By Mariwyn Evans of REALTOR Magazine
The motto of the National Association of REALTORS is “Under all is the land.” It’s a simple sentence that expresses just how central land brokerage is to the entire real estate industry.
Real estate has had it rough lately. Record foreclosures, falling home prices, stalling commercial sales, and financial gridlock seem to the perennial front page headline. But amid all of the bad real estate news, most types of land have held their value and continued to produce income for their owners.
“Land—especially income-producing farmland—is a more conservative investment than most other types of commercial/investment real estate, which means it’s also less volatile,” says Randy Hertz, ALC, owner of Hertz Real Estate Services in Nevada, Iowa.
Higher levels of equity in most land deals, combined with the growing demand for food and recreational space as the U.S. population grows, help ensure long-term stability and a strong future demand for land.
Land’s low volatility is good news for owners, but it also helps insulate land brokers from the more dramatic market fluctuations common in the commercial and housing sectors. That’s why selling land in all its forms offers an attractive niche for real estate professionals.
“The demand for land brokers should grow steadily in the next five to seven years. More than half of all farmland owners are over 65 and will be considering sales,” says Hertz. In addition, retiring Boomers will fuel demand for more recreational ranch and timberland. “If you enjoy land and helping people buy, sell, and manage their investments, land brokerage is a great career for you,” he says.
“How the United States uses and preserves land is very important today and will be even more so in the future,” agrees real estate consultant and Boston College MBA Professor Frank J. Parker, CRE. “Development pressures will rise in the future decades due to a strong increase in the nation’s birth rate and in immigrants with permanent residency. Land usage demand will elevate accordingly.”
Land brokerage offers a viable niche for those already in real estate because many of the same techniques used with other forms of investment real estate also apply to land investment. Market comparisons of value, analysis of appreciation potential, and calculations of cash flow projections are similar for all real estate investments. In addition, land, like any other investment requires professionals who can help match a property to an investor’s risk tolerance, holding period, investment goals, and available capital, says Lou Jewell, ALC, of Dan River Real Estate Inc., Pilot Mountain, N.C.
“A land broker, like any real estate professional, needs to be strategic. Brokers need to understand value based on current and potential uses and to interpret market conditions, says Hertz. Farmland, since it is often rented to a farmer/tenant, also requires skills in tenant selection and lease negotiation, as well as ongoing property management, to ensure that the value of the land is not undermined by erosion or misuse.
But if some real estate skills are readily transferable to land sales, the wide spectrum of land uses also requires specialized knowledge of individual niche products. Selling agriculture land requires knowledge of soils, crops, and government regulations. Land intended for livestock production must be analyzed to ensure sufficient water and acreage for stock. Timberland sales call for an expert on the life cycle and market desirability of different hard and soft woods. Selling land for future housing or commercial development requires an expert in zoning and land use regulation.
“Land brokerage is not a field you can go into cold,” says Parker. Land sales require experience, specialized education, and a professional network.
For brokers wishing to explore the opportunities in the land discipline, there’s only one national source—the REALTORS Land Institute, says Keith Morris, ALC, 2009 RLI President and head of Four M Land Company, Somerville, Tenn.
As a professional membership organization, the REALTORS Land Institute (RLI) serves the unique constituency of real estate professionals who broker, lease, sell, develop, and manage land assets. RLI offers superior education through its RLI Land University and professional development programs. Members of RLI may earn the prestigious Accredited Land Consultant (ALC) designation, which is conferred to only those land specialists who complete a rigorous education program and who achieve a volume of successful land transactions.
RLI also provides a unique opportunity to meet and learn from the most experienced and qualified land brokers in the business, adds Morris.
“Even with our housing markets in turmoil and commercial real estate markets at a near standstill, land remains a great investment,” says Jewell.
That means that there’s no time like the present to be a part of this thriving real estate specialty.
“If you enjoy land and helping clients buy, sell, and manage their land investments, land brokerage is a great career,” concludes Hertz.
For more information on membership and land education, contact RLI at 800.441.5263, or go to www.rliland.com.
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