Selling land is a different beast than selling a home. For one, it is much harder for potential buyers to envision the potential of the land than it is a home. They can’t see where the kitchen is, how many bedrooms it will have, or anything beyond what their view will be. That’s why it’s important to consider your audience and these top three factors that help attract land buyers.
Know your Audience
Before you can even start marketing your land to potential buyers, you need to know exactly who will want to purchase it and seek those people out. Unfortunately, it’s more rare to sell land than it is a developed property, therefore you won’t have much to compare it to. That’s why knowing your audience is crucial — you’ll be able to look into specific buying data in industries and know you won’t be wasting your advertising budget on the wrong people.
If the land is zoned for commercial use, then exclude families looking for custom homes and market to entrepreneurs and existing business owners. You can also look into landlords and property management companies looking to build a new apartment complex, condominiums, or multi-family living structures.
If the land is zoned for residential use, then you know to look for families who want to build their own home.
Remember that the size and location matter as well. For example, if your land is likely set up to build a luxury home or big box stores, it will be worth more than the average land for a residential home.
Once you know your audience, you have three other things to consider as well before you can attract your ideal buyer.
1. Location Matters to Land Buyers Too!
We all know the old adage “location, location, location.” It’s still the king factor when it comes to selling anything and everything real estate. If your land is in close proximity to amenities, on a body of water, has scenic views, greenscape, or is in a prominent neighborhood, then buyers will want your property!
Also the closeness to major highways, commercial stores, fast food, school districts, and any negative features, such as utility plants or protected lands (such as wetlands or national parks), matters immensely. Buyers love convenience, and if your land has then, then be sure to market it!
Think of the Future
Always think about the future of the location. Is it located in an up-and-coming neighborhood? Are there development plans for new retail locations down the road? Will there be any noisy construction in the neighborhood in the next year or two that will hinder construction? All of these need to be considered to present to buyers so they know what their investment will look like down the road.
For example, picture a new development neighborhood. Behind the neighborhood is raw land — a green field with no development. That land could be used to expand the neighborhood in the future, which means views will be impacted, traffic will increase, noise will increase, and it is likely that property values will be affected as well due to supply and demand.
Your buyers will consider all of this when they’re looking at your land, so it’s best to be knowledgeable about everything related to the location.
2. Expected Cash Flows and Profit Opportunities
Not all buyers will be looking to build a home. Some will rely on the land to bring in a profit in the future (after they build on it). Therefore buyers will want to know how your land will maximize their expected cash flow (how much money is left after expenses) and their profit opportunities.
This means being knowledgeable in all of the following:
Expected cash flow from rental income
Cost-benefit analysis of renovation before sale to get a better price
Cost-benefit analysis of mortgaged loans vs. value appreciation
All of these can be researched by looking into comparable properties in the area and by knowing your audience. For example, a family looking to build a home will want to know how home values in the area have changed overtime.
A business owner will want to know how many new businesses are in the area and how many of them are successful.
Finally, a landlord will want to know how much the average rent is in the area, how popular renting is, and if this location will be a good investment for them. This leads us to the third benefit...
3. Investment Purpose and Investment Horizon
Land buyers want to know they are making a good investment. Given the low liquidity and high-investment value in real estate, it can be difficult for buyers to know whether or not they are guaranteed to make money when they sell their home/business, especially when mortgages are involved.
As the land seller, you will need to identify which category your potential buyers fall into so they are comfortable buying from you.
Are they buying and using the land themselves?
Buying and leasing?
Buying and reselling short term? (Usually for a small profit, done by land developers or construction companies)
Buying and reselling long term? (Appreciation over a longer period of time)
Identifying which your buyers falls into allows you to market your land more aptly and appeal to more buyers. For example, raw land is more appealing for short-term sales, as a land developer can come in, develop and grade the land, and conduct all of the necessary surveys and inspections, and then turn it over to a new buyer.
Remember that selling land is more difficult than selling a home. As the landowner, buyers will look to you (or your agent) to answer their questions and concerns. It’s your job to help them visualize the potential and make them feel secure in their investment.
If you need help selling your land, give BC a call at 480-900-1991 or visit us online. Our real estate experts and land developers will be happy to help.