Whether you inherited a 300 acre plot of forest or a quarter acre that hosted a homestead decades ago, you might want to liquidate that asset to get some much needed cash instead. While selling a residential property with a house is complicated enough, selling raw or vacant land is even harder. Explore the common difficulties involved in selling undeveloped land and get the help of realty services to help the process go smoother.
Commissions are Higher
You'll end up giving a percentage of what you get from the sale to the real estate agent in exchange for their help, and this percentage is based on the income before you pay your capital gains taxes. While homes often only come with commissions as low as 5%, raw land rates can run as high as 20%. This is due to the extra work needed to move a vacant lot. Shop around and do a little haggling to get a good commission rate instead of settling for the first agency you contact.
Presentation is Harder
The real estate listing for a house usually includes beautiful shots of the kitchen, backyard, and view from the curb. However, shots of vacant land usually present little more than an uninspiring rectangle of leaves and dirt, unless there's a clear scenic view or creek to capture. You and the realty agency will need to take extra steps to catch the eye of buyers, such as:
- Paying for septic percolation tests and well water measurements to prove it's ready for building
- Clean up and improvement tasks like installing sod and removing junk cars
- Commissioning a speculative drawing of what the property could look like with development
- Custom home plans based around the lot from a building company ready to complete them
Zoning and Restrictions are Complicated
Before you write up a little ad for the local newspaper to sell your raw land by owner, you need to know exactly what the local government allows the new buyer to do with the plot. Advertising something as a great home site when it's zoned commercial or agricultural can leave you in hot water later. A real estate agent can also research the deed information to figure out if there are any restrictions on the use of the property put in place during previous sales.
Disclosure is Required
Some states let you sell vacant land with no further disclosure, but other areas require you to outline dozens of different defects or face legal action later. For example, property that used to host farms or car junk yards may come with contaminated soil that makes a drinking well unsafe for future residents. Working with a realty agency is the best way to make sure you don't miss any important disclosures while limiting how much negative information you share about your land.
Specialization is Important
Finally, don't forget to look for an agent that has experience and training in selling vacant and undeveloped properties. While this kind of education is not required by any state laws for a real estate license, organizations like the National Association of Realtors do require extra training before allowing their members to deal with raw property. Since the NAR is a big name in the world of realty services, you should take their requirements as a clear sign to look for qualified help.
Be patient if you want to get a good deal for your property. While you can probably get a quick sale if you're willing to only accept a small percentage of the assessed value from a development firm, you'll find better offers by waiting for someone who wants to invest in the land for the long term or use it personally instead.