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.
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