one, in my opinion. And I’m still grumbling about it.

There appears to be little impetus driving sellers to reduce prices despite weak demand for certain types of land. To the contrary unstable stock prices will drive land values higher as investors become convinced that land offers more security.

Why are land sellers holding their ground while house sellers sink?

Much has to do with the underlying mortgage…or lack of one. Hardly any of our current land listings are mortgaged. On the other hand, the entire housing meltdown is attributable to bad lending practices and mortgage pressure on homeowners.

Even mortgaged land differs substantially. Banks have always been conservative when it comes to land loans with 60% to 75% loan to value being the norm. Without political pressure on lenders to make everyone a landowner, credit qualifications were valid and borrowers actually paid a down payment along with closing costs. In short, most of the people financing land are monetarily committed to the deal.

There are many types of land and a few are currently down. Commercial sites and high-density development sites may be stagnant for quite some time. The development market flourished while being driven by ambitious developers and a huge demand for building lots. Quite a few of these developers are now holding overvalued tracts with an accompanying debt load. When you factor in huge increases to infrastructure costs due to asphalt, pipe, concrete and storm-water control, it will be difficult to justify building out these projects anytime soon …even if there were builders wanting to buy the lots.

Recreational and timberland tracts are in demand… if you can find someone willing to sell at a fair price. The timber industry controlled much of this type land until divestitures began taking place over the past several years. This move took thousands of acres out of availability for public hunting and private hunting leases. These tracts, particularly ones with merchantable timber, are great investments that outperform even a good stock market. Ponds, lakes and river frontage further add to the value of recreational land. If you are paying a timber value, confirm that value by employing the services of a qualified forestry consultant who will conduct a “timber cruise”.

Security and privacy is on everyone’s mind and private, gated communities in the country are popular. To comply with county regulations and in some cases qualify for agricultural use, these type developments usually contain parcels in the five acre and up range. Many are complete with amenities such as equestrian facilities, common areas and walking trails. A local project we are releasing within the next month has only 25 owners sharing the use of nearly 300 acres.

Estate tracts in the ten and up acre range will continue to be in demand. We “baby boomers” all want our place in the country and these sites are gradually becoming scarce. Eye appeal is critical as these purchases are often spontaneous. Check applicable regulations for maintaining agricultural use property tax exemptions. Occasionally buying an extra acre can mean the difference between $15.00 per year in property taxes and $1,500.00 per year.

Are you serious about selling your land in today’s market?

If you are a serious seller there are a few things you can do that will immediately set your property apart from much of the competition. The first thing is have an accurate survey and know exactly what you are trying to sell. Next, increase the aesthetic appeal by rotor mowing and clearing out roadbeds. Take care of areas that are showing neglect. You don’t want the buyer to factor in clean-up expense. If you are leasing hunting rights, put the lessee on notice that the property is on the market and to expect visitors. Likewise, advise your broker to stay out during early morning and late afternoon. Hunters and prospective buyers are a bad mix.

To bring an optimum price, land must physically appeal to a buyer and be easily accessible. Fall and early winter offer your best chance to prepare land for marketing. Always be mindful of the fact that land is bought with discretionary income and no one is compelled to buy it.

Consider financing the sale. Banks are tight and many buyers prefer not to tie up lines of credit. Owner financing was popular at one time and I see it coming back. Interest returns are usually better than savings accounts and offering financing will help you obtain a higher price. Make sure the buyer is financially committed and have your attorney either prepare the buyers note and mortgage or at least review it.

Employ the services of a qualified land broker. Just as there are vast differences between the housing market and the land market, there are vast differences in land specialists and residential real estate agents.

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The Metcalf Land Company was founded January 1971 in Spartanburg, South Carolina. We are a small family-owned company specializing in the sale of acreage, farms, timberlands and recreational properties in Upstate South Carolina and Western North Carolina. Visit our website at www.metcalfland.com.

Many buyers start a relationship with a listing agent with a disposition that the only purpose that agent serves is to sell you a particular property. That may be very true. However, with a little conversation you may find a particular agent may be willing to fill you in on recent sales, or recent community developments or other properties in the area that may fit your needs. Take it upon yourself to verify some of these statements. You could have found a person capable of helping you achieve your goals.

When calling on a particular property, you may know of the facts or figurers that the agent is informing you of but rather than cutting that person off and informing them of just how much you may already know, let them talk. The particular person may have just got there License last week and have no clue as to what they are talking about or you may find the person that knows so much that they could write a book on the area. A little patience and some careful listening could go a long way. You just might find that the “Shut up and Listen!” rule may apply and although having to listen to a sales pitch or redundant facts, new light may be shined on facts or factors involving a property or sales of similar property. Possibly, a pie in the sky price is just that, and after scaring away too many potential buyers, a seller is looking for a real offer because deep down he has an idea as to what it is really worth. (Whatever a willing buyer is ready to pay, especially true when a sale is a must.)

You may even find a true Buyers agent, someone whose goal is to educate and inform so you can make an educated decision with your purchase. They may find you an ideal property that although, it is not their listing, they can help you by working to get you the best deal because they are working for you not the seller. Not only getting you the best price, they can get you together with a reputable attorney, title company, bank, surveyor, builder, forester, engineer, and ect.

Ask questions and listen. Many times buyers ask questions and in the excitement of the ordeal ask another question before getting the first question answered. Not only have you robbed yourself of possibly pertinent information but it is extremely rude. If the answer to your question doesn’t sound right or seems odd don’t continue to question the agent on that particular subject. Many times people that don’t really know an answer feel pressured to give some answer, even if it is not right, for fear of feeling or appearing ignorant. The best answer is” I don’t know, but I can get that answer for you.” But if you really need to know the facts, do it yourself. It is not the agent’s responsibility to do your due diligence. All the agent has on the line is a commission and possibly repeat business, you, possibly your life savings. Check out this article for some great free sources of valuable information:  Ten Sources of Useful, Free Advice and Information About Buying Country Property.

On several occasions, I have met people that have chose rather than listening to what I or an associate had to say, decided they would go at it alone with little or no research, because they knew more and were eager to prove it in conversation, and buy a property that was poorly priced, priced well but not buildable, or use a service from a company that raked them over the coals. These customers have later called and asked for help getting out of the hole that they dug for themselves, and many times too late.

I have found it amazing that typically people are generally interested in making more money, but rather than doing the research necessary to make more money, they will eagerly throw there money at the first thing that resembles a good investment without researching what they are getting into. Only to find they have to work harder to make up for the money they lost.

After doing the research, you may know more than your agent. But keep it to yourself, because if you don’t allow you agent to speak, you may be closing yourself out of some new or valuable info or you could be giving up valuable information that may make the property worth much more than the seller or agent think. With a little patience and some research your hard work and education should help you receive the maximum benefit to your future purchase.

Neal C. Adams, Land investor and Broker Associate of Properties Plus.