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2022-07-17

How to Sell Land: A Step-by-Step Guide

How to Sell Land: A Step-by-Step Guide

Selling land can be difficult and overwhelming to navigate on your own. A quick Google search brings up scant resources, and the process for potential buyers is no more straightforward.

To top it off, details such as property lines and access may not always be documented properly for vacant land, and hidden factors like flood zones and crop history often have enormous impacts on buyers long after the sale.

The good news?

With a little legwork, it’s possible to get ahead of buyers’ questions and make your property stand out in the market.

Keep in mind there are different legal steps in each state for land transactions, so working with an experienced land agent can save you time and numerous headaches along the way. Not sure if working with an agent is right for you? We’ll cover the pros and cons of that too.

Contents

Questions to Consider First

Why is Selling Land Different Than Selling a House?

To begin with, there are fewer land buyers in the market than homebuyers. Land buyers also have different concerns than homebuyers.

While a home’s features and condition are easy to see, land has hidden qualities that could greatly impact the buyer in the future. For example, when buying farmland, a property’s vegetation index and soil type factor into the success of future agricultural endeavors.

A few more examples of questions land buyers might ask include:

  • Are there building restrictions?
  • What are the water rights?
  • How accessible is the property?
  • What crops were previously grown on the property?
  • What’s the elevation?

In general, it’s a much more nuanced search that requires excellent due diligence and research. If you already have detailed information about your land ready, you can help potential buyers feel more confident about your property.

Should You Work With a Real Estate Agent?

While selling land on your own is doable and might save you money, working with an agent or brokerage offers additional support and expertise during the selling process. The time and headaches it saves you can be well worth paying the commission.

However, be discerning when selecting an agent. Just because a real estate agent is experienced in the residential or commercial market does not mean they are experts when it comes to land real estate. If you choose to work with an agent or brokerage, finding a land specialist is ideal.

A seasoned land agent will understand the nuances of your local market and also have specialized knowledge about your region’s land. This means they know how to better communicate important information to buyers and market your land more effectively.

What’s the title process in your state?

Not having proof of title ready ahead of time slows down the process, and each state has different regulations around land titles. Do your research and work with an appropriate professional to understand what’s needed in order to transfer your land to a buyer.

What Can Prevent Land From Selling?

There are two major factors that can prevent land from selling. Understanding these upfront could help you avoid pitfalls during the selling process.

  • Overpricing: Setting a fair price is critical. Overpricing can make your property sit in the market for months (even years) or not sell at all.
  • Limited or No Access: If your property is difficult to access or landlocked, this severely limits the number of buyers who will be interested and often lowers the value.

Step 1: Value Your Land and Set the Price

Land valuation is a critical factor in selling your property. Too high of a price and your property risks not selling. Too low and you risk losing out on money.

Due to the complexity of land, working with an appraiser or an experienced land agent is wise when it comes to valuing your property at a fair market price. However, these factors can help you get a pulse on the current market:

  • Comp Sales: Check recent land sales in your area, and look for property of a similar size and/or with similar features. These provide comparable sales that you can use to estimate the value of your property. This may sound straightforward, but keep in mind that unseen factors, such as foreclosure, also impact price.
  • Current Listings: Because land values change year over year, it’s a good idea to also look at current land for sale in your area to see what other properties are listed for.
  • Highest and Best Use: Identifying the most feasible (both physically and legally) and profitable way to use your property can help you understand how much a buyer is willing to pay for it. An appraiser looks at four factors: legal permissibility, physical feasibility, financial feasibility, and the most profitable or productive use.

Of course, this only scratches the surface. Other factors that might affect land value include soil productivity, location, drainage, and water access. The more information you have about your property the better.

Not sure where to start? Acres makes valuing land simple and transparent. Check comp sales, current listings, and 12 layers of land data all in one place. Get started for free.

Step 2: Identify the Best Use of Your Land

Understanding the best use of your land helps you market to the right buyers and make better decisions during the selling process, such as setting the price or making land improvements to increase the value. There are many types of land use, but in general, these are the most common:

  • Agricultural: Purchasing farmland requires special considerations, like irrigation, flood hazard, and soil types. Buyers will be looking for potential trouble areas and thinking through the costs of needed improvements. Take the time to understand how your land meets (or doesn’t meet) these needs. It’s also a good idea to also prepare for questions about the historical use of your land.
  • Recreational: Is your property scenic? Does it have lake access or the perfect spot for a cabin? Recreational land appeals to buyers who want a place to retreat and enjoy outdoor activities, like fishing, camping, and ATVing.
  • Hunting: If your property has a healthy population of wild game and thick brush but no utility hookups or zoning for buildings, your property may be a paradise for hunters. To prepare for selling, be sure to note what wild game buyers expect to find on your property.
  • Timberland: If your property is wooded with desirable timber, consider selling points like access roads and clearly marked boundaries to increase appeal.
  • Development: If your land is close to an expanding town or residential area, developers may be particularly interested in your property. A land agent can help you identify who’s buying in your area.

Step 3: Decide if You Want to Split Your Land or Sell Whole

Evaluating your local market can give you insight into whether or not it will be more profitable to split your land into parcels or sell it whole.

  • When to Split Land Into Parcels: If your property is close to residential or commercial development, smaller parcels could help you sell faster and earn more.
  • When to Sell Whole: In a more rural area, large tracts of land are often more attractive to buyers.

These are, of course, generalizations. Take a look at comparable sales and listings in your area for a better understanding of current market trends. Your land agent can also provide this insight.

Step 4: Determine the Best Way to Sell Your Land

Choosing the right type of listing depends on your needs and your local market. Here’s a brief overview of common listing options:

  • Traditional Land Listings: This method is probably the most familiar and reaches the most buyers. Typically, a traditional listing appears on major online real estate platforms and in local publications.
  • Private Land Listings: If you would like to keep your listing private, an agent can help you find a qualified buyer through their personal network. Land Auctions: An auction increases competition around your property, which means you may be able to close at a higher price.

Depending on state regulations and circumstances, there are other options available, such as selling to the government or institutional buyers. A land agent knows how to identify the best option for your situation and, in some cases, may be necessary in order to reach the right buyers.

Step 5: Prepare Your Land for First Impressions

Conduct maintenance on your property or hire a crew to increase curb appeal. This could include clearing out brush, mowing, or removing trash.

Once you’re done cleaning up your property, take photos that show off the property’s best features. Because buyers often start their search online, great photography is critical for first impressions. Consider hiring a professional photographer if this is not your strongpoint. Video and drone footage are also excellent ways to make your property stand out.

  • Tip: The type of land you’re selling impacts the type of necessary clean up. For example, if you’re selling land for hunting, brush might be desirable and may not need to be removed.

Step 6: Decide How to Structure the Sale

If you accept traditional cash deals or bank financing, you would close at a certain date, transfer the deed to the buyer, and receive the full purchase price all at once. While this can be a benefit, keep in mind that you will also have to pay taxes on that full amount.

Alternatively, you may want to offer seller financing, also known as a land contract. This involves creating a payment agreement with the buyer. The buyer will make a down payment and then pay regular installments until the land is paid for in full, including interest.

  • Pros of a Land Contract: You can usually set a higher asking price, and the buyers won’t have to go through the process of getting a mortgage. A land contract also limits your tax liability by spreading out payments.
  • Cons of a Land Contract: You won’t receive the full purchase price up front, and if the buyer defaults on regular payments, the process for removing them could be costly and time consuming.

Step 7: Market Your Property

Once your land goes up for sale, make sure everyone knows about it. Here are a few simple ways to reach potential buyers:

  • Signage: Post clear, easy to read signs around your property with a phone number to call for inquiries.
  • Talk to Neighbors, Friends, and Family: Don’t underestimate word of mouth. Find out if your neighbor is looking to expand or if someone close to you is looking for their little slice of paradise. No takers? Encourage them to ask around as well.
  • Local Publications: Put your listing in local newspapers and other regional publications buyers use to find land for sale.
  • Social Media: Let your network know your land is for sale by posting about it on social media.
  • Advertise: Buy a placement in your local news sources or pay for social media ads to increase the reach of your listing.
  • Online Listings: Today, many buyers start their search online, and there are numerous websites where you can advertise your listing. Consider placing your listing on both land-specific and more general real estate sites for maximum exposure. A few examples include Lands of America, Land.com, and Zillow.

Tip: Major listing websites can be expensive, but if you work with a land broker, they likely already have access to these websites.

Step 8: Close the Sale

Once you have an offer on the table and have negotiated the price, it’s time to close the sale! A standard land transaction requires a purchase agreement, disclosure forms, contract, deed, and closing statement. Working with a land agent or real estate lawyer helps ensure these documents are created, signed, and filed correctly.

Final Thoughts

Land sales are more complex than selling a home. The market for vacant land is much smaller, and land buyers have different concerns than homebuyers. However, understanding the process ahead of time is a good step toward a smoother selling experience.

Here are a few key points to remember when getting started:

  • Land valuation is a critical step and quite nuanced. Consider working with a professional to set a fair market price.
  • Understanding the best use for your property helps you better identify who potential buyers are and where to list.
  • Don’t just put a for sale sign up. Take the time to advertise your property and get the word out to reach more potential buyers.
  • Working with an experienced Land Expert makes the process far easier and is well worth paying the commission.

If you’re looking to take the next step and want to work with an experienced land specialist, connect with your local AcrePro agent today!