How to Sell Land: The Differences Between Land Types and Sales Techniques
When it comes to selling land, many people aren’t quite sure where to start or how the process works. Some landowners list on the traditional real estate market, others put their land for sale by owner, and still others just accept the first cash offer they get. Although these methods are legitimate ways to sell your land, you’re unlikely to get the best price with them.
To sell for the fair market value of your property, you need to understand how the type of land you own and the sales process you choose can affect your sale. In this article, we’ll teach you about three different types of land—agricultural, residential, and commercial—as well as a step-by-step guide on how to sell your land.
Types of Land
There are many different types of land and although the sales processes are similar, each type requires unique considerations. Determining the type of a piece of land relies on its use and how it's zoned by your city or county. The three main types of land prospective buyers are looking for are agricultural land, residential land, and commercial land.
This land encompasses any type of working farmland or areas zoned as farms, whether in use or not. These are often large acreage lots with multiple structures (house, barn, utility shed, etc.), fields of crops, or herds of livestock. Potential buyers are usually interested in the features of the land as well as the potential profit if they continued farming on it.
Selling a farm comes with the unique challenge of determining your land’s value, which can be done in a few different ways. You might decide to model your price after other land properties in your area that have recently sold or are currently listed. Or you can figure your asking price based on how much all your assets and income are worth.
Another route for selling agricultural land is breaking up your property into tracts or parcels and selling it piecemeal. This can earn you more profit in the end, but also takes longer and requires finding multiple buyers.
Most people who buy land are looking for residential lots. These are usually areas of vacant land where someone can build their home. They might be part of a developing subdivision or a stand-alone lot in or near an established neighborhood. Home buyers who would rather build new than buy resale are the typical market for this type of land.
Land zoned for homes comes in a few different stages of readiness:
- Undeveloped (raw land) – This means there hasn’t been any preparation to build a house on the land. The buyer will have to install all water, sewer, and electricity lines on the site.
- Partially developed – There are usually some lines or access to public utilities on these properties. The buyer might have to install hookups and lay a house pad, but the foundational elements are there to get a house connected to necessary services.
- Developed – This land is ready to build on. It has all the necessary lines and hookups on the property and sometimes even has a house pad already laid. Buyers can start building their new home right away.
If you’re selling a piece of residential property, it’s important to know what type of land you have so you can inform buyers what they’ll need to do before they start building.
Commercial land is designated for business use, which could mean anything from office buildings to shopping centers to industrial warehouses. It’s most often purchased by businesses looking to establish their own operations center or developers who want to break up the space and rent it out to other businesses.
Keep in mind that towns and municipalities might zone commercial properties for particular industries or purposes. Check the zoning on your piece of land before you list it for sale to ensure you only work with buyers who need that specific type of property.
No matter the type of land you’re selling, the process has many steps, and what your land sells for can be directly impacted by how well you navigate this process. There are six main steps to selling your land:
- Understand your ideal buyer. What type of land buyers would be interested in your property and what information do they need to make a decision? For example, if you’re selling farmland, then your ideal buyer is likely another farmer who wants to take over farming your land. He’ll need to know what equipment, if any, comes with the sale, how much potential income can be made from your farm, and what crops you grow or livestock you have.
- Prepare your land for sale. You might have portions of your property that could use some maintenance. It’s important to tend to these areas before you list them for sale so you can get the best possible price. If you have a structure like an old barn or shed that’s no longer in use and has fallen into disrepair, consider taking it down altogether. The goal is to create a property that’s appealing to buyers.
- Assess the value and set your price. Now that you’ve gotten your property in condition for sale, you can figure out how much your land is worth. There are a few different ways to do this, so working with a professional appraiser, real estate agent, or Auctioneer is advised to ensure you choose a reasonable asking price.
- List your property. Most properties sell through online listings these days, including those sold at auction. You or your agent will need to take lots of pictures of your land to add to your listing and include as much information as you can about the property. The more information prospective buyers have, the more likely they are to take the next step.
- Field bids or offers. Now it’s time to let the people come to you. If you’re selling through the traditional market, then you’ll have to field bids from buyers. Some people might offer cash, others might require financing, and it’s all up to you to decide who you work with.
- Agree to a sale. When you find a buyer who makes a good offer, you can agree to their price and finalize the sale. This step requires covering closing costs, making sure you’re up to date on property tax payments, and legal documents officially transferring ownership of the land. For this reason, it often takes a few weeks to a couple of months to finalize and close your sale.
Some people will opt to go it alone, but it’s smarter to work with a land real estate agent. These professionals know the market, have experience listing and selling land, and know how to get you the best price quickly. Plus, when your real estate agent works for an auction group, they also have access to the auction market.
Benefits of Selling at Auction
Selling your land at auction is the best way to get the fair market value for your property. It also streamlines the selling process so you don’t have to worry about jumping through hoops with potential buyers.
In an auction, all of the buyers bidding on your property are committed to making a purchase. Depending on what type of auction you choose, you might not have to worry about multiple offers at all. You can accept or reject the highest bidder on your auction date, so control of the sale stays in your hands.
Auctions are also an easy way to shorten your sales timeline because you don’t have to wait for people to respond to your listing, tour the property, and make an offer. When you list your property in an online auction, you’ll set an auction date as well. Bids can come in until the auction deadline, then you can decide which bid you’ll accept, if any.
Typically, auction land sales close within 30-45 days after the auction date. Your auction group real estate agent will navigate the hassle of closing and work with title companies so you don’t have to worry about forgetting an important piece of paperwork.
Auctions also make negotiating a sale much easier because both the seller and buyer sign a purchase agreement beforehand. It states what the seller is willing to list for (and often their minimum bid amount as well) and what is required of buyers who want to purchase the property. Buyers also receive an information packet so all of their questions are answered before they bid and you don’t have to worry about maintaining communication with multiple interested people.
Finally, auctions get you the best possible price for your land. By nature, auctions are determined by true market value because the buyers are setting the price they’re willing to pay. So instead of the buyer vs. seller approach of the traditional market, in the auction market the competition is buyer vs. buyer, which often drives up the price.
Hire a Hand for Selling Your Land
Managing the land sales process is a lot of work, whether you go the traditional route or the auction route. Knowing what type of land you have, understanding the steps to sell, and having an experienced real estate agent to help you sell quicker and for a better price.
If you have a piece of land to sell but no time to manage the process, give us a call. We have a team of real estate agents experienced in land sales who can help you get the best price for your land.