“Should I try to sell my land now?” is a question many rural property owners are currently asking themselves. Over the holidays lots of people had family meetings to discuss what they are going to do with family-owned land in the coming year. Landowners often get to the end of the proverbial diving board and stand there staring into the murky waters that make up our current land market and take a long look before committing to make the leap.
I love working with landowners, and 9 out of 10 times I am the listing agent in a transaction. A listing agent works for the landowner, and should try to be as helpful as possible in helping their client achieve his goals while selling a property. When asked by sellers about what they should do or expect if they decide to sell, I try to be as honest about the current state of affairs as possible and help them have the expectation that even when marketed properly it could take a year to sell a nice property. I invariably hear, “Well I’m not going to give my land away. I don’t have to sell it.” (That phrase must be written on a slip of paper closing attorneys or estate executives hand out to new landowners when agents are not around, because that response is universal.) My advice in that situation is almost always to wait another year or so because you may be able to realize more money from the sale of your land then. Landowners usually follow up with, “But I would like to go ahead and put it on the market.”
I am a word picture kind of guy, so let me use a metaphor to help describe the current market of rural land in Alabama, and from what I gather it is much the same in other parts of the country. The market is currently packed with available rural properties for sale. LANDFLIP.com currently has 1339 active listings of land for the state of Alabama. I have done some research and discovered that there are over 100 companies that have some emphasis on land sales in our state. If we were to assume that a whopping 10% of all available rural properties in our state are on LANDFLIP.com, then we would have about 13,000 tracts of land for sale in our state at this moment. When a seller gets ready to put their property on the market, they essentially enter a competition with a host of other owners that are selling too.
Imagine you live in a major city, and you would like to go to a store that is 15 miles away at the heart of the city, and you need to be there about 5:00pm on a weekday. You know from living there for years that the freeway will be packed with people coming and going at that time of day. You have to decide how important it is to you to make it to that store at that time. So you hop in your car, and enter the fray. This same scenario is playing out right now in the rural land market. Lots of people are selling in this market for many reasons: the land may be bank-owned, distressed, or sellers simply need the money. Whether people are headed to the city-center to visit a store, hospital, or try to get home, they are all still part of the congestion. The reasoning makes no difference.
You look across the median to the south bound traffic and you see light congestion and drivers leisurely changing lanes. That is what a seller’s market looks like. Sellers can set prices within reason and have separation from other properties. That is what a seller needs to move a property in this market too: SEPARATION.
All of the cars on the freeway are moving at the same speed so they stay bunched up. This is exactly what happens when properties are priced according to stale comparable sales. A log-jam develops and properties seldom sell at those asking prices.
So how does a seller differentiate their properties from the competition? I tell my clients two things will sell your land in this market: price and marketing.
Price– It is imperative that you price the property correctly right out of the gate. New listings get a lot of attention as soon as they come on the market, and a well-priced property can sell within days or weeks with the right exposure. If you try to list it at a price that is too high to “just see” in this market, your land will get lost in the shuffle. I am seeing properties listed at 15% to 20% of the appropriate price get no attention, 5% to 10% will get minimal activity, and a property 5% to 10% under can get you a really quick sale. That is because properties offered slightly under the market price get attention from savvy buyers who know what price they “should” be paying. That is one way to get separation.
Marketing– Your land needs exposure to every prospective buyer. A seller or their agent must have a good strategy to advertise a property broadly. If 85% of prospective buyers are beginning their search online, as the NAR reported last year, then your land must be visible to those searchers. This is one way that a great land agent will help separate your property from the mix. A great agent uses the basic online tools to market it, but is also innovative and finds ways to maximize exposure for your property.
You don’t want a middle-of-the-road land agent in this climate. Find a great agent that has the pulse of the market in your area, and let them go to work on helping you sell your land. For your land to sell right now it has to stand apart from the competition through a combination of great features, good price, and exceptional marketing exposure. Find a way to separate your land from the traffic jam and get it sold this year. If you have a property on the market currently, make the necessary changes now and hopefully they will be met with success.
Everyone is swallowing hard in this market: sellers on price, buyers on turning loose of money and not knowing where the economy is headed, and agents at laying out money to market listings that may not sell. Finding a win-win solution for each party to a transaction will help get more deals to the closing table.
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