Selling land - best approach?

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prudent
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Selling land - best approach?

Post by prudent » Fri Mar 22, 2019 10:16 am

A friend has asked me for advice on the best way to sell their land, currently used for farming; I said I know nothing about it but would ask some "people I know." :)

It's nearly 40 acres along a state 2-lane road, almost all of it is cleared and level enough to be "shovel-ready". I'd describe the vicinity as between rural and suburban. About 2 miles away, a similar sized plot is being built out by a developer if that matters. Of course they want as much as they can get, but need some pointers on where to start. He's hesitant to just call an agent at random and see what happens without doing some research of his own beforehand. He has an appraisal but doesn't know if that is for using it as a farm (seems too high) or if it would bring more from a developer (seems too low).

Thanks in advance for any suggestions.

il0kin
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Re: Selling land - best approach?

Post by il0kin » Fri Mar 22, 2019 10:55 am

I’ve never done it so what do I know, but putting up a FOR SALE (Phone #) sheet on the edge of the highway on a sheet of plywood driven into the ground on 4x4s seems to be fairly common around the exurbs in my area, and seems to work. If your friend isn’t in a hurry, they may just get a lot of money for their land.

He may be able to find public records of what similar parcels have sold for via the County online GIS and tax bills, it’s all public information.

renue74
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Re: Selling land - best approach?

Post by renue74 » Fri Mar 22, 2019 11:44 am

He can list it with a commercial broker. Typically, these guys know all the big developers in town and would shop it around to housing or commercial developers. Who knows, there may be a developer looking for land for a Wal-mart.

As far as fair pricing, the broker would give you an idea.

Also, in my town, there are are actually a few normal real estate brokers that tend to specialize in horse farms or farm land. Maybe that is the way where he is also.

It doesn't hurt to shop the land around to a few agents. You can kick the tires and get some rough estimates on potential prices.

Hockey10
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Re: Selling land - best approach?

Post by Hockey10 » Fri Mar 22, 2019 11:44 am

Contact the adjacent owners directly. Maybe one of them would welcome the idea of expanding their existing parcel.

not4me
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Re: Selling land - best approach?

Post by not4me » Fri Mar 22, 2019 12:01 pm

Assuming the area is moving from rural to suburban, the best answer may depend on how fast that is happening. But here are some thoughts...A good appraisal is good place to begin, but bothersome to hear the description. It likely varies, but somewhere in the 40 to 50 acre area there is a shift in skill level needed by the appraiser, There are good/bad in most every profession, but this appraiser likely didn't handle this well. Ideally, upfront, there would be clarity in what the seller wants. Example: seller inherited a year ago & needs to have a cost basis established; seller is willing to wait 2-3 years to close to get top dollar; seller wants to do a 1031 exchange before year-end; etc. If the appraisal in hand is fairly new, I would think the appraiser would be willing to answer questions. If it is old (or just not sufficient), it might be wise to get a new one.

You indicated they wanted as much as they can get -- it just needs to be understood there are trade-offs between speed, level of involvement (willing to finance? help with zoning changes? etc), & total cost. You said it is currently being farmed -- if under contract are there restrictions on when it can be sold? Appraiser may not need to know all of that, but it can enter into the constraints. If there are wetlands, conservation easements, etc would be factored in by a good appraiser qualified for such deals.

Many communities like that have a development board tasked with bringing in jobs. I would contact them to see if they knew of any interest, but also get a recommendation (or at least a list) of real estate brokers/agents that they work with. In many cases, farming will not end up being the "highest" use for 40 acres with development on the way. But a zoning change may be needed for next step. You used the term shovel ready, but there may need to be water/sewer work, even highway work, before much can be done. Some communities have moratorium to manage the speed of change.

bob60014
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Re: Selling land - best approach?

Post by bob60014 » Fri Mar 22, 2019 1:24 pm

Checking the current and future zoning is a excellent idea.

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PalmQueen
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Re: Selling land - best approach?

Post by PalmQueen » Fri Mar 22, 2019 1:33 pm

A good place to start would be by chatting with the county tax assessor's office.
Questions -
How does tax assessment correlate with market prices?
What has been the price trend for actual sales of similar parcels in the past year?
What is the zoning?
Any plans for rezoning in the future?
Any insights into the development in progress a couple miles away?
What's the custom in the area for selling this type of property? (realtor, auction, etc.)

NoblesvilleIN
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Re: Selling land - best approach?

Post by NoblesvilleIN » Fri Mar 22, 2019 1:37 pm

I'm guessing that the land developing 2 miles away has access to sewers and water. Does your friend's property have that access? If it is currently farmland, I would be very surprised if sewers are close. In my area, to get sewers, the property must be annexed into a city. To get annexed, a property must be adjacent to a city limit. Not having easy access to sewers is going to limit who would want to buy it for development and the price that a potential developer would pay. That said, the field behind me has been owned by an investor (assuming for future development) for over 25 years.

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prudent
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Re: Selling land - best approach?

Post by prudent » Fri Mar 22, 2019 6:06 pm

Thanks all for the input! Will pass along your comments.

retire2022
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Re: Selling land - best approach?

Post by retire2022 » Fri Mar 22, 2019 6:19 pm

Prudent

I've used Zillow when I was searching for property, I suggest you check out your friend's address within that program and have a rough idea of what the property is worth.

I own 89 acres my story has been posted on this thread viewtopic.php?f=1&t=276265#p4447032

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aspirit
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Re: Selling land - best approach?

Post by aspirit » Fri Mar 22, 2019 6:46 pm

Go visit the developer, they might be interested after one searches the Registry of deeds location they purchased down the street. :happy
Zillow is nonsense. IMHO
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Seal the Deal
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Re: Selling land - best approach?

Post by Seal the Deal » Fri Mar 22, 2019 7:51 pm

acrevalue.com to see the farmland value.

J295
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Re: Selling land - best approach?

Post by J295 » Fri Mar 22, 2019 7:55 pm

Broker

Slick8503
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Re: Selling land - best approach?

Post by Slick8503 » Fri Mar 22, 2019 10:30 pm

A lot of land, especially farmland, is still sold by auction.

I’m not sure the location of the property but much of the midwest’s farmland values are off from their highs but still bringing strong prices.

Bacchus01
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Re: Selling land - best approach?

Post by Bacchus01 » Sat Mar 23, 2019 5:33 am

aspirit wrote:
Fri Mar 22, 2019 6:46 pm
Go visit the developer, they might be interested after one searches the Registry of deeds location they purchased down the street. :happy
Zillow is nonsense. IMHO
While possible, that’s not the way all developments go.

We bought a 12 acre parcel of vacant land a couple years ago. I offered half what they were asking. They told me they had a developer that was offering them 50% more than what I was offering. I told them it was a good deal and they should sell it. They took my offer.

Why? The developer offer, which is common around here, is more like a land contract where the developer pays the original owner off AFTER all the development work is done and the lots are sold. That would have gotten them more money, but it surely wouldn’t have happened as fast.

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Re: Selling land - best approach?

Post by carolinaman » Sat Mar 23, 2019 9:38 am

renue74 wrote:
Fri Mar 22, 2019 11:44 am

It doesn't hurt to shop the land around to a few agents. You can kick the tires and get some rough estimates on potential prices.
Since he already has an appraisal, talking/vetting a few RE agents is a good next step. This will give him a better idea of the property value.

We got an appraisal of timber land 2 years ago, and it included recent comparable sales. Your friend should have that from his appraisal too, since this is a major determinant for value.

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