Gain an advantage – Selling land is a business that requires knowledge, experience and dedication to be successful. A great deal of what I’m writing about has to do with the seller’s broker being informed about the property for sale because unknown variables kill land deals. If buyers have questions about a property they are considering purchasing and don’t receive answers promptly they will often look elsewhere. Hiring a Broker who knows the land business to list your property usually doesn’t cost a dime extra, this is the easiest way to gain an advantage over other land sellers competing for a buyer.
Make your property showable – Like selling homes, lots can be prepared or staged for market. Clearing brush, saplings and trees can open views and allow buyers to access more of the parcel. Mowing cleared lots allow buyers see the contours of the land and make the lot easier to walk or drive. This is known as parking out a lot. It helps buyers imagine their future homes location on the lot. This obviously is psychologically useful in selling land.
Identify the corners – often buyers, after looking at a lot don’t have a clear idea of what they just looked at. Around Sequim most all property has steel rebar stakes at the corners that have long since been buried under by sod and undergrowth. Locating and making clearly visible survey pins are something that will be done eventually before building so doing this before listing the property is a real value to the eventual buyer. This can gain an advantage over the competition that didn’t locate the pins and even increase the price. If possible locate and mark with ribbon as many corners as possible before listing the property.
Know the costs to build on your lot – Almost all offers will come with a feasibility contingency that will allow the buyer to find out the cost to build on the lot. These costs are called site specific costs and can occasionally cost more than the land itself. The buyer can walk away from the deal with his earnest money if he doesn’t like the findings. This time lost during the feasibility can hurt if the “meant to be” buyer buys another property because he didn’t want to waste time in a backup position waiting to see if your lot would close or not. Having cost estimates for Utility facilities fees, connection fees, service agreements, usage rates etc. will give buyers one more reason to write an offer on your dirt instead of the other guys and one less reason to back out of the deal after he does. It also could enable a seller to negotiate a quicker feasibility and closing. The City’s, P.U.D’s and community utility companies don’t like to but will provide cost estimates if someone who knows the ropes and uses the proper procedure when requesting them.
Understand how government regulations affects on the property – Zoning classifications, open space, shoreline management and critical areas such as wet lands, eagle habitat and the salmon recovery act are some of the governmental issues that could affect the value of your land.
Consider carrying the contract – Owner financing is when a seller acts as the bank in a land deal. If the property is owned free and clear, meaning the seller has clear title without any loans, the seller might agree to carry all the financing. In that instance, the buyer and seller agree upon an interest rate, monthly payment amount and term of the loan, and the buyer pays the seller for the seller’s equity on an installment basis. For example; a buyer could pay 20 to 25% of the purchase price as a down payment, this money pays for the closing costs leaves some net proceeds for the seller at closing. The 75 to 80% balance is usually amortized over 20 to 30 years in order to keep the monthly payments affordable but is typically payable in just 3 to 5 years because of the fact that the lender is a person not a financial institution. When short term loans have long-term amortization schedules the last payment is many times larger than the previous payments this last payment is called a balloon payment. Often the land is refinanced with a construction loan when the balloon payment is due or earlier. Because there are no fees typically associated with the lending institutions owner finance rates are usually higher than what a bank will charge. Unless the property is subordinated (in second position) to another lender, the owner will be able to take back the land in the case of a default by the buyer.