Buying Land

Why Hire a Land Agent when Dealing with a Neighbor?

Why Hire a Land Agent when Dealing with a Neighbor?

Why in the world would a landowner hire a land agent when doing a deal with a neighbor or adjoining owner? That seems like the most slam dunk deal that any landowner could find himself in. Let’s address a few of the reasons why this can be a good idea.

Dave Milton, president of AlaLandCo, and I have had a running discussion throughout 2011 about becoming a trusted advisor for our clients. Our desire is to be more than just an agent, but to be the go-to source of information for anything pertaining to land. At AlaLandCo, we do not merely “hock” land; we offer solid advice about ways to improve any land transaction for our clients. So this article is in that vein of thinking.

Sometimes Neighbors are not so Neighborly

Ever hear of the Hatfields and McCoys? For 23 years these “neighbors” from Kentucky had an all-out war, sparked by a pig that had crossed from the land of one family to the others. Everyone in the land business has heard stories of deals gone sour between adjoining owners. Hiring an agent to help navigate the trouble spots in a land deal can save lots of frustration if a problem arises. One of the biggest potential icebergs for sinking a deal is when a landowner is selling a property that he does not know has a problem with the title, boundaries, or something for which he was honestly unaware. In my experience, problems arise in nearly all real estate transactions. It is the response to that issue that determines whether the deal will have a successful outcome or not. People do not naturally respond well to problems that may affect their pocketbook. Having a good agent to steer the negotiation can help avoid a costly shipwreck.

The Dirt is in the Details

I had a client that sold 40 acres along a state highway to a friend of his. He owned 120 acres, sold the front 40 to his friend, and kept the 80 acres in the back. 5 years after that transaction he decides to sell the remaining 80 acres. In the original deal, he did not reserve an easement in the deed to get to his back property. The “friend” is now reluctant to have people driving by his house and wants to make sure he controls who his new neighbors are. He has held the 80 acres hostage for two years, and the seller is reluctant to sue his “friend”.

A good agent would have advised his client on the front end to reserve an easement for ingress and egress. At that time I guarantee the easement would not have been a barrier for the buyer to agree to. After the ink dries, everything becomes subject to renegotiation. Other similar considerations would need to be given for water and mineral rights, shared fences, boundaries and a host of other potential snags. Settling these on the front end will help keep thing amicable for parties on both sides of the fence.

You have a Scapegoat

This past month I was hired by a landowner to help negotiate the purchase of tracts that touch his property. We made strong cash offers on two adjoining tracts, but were unable to reach a meeting of the minds on either. We offered more than the fair market value of each, but neither of the adjoining owners were willing to accept those terms. The point is that they are all still neighbors after the failed negotiation attempts. Now when they pass each other on the road or in the local café they can be neighborly. I was the go-between and any frustration or disappointment was dumped on me, not the other owners. This paves the way for making a successful offer in the future. If there is a breakdown in negotiations it is easier to throw the agent under the bus (figuratively I trust) and be able to have a peaceful co-existence.

But an Agent Costs Too Much

I would ask a broker or agent to work for you in this sort of transaction for a reduced fee. Most will be agreeable. In a situation where the agent does not have to go out and secure the buyer or seller they are more likely to agree to work for less money. I stress to my clients that I do not earn my money advertising or showing land. I really earn my money once the contract is signed and bringing the deal to a successful close. A good agent will make or save you more money than they cost.

If you still don’t buy into my concept, think about what happens in many do-it-yourself projects. How many times do you wish you had paid the plumber, accountant, mechanic, or dentist to do something properly out of the gate instead of living with regret over a leaky faucet, noisy car, or ragged smile?

As a landowner, you should find a broker or agent that can be your trusted land advisor. Wear them out asking advice, current sales information, or any question you can think up about land. Then when the time comes let them help you make money and save grief in a land transaction. You will be well-served by having a quality land professional in your corner, even when dealing with an adjoining owner.

This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of LANDTHINK. Use of this content without permission is a violation of federal copyright law. The articles, posts, comments, opinions and information provided by LANDTHINK are for informational and research purposes only and DOES NOT substitute or coincide with the advice of an attorney, accountant, real estate broker or any other licensed real estate professional. LANDTHINK strongly advises visitors and readers to seek their own professional guidance and advice related to buying, investing in or selling real estate.

About the author

Jonathan Goode

Jonathan is passionate about helping people buy and sell land. He is an associate broker with Southeastern Land Group, LLC (SELG) and is the Responsible Broker for the company in Mississippi. Jonathan is an Accredited Land Consultant (ALC), working with Southeastern Land Group (AlaLandCo) since 2008, serving Alabama and Mississippi. He is a member of the Alabama and Mississippi chapters of the Realtor’s Land Institute (RLI), and is currently serving as Vice President of the Alabama Chapter. Jonathan specializes in marketing rural properties online, and is a contributor for LANDTHINK.com, writing articles focused on helping people buying and selling rural land.

14 Comments

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  • Jonathan,
    You are absolutely right on target on this issue. I would add “& Family” to your title after Neighbors – because of the most important reason… the “Scapegoat” aspect.
    Best Wishes,
    Marisa

  • You’re right Marisa. Only slightly less painful than pulling your own teeth is helping disgruntled heirs sell jointly owned property. When I hear multiple heirs in different states, I usually start thinking of who I should refer them to.

  • Jonathan,

    Indeed you are correct. I had a local farmer sell to his friend an adjoining farmer. The seller forgot to mention in the contract that the CRP planted pines had to remain. The buyer plowed the pines up and converted the land back to row crop. Cost to seller was $50,000.00. The cost was way more than the commission that I would have charged to help him.

  • Excellent post, Jonathan! Speaking of multiple heirs, it would be great if someone would write an article for Landflip about “petition for partition” of land. My husband is one of 15 heirs currently going through the early stages of it in NC. Some want to have it partitioned and keep their part, some want it sold and some don’t want the land split up at all! To complicate things further, this isn’t an easy piece of land to equitably partition. Appx. 330 acres. The legal process isn’t smooth.

    • Spring,
      In one family selling off land issue, one heir bought out others at appraised value so land did not have to be split. Then they setup a LLC with heirs as members and they received percentage share split of farm/crop income for a set time (10-20 years) after that the land was 100% to the one who bought out. I agree with Jonathan that is a definitely a state law issue. Good Luck with it.

  • Tate- Ouch, that is a lot of money to spend on a misunderstanding. I find similar things that one party forgets to disclose that are pretty big, but they assume the other person knows it too. Alabama is a buyer beware state, and you can get your head taken off here if you aren’t careful.

    Spring- Thanks for reading. The issue of multiple heirs would make a great article. One issue is that states have independent laws governing the process for division of land among heirs. But it might be a good topic for a general overview. Each case is fact dependent and generally requires an attorney. My advice to landowners is sell it while they are still alive and divide the money. Then the heirs can do what they want with the cash. Thanks again for reading.

  • Thanks, Marisa and Jonathan. Preaching to the choir about state laws, but I’m glad to see someone besides me understands 🙂 It seems like I’m always the one to bring up that issue in comments on blog topics that are governed by state laws. Anyway, it would still be great to see an article with a general overview on the subject of partition among heirs (tenants in common) especially in these economic times. It amazes me that so much of this type of ownership exists where it has been handed down through so many generations with each heir owning a different interest due to where they are in the lineage of the original heir. This case is extremely convoluted. The title search in itself will be puzzle. The longer families wait to make decisions about partition, however they decide to handle it, the more convoluted the situation gets. Explaining the possible pitfalls to holding land as tenants in common for several generations would make for a great article. Of course, end the article with “Consult with an attorney about the laws in your state governing partition of property among heirs”.

  • Spring, I just returned from looking at a 600 acre tract with at least 6 heirs on it. All heirs are in agreement to sell, and they have appointed one person to be the “lead” in dealing with real estate agents. That is very helpful when everyone agrees to cooperate for the good of the whole. My best advice for landowners is to do some estate planning if possible before letting it get to that point. It’s much easier to prevent than fix a splintered situation.

    • Jonathan, thank your lucky stars on that one 🙂 In rural NC, people hoard inherited land like its their life blood. This case has 15 heirs. It started with 6 children (heirs) who inherited the land from their mother who died intestate. Now, only 2 of the original heirs are still alive with an interest of 1/6 each. The remaining 13 heirs have interest ranging from 1/12 to 1/48 each, depending on their position in lineage (grandchild or great-grandchild). The name on the deed has never been changed since the death of the mother who died intestate. Heirs pass away and leave it to the next generation through wills or probate. Three of the 15 heirs have finally petitioned for partition asking for court to sell the land and divide the proceeds. At least 6 heirs are opposed to a sale (including the two remaining original heirs who do not want it sold or partitioned). Four of those six heirs want it partitioned. Dividing the land equitably is somewhat of a problem because this property is diverse with timberland, farm land and creek frontage (a huge creek runs through the a large portion of it) and not a tremendous amount of road frontage. Obviously, the best thing would be for everyone to come to some sort of agreement. Ultimately, I don’t think that will happen. I see an expensive ride through the court process.

  • Spring- Holy Cow! That is exactly the kind of deal I love to refer to other agents. I think I have a more legitimate claim to the throne of England than some of the heirs on this NC property. I wish you the best of luck, and it looks like the attorneys in that area are going to be able to afford braces and Ivy League schools for their kids now too. I might suggest a legal phrase to discuss with your attorney, “Quitclaim deed.” It will probably save your family money in the longrun if you aren’t emotionally attached to the land.

    Best of luck, and thanks for sharing your experience on LT. The staff is working on getting an article together as you suggested.

    • My husband tried to get some of them to buy out his interest and he would sign a “Quitclaim deed”. The few heirs who were willing to consider it, couldn’t agree on a price. In NC, the court can appoint a panel of 3 commissioners to present their recommendations. The panel consists of a surveyor, an appraiser and a real estate agent. Just a survey on this land will run around $30,000.

  • I would give a quitclaim to whoever would take it to keep from being named in a suit or have to to have to pay the other costs associated with it.

    What kind of price per acre is land in this area selling for? Does this have some special value like minerals or lakefront or something?

    You could tell everyone you are going to put a conservation easement on your portion and donate it to a landtrust. That might scare someone into taking action.

  • Land runs like blood through the veins of families who live in the same area for many generations.

    The “suit” is only a formal petition for partition to the court (normal NC law procedure) and everyone with an interest in the land must be named in and notified of the action. If the heirs who want to keep it would agree to “quitclaim” a portion of it to the heirs who want to sell, that would be great….if everybody could agree to an equitable distribution. In this case, my husband, his niece and nephew initiated the petition to the court requesting a sale. According to NC laws, all the costs associated with the procedure come out of the sale proceeds if the court decides that selling is in the best interest of everyone.

    If a judge decides it’s best to partition it among the heirs who want to keep their interest and allow a court sale for the rest, the heirs who don’t sell have to come out of pocket for their portion of the costs (survey, appraisal, etc). For the heirs who choose to have their interest sold, the costs comes out of the sale. A judge also has to consider equitable distribution of the land when deciding whether to order a partition or a court sale. A partition cannot cause injury to any of the owners’ interests.

    It can be a long process with this many tenants in common with different percentages of ownership interests. Just the title search itself will take a while… going through wills and probated interests.

    When LT gets ready to write the article, please feel free to contact me about the specifics related to this case. It would be a good reference for people to think strongly about partitioning land before it passes through so many generations of heirs, eventually complicating a sale process for any tenant in common who chooses to sell.

  • One of the first things we train our agents in Texas and Oklahoma to cover when we are looking at a ranch to potentially list is… “Mr. Seller, have you contacted your neighbors to see if they would be interested in buying your place?” Nearly every time the answer is no. Sellers often don’t want their neighbors to even know they are selling out. No signs on the ranch, no local advertising, etc. We tell them they can save paying a group like ours a commission, by selling their own place and hiring a lawyer to do the legal work. Most respond with horror stories, not unlike the ones i have read here today. Once in a while a rancher will take our advice and occasionally even structure a deal with a neighbor, but most often they tell us they simply don’t have the stomach for it. Sharing this kind of advice with a potential listing client has been a very effective way to gain genuine trust. We currently have a number of listings of outstanding places at very competitive prices that came to us from sellers who were disgusted with the poor performance of their listing brokers. We know that a great place simply won’t sell at an unreasonably high price in this market and that often times sellers have to go find that out the hard way and then come back to us. We pass on the majority of the ranches that we have the opportunity to list due to price as well as lacking desirable ranch components. Those we choose are the ones we know our customers are searching for. That’s when the process of building a great working relationship really begins. Earning a seller’s trust is a critical part of our philosophy as a company. Encouraging a seller to make a deal with a neighbor before he hires us to sell his place inspires him to trust us. it sets us apart from many other sales companies.

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