Are you thinking about selling your rural land in 2023? Perhaps, you are concerned that you missed some magical window in the white-hot pandemic-era market. So far, 2023 is still a good year to sell property.
The market has changed, and many wonder if the slowdown and an economically ambiguous environment are conducive to selling property. Land values are increasing throughout the country, meaning that sellers can nab a top price for their land in many markets. At the same time, there is a low inventory of land for sale.
Unfortunately, no one can predict exactly what will happen next in the real estate market. But there is money out there looking for land. So, if you’ve been hesitant about selling, it may be time to reconsider.
Here are some tips for a decision you’ll feel good about:
1. Come to Peace Emotionally with Selling Your Land
Whether you’ve lived on your land your entire life or just owned a tract a few years, it can be emotionally tough to say goodbye, especially when lots of amazing memories are involved. Will the memory of your grandfather be violated? Does your son or granddaughter really want the land? These are real world issues that land agents hear from sellers every day. We suggest you deal with these matters before putting your property on the market.
It takes honest communication, but our experience is that emotional conflict will derail your intention to sell every time. Take the time to really come to peace with the decision to sell your property. Process any emotions that you need to process so that when you jump in you can do so with a clear mind and excitement for the future.
2. Get a Professional Assessment of the Market Value of Your Property
When considering the prospect of placing your land on the market, you should have an accurate estimate of its value. The best time for an appraisal is before listing it for sale, so you can make sure you’re not over or undervaluing your property. As real estate agents, all too often we meet landowners whose opinion of land value is based on coffee shop talk or on what a neighbor asks for their land. Both famously bad guides for fair pricing. It’s almost impossible to be impartial about the value of your own land, especially if you don’t rely on actual sale data from the courthouse. Retain an appraiser or a real estate broker and gather some facts to work with. It’s a small price to pay for big-time confidence when the time comes for hard decisions. Remember that a listing price isn’t the same thing as an appraisal or a sale price. Instead, there’s usually room to negotiate.
3. Decide if You Want to Sell Your Land Yourself
A small number of people choose to try and sell their property themselves and avoid paying real estate commission fees. There are pros and cons to taking this path, so make sure you know what you’re getting into before you decide. If you’ve got the time, know-how and interest, then go for it. Things to consider are: determining market value, reaching potential buyers outside your local community, preparing signs and brochures, showing the property, negotiating with prospects, getting a contract that protects your interest and arranging the closing.
A private sale process usually takes longer than it would if you used a land agent. Land agents have a ready database full of potential buyers- an effective tool for selling your land quickly! A private sale signals potential buyers that there’s no urgency. They’re more likely to take their time deciding whether to put in an offer on your property and the negotiation process can become quite drawn out.
4. Know the Tax Consequences
If the land has been in your family a long time with no adjustment in the basis, you may be subject to capital gains tax. Fortunately, as a landowner, you can minimize this capital gains tax burden when you sell your property. There are several tax strategies available to landowners that allow for deferment and, in some cases, the elimination of capital gains taxes. All require strict adherence to IRS regulations. Consult with a CPA or tax attorney about the tax consequences of a sale before you put the property on the market. It’s a good way to avoid a last minute surprise.
5. Make Sure All Owners are Committed to the Sale
Sometimes several family members (or business partners) have a say-so in the decision to sell land. Usually in this case there’s a wide mix of motivations toward the idea of selling (including a cousin in the back of the room who won’t tell you he doesn’t want to sell until the worst possible moment). We suggest everyone give one person in the group a Limited Power of Attorney to act for the group. It’s the best way to find out where everyone really stands on the idea of selling.
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