Back in the day, there was so much available land in the U.S., especially in Kansas and other Midwestern and Western states, that the federal government was giving it away for next to nothing. Thanks to the HOMESTEAD ACT OF 1862, settlers who made their homes on land and stayed there for at least five years could take ownership of up to 160 acres, all for the price of a small filing fee.
Today, it’s obviously a different story. Though the U.S. is still a pretty big place, no one’s just giving out parcels of land anymore. If you want land, for development or any other reason, you have to buy it. That can be great news for land owners! But before you waltz out and put a “For Sale” sign on your land, it helps to understand how to sell land and how selling land is different from selling other types of real estate, such as a home.
Table of Contents
- How The Land Market Differs From The Residential Market
- Understanding Your Buyers & What They Need To Know
- Documents Needed To Sell Your Land
- Additional Preparations That Can Help You Sell Your Land Faster
- What Are The Best Ways To Sell Land?
- Work With The Auction Specialists At Cates Auction & Realty Company
HOW THE LAND MARKET DIFFERS FROM THE RESIDENTIAL MARKET
One of the most significant differences between selling land and selling a residential property is who the buyers for the properties will be.
DIFFERENCE #1: THE BUYER
Homebuyers tend to have very different expectations than land buyers. Knowing those differences and how to cater to the needs of your buyers will help your property stand out and sell faster.
• WHAT HOMEBUYERS WANT
While it can take some work to find out what some people want, that’s just not the case with homebuyers. They aren’t going to play their cards close to the chest or make you guess about what they’re looking for. No, homebuyers are an upfront bunch. They know what they want, and if a house doesn’t deliver, they’ll let someone know — just watch an episode of House Hunters if you don’t believe us. Homebuyers care about the bones or structure of a home. They’re about to spend their life savings on a property and most likely take on years of debt. They want to be sure they’re not buying a cardboard box or a “house of cards” that will tumble down the first time a tornado or storm blows through.
That said, while homebuyers do care about the house being well made and structurally sound, they also tend to have their eyes on the cosmetic details, too. Even small, easily changeable features, such as outdated carpet or a lackluster front entryway, can be enough to turn potential buyers off and cause them to head for the hills. Homebuyers also have their eyes on the layout and design of the house. Is it modern, with an open — but not too open — layout? Is the kitchen big enough? They want to be able to envision themselves living there, comfortably entertaining friends and family, relaxing outdoors on a warm, sunny day and enjoying modern amenities at home.
A homebuyer is also going to look at the land the home sits on, but his or her expectations for that land are going to be different from those of a land buyer. Homebuyers are going to worry about the yard being big enough for their kids to play in, or about whether or not they have enough space for a pool or a garden. They’re also going to be concerned about the neighborhood. Do the people who live nearby seem friendly? Are there community events or common areas, such as playgrounds or parks, nearby?
• WHAT LAND BUYERS WANT
Like homebuyers, land buyers know what they want, and they’re going to let you know it. It’s just that their needs and desires tend to be a little more pragmatic and practical than homebuyers. You won’t find them fussing about carpets or kitchens. Instead, land buyers will be looking for a property that is flexible and that they can customize to fit their needs. If it’s zoned for one thing, they’re going to want to know if they’ll be able to change the zoning, or if the current zoning is appropriate for their project.
You always hear about location whenever anyone talks about real estate. For example, a poorly maintained, dilapidated house might cost a fortune because it’s in a highly desirable part of town. Meanwhile, a piece of land that otherwise has a lot going for it might sell for a song because it’s in a remote area without a lot around it. Land buyers are going to be more interested in a property that’s in the right location than one that’s more far-flung. For example, a buyer looking to build up a housing development might be more interested in land that’s near the Kansas City metro area, as the houses built on that land will be more likely to attract buyers, especially buyers who work in the metro area. Other land buyer-specific concerns include:
- Setbacks and restrictions — is there anywhere they’re not allowed to build on the land?
- If they can drill for a well
- If there are utilities available
- Property tax amounts
- The past life of the land — are there any environmental concerns?
- Tax breaks or tax abatements on the land
- Water access for irrigation or livestock
- How accessible the property is
Of course, if you’re selling land for a specific concern, such as recreational use or agriculture, there are many other concerns or wants your buyers are going to have.
DIFFERENCE #2: THE SALES TECHNIQUE
While there are some similarities in technique when you’re selling to home buyers or land buyers, you’ll need to take a slightly different approach when you’re selling land versus a home. The one technique for how to sell a piece of land that is the same for home sales is using imagery to help buyers get a feel for the property and to help them get a sense of what they can do with it. For example, when you’re selling a home, you want to include plenty of photos with the listing and hold open houses so people can get a feel for the house. You want to clear out clutter and stage your home so buyers can visualize themselves living there, without being distracted by photos of your kids. With land buyers, it also helps to have lots of images, such as photos of the various features of the land and maps of the property. Looking at the land and viewing maps of it can help your buyers visualize how they’ll use it, and how the land will help them reach their goals.
When you’re selling a home, you want to give buyers all the details about it, such as a list of all projects you’ve had completed and a list of all updates and maintenance work performed within the last decade. You also want to show off the most desirable areas of the home, such as the kitchen or recently renovated bathrooms. Buyers are looking for details on the community, such as nearby schools, the friendliness of the neighborhood and property tax information. You should also tout the key features and benefits of the land when you get ready to sell it. Why should someone buy your tract of land and not the one a few miles down the road? What is the soil type? Is the view the best in the area? Are there interesting features such as creeks or timber? What is the topography? What’s near your land? When you’re selling land, you might have a potential buyer base in your backyard. It’d be peculiar for one homeowner to buy their neighbor’s home, but it’s not so weird for a neighboring farm or another nearby landowner to consider buying the property that’s just next door, so to speak. It could be your neighbors have been looking to expand their farm for some time now. You selling your land provides a mutually beneficial opportunity.
DIFFERENCE #3: THE ACTIVENESS OF THE MARKET
Things can move fast in the residential real estate market. Homes can seem to fly off the shelves in some cases when the number of people looking to buy outpaces the number of people trying to sell. Kansas City has recently seen its version of a seller’s market, as housing inventory has DROPPED BY MORE THAN 55 PERCENT between 2012 and 2017. Desperate for a house, some buyers are doing crazy things, like making offers without seeing a property and agreeing to finalize the deal without a home inspection. You likely won’t see that kind of action when you’re selling land. It’s usually a much quieter market. You won’t have buyers trying to flatter and woo you with cookies or videos. In fact, after you list your land for sale, even if the price is right and the land ticks all the boxes, you might hear crickets, at least initially. It’s just going to take longer for you to sell a parcel of land than it would to sell a house, since there are fewer buyers out there.
UNDERSTANDING YOUR BUYERS & WHAT THEY NEED TO KNOW
When you’re selling land, it helps to think like a buyer. Put yourself in their shoes and make a list of what they want, what they might be concerned about and what else they need to know about the property.
Imagining what your buyers might ask can help you decide what information to include in your property listing, and can help you fill in any gaps in knowledge. Here are just a few things your buyers are going to want or need to know:
- What properties and developments are right next to or near your land, and how are they used? Are you surrounded by farms, or do you have an empty tract of land in an area bursting with housing developments?
- How much work will the buyer have to put into the land? Is it a ready-to-go farm, or is it already zoned for residential use? Will the buyer have to set up utilities, dig for wells or handle any zoning issues on their own?
- Are there any hidden details or “secrets” about the land? What used to be on the property, and will the history of the property potentially have an adverse effect on a buyer’s ability to develop or resell it?
If you don’t know the answers, you want to do some digging to find them out. That research means a trip to your local historical society or diving into public records.
DOCUMENTS NEEDED TO SELL YOUR LAND
One thing selling land has in common with selling a residence is that you’re going to need a stack of paperwork before the deal is done. You can’t just shake hands with a buyer, take the cash and be done with it. Here’s a list of the documents needed for selling land, when you need them and why they matter.
- Purchase agreement: A purchase agreement is a document stating the buyer is going to buy the land for a given amount, and that you’re going to sell that land for that amount. A purchase agreement also lists any conditions that would allow either of you to abandon the sale and includes any details of the purchase that have been met, such as the buyer making a down payment.
- Disclosure forms: Whether you need a disclosure form depends on the state you’re selling in and what you’re disclosing. For example, in Kansas and Missouri, you need to disclose any known environmental hazards on the property, as well as any defects on the land.
- The contract for sale: The contract for sale outlines the terms of the sale and lists any other forms or documents that are required for the sale to go through.
- Deed: For the sale of the land to become finalized, you’ll need to have the deed transferred over to the buyer from the seller. This can happen at closing, or it might happen later, depending on the type of financing the buyer has.
- Closing statement: A closing statement lists property tax deposits, mortgage insurance and all other fees connected to closing.
ADDITIONAL PREPARATIONS THAT CAN HELP YOU SELL YOUR LAND FASTER
When people are selling their homes, they hear a lot about the value of staging to make the home look better and to speed up the sale process. While you can’t really “stage” your land — unless you want to strategically place a few cows or sheep here and there to make farmland look more “farmy” — there are several things you can do to speed up the process of selling your land.
- Provide as much detail as you can: Land buyers want the facts, and they wanted them yesterday. When you’re listing your property, be sure to include the zoning, plus details on whether the buyer will be able to change the way the property is zoned. You also want to include details on taxes paid on the land and other typical expenses. If you can, include the tax-roll printout from your local land registry or county assessor and include the legal description of the land in the listing. You can also provide that detail when people come to look at the land.
- Get your facts straight: Hire a surveyor to map out the boundaries of your land, plus any easements and setbacks. It can also be useful to have previous surveys and the history of the use of the land available to buyers so they can see what their options are.
- Make it look nice: Pick up any litter on or around the property, pull up weeds and mow the grass. Take pictures on a sunny day, when your land is looking as good as it can.
- Take good photos: Aerial photography or drone footage can show your land in greater detail than photos taken at ground level. It’s a good idea to have a combination of both, plus maps.
- Let people visit the land: Don’t be one of those sellers who restricts access to their property. Let buyers come by to assess the property when it’s convenient for them.
WHAT ARE THE BEST WAYS TO SELL LAND?
As with selling a residential property, you have a few options when it comes to the methods you can use to sell your land.
1. LAND AUCTIONS
One of the best ways to sell land in the Kansas City metro area is via auction. SELLING LAND BY AUCTION has several benefits over other options. For one thing, it can significantly speed up the time it takes to make the sale.
When you sell land more traditionally, either for sale by owner or by working with an agent, you need to wait for the buyers to come to you, usually on their own schedule. With an auction, you set the time and date of the sale, and potential buyers come then. Another benefit of selling your land by auction is that buyers end up bidding and competing with each other for the property. You might expect to get a specific dollar amount for your land, but if it ends up being in high demand and a bidding war breaks out, you might walk away with a lot more. You can sell pretty much any type of land at auction. Cates Auction & Realty Company has experience with a variety of land types and uses, including:
- Development — residential & commercial
Fill out a PROPERTY ANALYSIS and see if selling your land at auction is a good option for you.
2. PROMOTE PROPERTY TO FRIENDS AND NEIGHBORS
You might also try to sell your land by promoting it to potentially interested friends and neighbors. Maybe the person who owns the land next to yours is looking to expand, or a friend is hoping to get into real estate or property development. The major drawback of trying to sell your land through word of mouth is that you might never talk to the person who would pay the most or you might not find anyone who’s interested in purchasing it at the moment.
3. FOR SALE BY OWNER
Some people prefer to cut out the middleman when selling property, which means selling land without a Realtor. If you go the FOR SALE BY OWNER (FSBO) route, you don’t have to pay a commission to an agent. The drawback is that you’re likely to sell for less than you would at auction, and selling land privately might take considerably longer for the sale to go through.
Private sales of land also require more work on the part of the owner. You have to manage all the advertising, negotiations and paperwork yourself! For owners, selling land by yourself means you will have to do research to figure out who to target with your marketing. You will also need to list the property on your own, create advertising materials like signs and make the land look presentable for potential buyers.
Once you have found a buyer, you will need to negotiate with them to find the right price, then work through all the paperwork that accompanies a large sale.
4. WORK WITH AN AGENT
For some landowners, the idea of working with an agent is appealing. Real estate agents, especially those who specialize in land sales, know the market well and can help you get a reasonable price for your land. But the problem with working with an agent is you have to wait for the buyers to come to you. When they do come, they are often the ones dictating the terms of the sale, meaning you might end up getting less for your property than you had hoped.
How to Sell Land as the Owner
If you’re looking to sell your land yourself, be sure to take notes while completing all the previous steps, like gathering necessary documents, hiring a land surveyor and taking photos of the property, so you know where you are in the process. Since you will do all those things yourself, you should make sure that you keep all the necessary information organized to make the selling process more manageable.
Beyond that, you should develop a plan for a payment strategy. There are two main options you can offer when selling your land.
Mortgage Payments or Loan
Using this process, interested buyers go through a mortgage and lending process at their bank. This way, buyers may pay the full price of the property with help from a bank and then pay the loan off over time.
Many people who buy land with a home on it use loans or mortgage payments to pay off the cost of the property. While loan payments may be an attractive option for sellers hoping to be paid upfront, buyers often want a more flexible payment option.
If buyers do not want to rely on a traditional mortgage, owner financing is an alternate option. As a seller, you can offer owner financing in two ways — a promissory note or a contract. With a promissory note, a buyer promises to pay the full price of the land, and you transfer the title to their name immediately. A contract works the opposite way. Here, you promise to transfer the title to the land after the buyer has paid the agreed-upon price.
If you choose to offer this option for repayment, you should do some additional research through a credit check to determine whether a buyer has the means to make timely payments.
WORK WITH THE AUCTION SPECIALISTS AT CATES AUCTION & REALTY COMPANY
Cates Auction & Realty Company has been working with property owners and selling land at auction since 1942. We use accelerated auction marketing methods and competitive bidding to generate interest in and increase the market value of your land. We’re committed to getting the best price for your property, in the shortest amount of time. To learn more about the benefits of selling your land at auction, CONTACT US TODAY.