Alabama Land for Sale Archives

Selling Land in Alabama- The John Hall Advantage

How Do I Prepare Land to Sell?

Welcome to the John Hall and Company Selling Land in Alabama series. In part five, John Hall answers the question “How do I prepare the land to sell? Our founder personally has over 35 years invested in selling land and commercial real estate across Alabama.

There are several tasks most people do when they prepare to sell their home. This item might include: service the HVAC; paint and repair rotten wood, update the landscaping, and straighten up furniture and closets, etc. A similar concept applies to preparing your land for sale, but it is a vastly different process than selling residential property.

Land properties are not the same. You would treat a 60-acre wooded tract differently than a 400-acre recreational tract with amenities.

Selling Land- Small Wooded Tract

Let’s begin with preparing a 60+/- acre wooded tract for sale. Firstly, the owner should consider thinning some timber and using the money to install a good trail system and 1 or 2 wildlife plots. Secondly, getting a boundary survey or at least mark each corner clearly is recommended. It is important that there are no boundary line disputes or easement issues with neighbors. Finally, a sturdy metal entrance gate with a lock is a nice feature.

John Hall and Company can help the seller to find the right people to do the improvement. We have several services we offer to our sellers. For example, if an owner doesn’t know how to hire a logger and/or contractor to do the improvements we have experts who we know and trust. The main reason to do this upfront work is

“You can’t sell a tract unless you can show it.”

If the owner does not want to prepare the tract as we have recommended, he can sell it strictly to a timber buyer. The seller can expect to get 25% to 30% less i.e. $400-$500 per acre less at the closing of the sale.

Selling Land- Large Land Tract

Now, let’s discuss a 400 +/- acre tract of recreational property. This property has a cabin, equipment, shed, a 3 to a 10-acre fishing lake, and wildlife plots with permanent deer stands. This type of property is a land broker’s dream listing when it is maintained and “shows well.”

“What should the owner do to prepare this property for sale?

Selling a large tract of land may require similar action to the small tract discussed earlier. The owner should mark all property lines and corners and install “No Trespassing” signs. It is always helpful to have a boundary survey. The seller can expect to pay $5,000 to $7,500 for a survey. A survey is the only way to determine the exact acreage. A property this size may sell for $3,000 to $3,500 per acre.

Land management before a showing will make a huge difference in the selling price. Trails need to be bush hogged and “limbed up”. Wildlife plots need to be planted in winter or mowed in summer. Pine stands need fire lanes established.

Proper care of lakes, streams, and ponds on the land is important. The fishing lake should have some clean, mowed areas along the bank, a well-maintained boat dock, and fish feeders. Fertilizing and adding lime to the pond will provide plankton for a healthy fish population. Hopefully, the pond provides good fishing because it is such a joy to see a 3-year-old catch his or her first fish!

Click here to learn more about our free “Broker’s Opinion of Value” we offer future clients.

Selling Land- Preparing Structures

Evaluate buildings on the property. Do the required maintenance and renovations to bring the building up to standard for the selling price. Any house or cabin on the property needs to be in very good condition with no roof leaks, no rotten wood, etc. The HVAC, plumbing, and appliances should be in good working order. Equipment shed or barns need to be cleaned up with all equipment/tools neat and orderly.

The owner should incorporate best management practices for his land, timber, and wildlife. Not every practice is cost-effective for every owner. My team can help you assess what investment will be best for you to get the best return.

You must create a good first impression for your land broker and your prospective buyer when they arrive at your property!

-John E. Hall, Jr. CCIM

We invite you to review other articles in our Selling Series

Selling Land in Alabama- The John Hall Advantage

What Does it Cost to Sell Land?

Welcome to the John Hall and Company Selling Land in Alabama series. Today, we answer the question, “What Does It Cost To Sell Land in Alabama?”

The first conversation with a new client involves outlining the costs associated with buying or selling property. It is very important to understand costs. Please, note that expenses will vary among real estate transactions.

Up Front Costs

Sellers are responsible for certain closing costs along with the real estate commission to the listing broker. However, there are other up-front costs that may be required to make the property suitable to sell. The agent should do an assessment on the property and suggest to the seller what to do to get the best return on their investment.

These costs may not always be necessary, but they can greatly improve profits. For instance, the property owners will definitely want to make changes to improve the aesthetic appeal for prospecting buyers.

Key Investments for Selling

One key investment is having a good road system on the property. A good internal road system will appeal to a future owner. In addition, the right road gives curb appeal and accessibility during showings. The cost of an internal road system is dependent upon the condition of the existing road and the size of the tract.

Other important costs are incurred with maintenance expenses such as mowing, land clearing, spraying, planting, etc. These costs are a relatively minor part of the transaction but can go a long way in getting the property sold quickly for the asking price.

Land Survey

A land survey is an additional cost that sellers should seriously consider. Surveys are not required, but they are a great asset in selling a piece of property. Buyers will want to have a clear understanding of exact acreage and boundary lines before moving forward with a purchase. A survey gives the buyer assurance of no underlying issues such as encroachments or any kind of boundary line disputes. Costs of surveys vary depending on the size and shape of the property. It is best to consult with your listing broker to determine if doing a survey is justifiable before putting a piece of land on the market.

Closing Costs

After an agreed-upon sales price, costs will then be settled at closing. The majority of fees are negotiable as to who pays between buyer and seller. However, there are standard fees assigned to each party. Sellers often account for costs such as agent’s commission, deed preparation, prorated taxes, attorney fees, and any judgments or liens tied with the property. The agent’s commission is an agreed-upon percentage of the sales price between agent and seller.

In closing, all land sales transactions are unique in their own way. This article gives sellers a good outline of standard costs. These factors emphasize the need to consult with a qualified broker. Selling a piece of property can seem like a big task, but having an experienced land agent to guide the process is critical in obtaining the desired profit.

Click here to learn more about our free “Broker’s Opinion of Value” we offer future clients.

-Staff

We invite you to review other articles in our Selling Series

Selling Land in Alabama- The John Hall Advantage

What Is My Property Worth?

Today, Josh Hall is answering the question “What is my property worth?” or “How much is my property worth?” He outlines how the worth or value of land is calculated. Click on the link below to see if you qualify to receive a free “Broker’s Opinion of Value”. Welcome to the John Hall and Company Selling Land in Alabama series. John Hall and Company has over 35 years invested in selling land in Alabama.

How Much is My Property Worth?

The first question sellers ask is, “How much is my property worth?”. The American Dream is owning a piece of land. Having your own property provides a getaway to the country for hunting, fishing, horseback/ATV riding, gardening, farming, and building family memories.

Consequently, these wonderful memories of activities on the land often make an owner think more highly of their land. Landowners “bake” these great times into the value of their land making it harder for them to set a realistic value.

Creating an accurate estimate of the value of your land is very important for buyers or sellers. John Hall and Company gives an accurate assessment of the value of a property based on objective data.

“Value is only an opinion and that opinion is only as good as the amount of market data and the detail of data available.” -Josh Hall

We have access to hard data like contracts, listings, and closing sales. As a result, our brokers utilize these key data points to arrive at a more accurate opinion of value while making sure the data is truly comparable.

Appraising land is more difficult to value as opposed to residential listings. This is due to the lack of availability of sales and listings data. 80% of all residential sales are inputted in a multiple listing service (MLS) and the data is readily available to the public. Land transactions are not usually included in the MLS. The most important sales data is scattered amongst land brokers and consultants. That is to say, it is difficult and time-consuming to collect this data.

Here are a few ways to start gathering additional data:

Step 1: Ask The Right Questions Of Your Property

The first step to understanding what your property is worth is accurately assessing all of the important economic and physical attributes of your property.

I am often asked,

What is the land going for around here?

My immediate response is,

What type of property is it? Is it crop land, pastureland, wooded land, timberland, cutover land, turnkey recreational land, etc?

Where is the land located?

What do the surrounding properties look like?

These questions help clients to see that not all rural land is the same.

Step 2: Assess Land Market Value of Your Property

The second step to assessing what a property is worth is gathering sales and listing information of a similar property. Sales of similar property should follow this definition of “market value” set by the US Federal government for Financial Institutions.

A definition of “market value” is below:

The most probable price which property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus.

In other words, when looking for comparable sales in order to arrive at an opinion of value the comp sale should be “normal”. However, some properties are outliers. The following examples are not typically a good comparable sale:

Forced sell due to a court order or a bank foreclosure
Adjoining property owner paid a premium because it was a neighboring property
Owner offering below market financing (say 0%)
The seller accepting the first offer they received while not exposed to the open market
Parties involved in the transaction being uninformed, such as a party did not know the true timber value, the property was contaminated, or had a WRP easement attached.

Certainly, sellers would benefit from adjoining landowners paying a premium for their land, but this is rarely the case.

Step 3: Define Characteristics of Your Property

Fourthly, to determine what property is worth we would research the transactional and property characteristics and compare them to your property.

Transactional adjustments include:

Property rights conveyed: Do all rights go with the sale, mineral, surface, timber, etc?
Financing terms: Were terms normal or favorable due to owner financing?
Conditions of sale: Normal sale or not, the buyer could have paid a premium because they were on the backside of a 1031 exchange or maybe the sale was to a family member for a discount.
Expenditures made immediately after a purchase: Did the purchaser pay a commission, or did the purchaser have to buy access or clear a title problem after the purchase?
Market conditions (change in value over time): If the sale is a year or two old, has the market changed?
All of the above have to be known, considered, and adjusted as it compares to your property.

Property adjustments include differences in:

Location: Area or neighborhood differences and proximity to major cities or major interstates.
Physical characteristics: access, topography, interior road system, flood zones/ wetlands, size, the shape of the site, improvements on the property.
Economic characteristics: CRP rent, timber leases, hunting leases, surface or mineral royalties, or amount of timber.
Non-realty components of value: Land transactions often include personal items such as tractors, ATVs, trailers, or furnishings to name a few

Understand each sale used as a comparison to your property is vitally important. This process draws a credible conclusion in understanding what your property is worth. The more sales and listings which are available increases the credibility of the opinion. Also, having the sales data is the first step to know what your property is worth. However, accurately analyzing the data is equally important. A business analyst once told me

“Just because you have the recipe, doesn’t make you a good cook.”

Step 4: Evaluate Market Shifts Around Your Property

Lastly, when calculating the worth of your property know that market changes are not linear. The market goes up and down. It is like a wave in which there are troughs and crests within the rise and fall of overall land market movement. If your property is listed at the same time many similar properties like yours are listed, it could a trough moment where the supply exceeds demand. Vice versa, your property could experience a crest moment where demand exceeds supply if yours is one of the few listed properties for sale at the time. In addition, the number of listings also needs to be reviewed in light of comparable sales.

How Much is My Property Worth?

Over the years, I have seen many investments not optimized and undervalued. In part, due to the seller not wanting to pay a knowledgeable broker or consultant prior to selling their land. I have been guilty of doing things myself and not hiring an expert to do the job to save a dime. In most cases, I end up wasting my time and losing money. My advice is to keep your day job and do what you do well. When selling your land, hire a professional broker or appraiser to help you with pricing your land. Hire a professional broker to show your property to a wider and more targeted market of buyers in order to maximize the return on your years of investment.

In conclusion, if the process of collecting data and researching properties concerns you, we help future clients who are serious about selling land by doing a free Broker’s Opinion of Value. Click here to learn more about our free “Broker’s Opinion of Value” we offer future clients.

– Josh Hall, MAI

We invite you to review other articles in our Selling Series