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

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

Selling Land in Alabama – How Does Selling Land Work?

Welcome to the John Hall and Company Selling Land in Alabama series.  This is part two in the series. Go here to read, part one written by Pete Hall

Selling a piece of property can be an intimidating or foreign concept to some landowners who have never sold property before. The following information is for those who ask themselves the question “where do I even begin” or “what are the steps I need to take in order to acquire the best value I can for my property”. We at John Hall and Company are here to provide you with the knowledge and confidence so that when you are selling a property, you know you are making educated decisions that will ultimately benefit you come the day of closing.

The first thing a landowner needs to recognize when deciding to sell their land is the understanding of what they own. It may sound simple, but when trying to maximize the monetary value that can be received a good understanding of what your property has to offer is necessary. Understanding what the property has to offer can be identified in several different ways. The location of a property can make a big impact on a property’s value. Depending on the location, the demand may be higher or lower than others areas. What is the best use for the property? Is it a potential development property, a home site, timberland, agricultural property, recreational property, or a combination of these? John Hall and Company is happy to help landowners wanting to sell their property understand the different aspects that will affect their property’s value. We do this by offering what we call a Brokers Opinion of Value or “BOV”.

The next question a landowner may have is “how do I value these different aspects of my property?” This is where you will need help. John Hall & Company is here to give our professional opinion with data to back up our statements, but we also have an extensive list of other professionals who can value individual characteristics of your property to help come up with a total value for the property. We have contacts such as certified foresters who can provide timber values, certified appraisers who can put together an official appraisal of your property, or we can use recent sales of properties that are similar to yours and in the same area to identify what other properties are selling for.

Once a landowner has a good grasp and understanding of their property, the next question is “How do I sell my property”. Real estate brokerages that are specifically catered towards selling properties such as yours are who you need to be looking into. If you have a home you want to sell, then a residential real estate agent may be your best option. If you are selling a commercial building, such as office space, then it would be most beneficial to seek out a commercial real estate brokerage. If you are selling a recreational hunting property, timberland property, farm, or other type of rural property even if it may have a home on it, then a real estate brokerage that specializes in that category (such as John Hall & Company) would be who you need to seek out. We encourage Sellers to ask as many questions about our company as possible so that you know we can be trusted and depended on. We want you to know that we are here to represent and serve you as our client in your best interest. Buyers for land come from all over the country. John Hall & Company’s marketing strategies are put in place to make sure that we are able to gain maximum exposure and in front of potential buyers.

After you have identified as real estate brokerage that you would like to represent you, the next step is listing your property to put on the market. A sales plan needs to be put in place and an initial listing price needs established. Once the real estate brokerage compiles all of their marketing materials and begins to advertise the property you may want to ask them to provide a monthly report on the traffic your listing is receiving through website views, phone calls, emails, etc. Upon receiving an offer(s) it would be beneficial to consult with your listing real estate agent and listen to their opinion. It is your real estate agent’s duty to represent you with your best interest in mind. Having knowledge of the market and experience in negotiating deals they will most likely have a good insight on how to navigate you through the negotiating and in turn ending with a contract and that is beneficial and pleasing to you as the seller. That real estate agent should then work with you and update you through the due diligence period of the contract and on to closing.

Selling land can be complicated in some situations, but it doesn’t have to be. The best advice for a landowner looking to sell their land is to find a real estate brokerage that specializes in selling property such as theirs. They should find an agent they can trust and depend on to represent with their best interest in mind. The end result should be you, as a seller, getting up from the closing table knowing that you got a good deal in a timely manner!

-Hoke Smith

 Click here for part three of this series, written by Josh Hall, “Selling Land in Alabama-  What is My Land Worth”

Click here for part four of this series, written by Robert Smith, “What Does it Cost to Sell Land in Alabama?”

Click here for part five of this series, written by John. E Hall, Jr, “Preparing Your Land To Sell to a Recreational Buyer”

Selling Land in Alabama

Welcome to the first part of a series entitled Selling Land In Alabama. In this first article, we discuss the John Hall and Company Advantage when it comes to selling land across Alabama. Pete Hall outlines why hiring one of our agents gives you a good return on your investment

At John Hall and Company, we have one simple goal for selling your land. We endeavor to command the highest possible return on your investment. That is to say, we market to a class of buyers who are willing to pay a premium for the time, effort, and stewardship you have poured into your property.

A Family Land Legacy

Selling land is not just a job to me and our agents. It is a call. Moreover, serving our clients is our reward.

I am a 4th generation landowner.  My great-grandfathers shaped my values and love for the land. One great-grandfather farmed cotton and owned a cotton gin in North Alabama. The other great-grandfather bought acreage for his timber and cattle operations in Montgomery County. My father, John Hall, was raised on property outside of Montgomery. He taught his three sons to hunt and care for the land. Certainly, the lessons we learned through conservation and good stewardship fueled our passion for the land.

Selling Land In Alabama Is Our Passion

John Hall started our company 35 years ago upon the foundations of INTEGRITY, SERVICE, and THE GOLDEN RULE

From the beginning, my father hired specialists whose passion reflected his own. Our agents adhere to the core values he outlined so many years ago. Both our staff and clients benefit from the legacy my father established from 35 years in commercial real estate. Likewise, the relationships of goodwill he cultivated with landowners and everyone in the industry have made us the company we are today.

Clients have a significant advantage using our first-hand understanding of all types of land transactions in Alabama. We have decades of experience selling:

  • Hunting plantations
  • Timber investments
  • AG and cattle land
  • Conservation easements
  • Mini-farm
  • Land investments

We know what it takes to make our clients succeed in selling all types of properties in Alabama.

The Right Real Estate Agent Is Important

After deciding to sell your land, the most important decision you will make is the Real Estate Broker you hire. Currently, the industry is overcrowded with corporate land companies hiring weekend warriors or anyone willing to get a real estate license to sell land. The industry has lost its heart and soul. You deserve a real land specialist with the local market knowledge and technological marketing expertise. And, you deserve the difference that results from using John Hall & Company. 

Choose An Agent Who Knows The Local Market

There are a host of influences that can affect your property’s market value. Some influences you can control, but others you cannot control. You may not be able to choose the timing you sell or costs like pine pulpwood.  However, a good broker is one who has a firsthand understanding of the market. They assess all the variables on your behalf. 

Who sells your land makes a direct difference in your net profit.

At John Hall and Company we understand the significance that the power of information has on your net profit.

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

3 Advantages to Hiring JHC to Sell Your Land in Alabama

Firstly, our agents have an intimate familiarity with the markets we serve. We put boots on the ground. 

Secondly, we understand there are outliers and characteristics of certain properties that are rarely taken into account by most brokers and appraisers. For instance, there are certain areas where we find micro-markets within the same county.  This allows us to justify a much higher bare land value than another property.

Examples include:

  • Soil- Better soil on the land will produce better food sources and ultimately, bigger wildlife.
  • Location- The Bird Dog Field Trials started in 1920 in Union Springs have influenced the value of the properties in the area. Over time, the Field Trials attracted a wealthy clientele of purchasers willing to pay a premium in this coveted area.
  • Surroundings- A seller may own a smaller hunting tract. However, their land is surrounded by larger landowners who manage their plantations for trophy wildlife. This increases the value of the hunting land.

Lastly, we help sellers take into account higher building costs. Including, permitting issues associated with creating a lake and other amenities.

These are just a few of the areas we take into consideration with assessing the land’s worth and determining the market value. We justify the best price possible for your property.

Relationships and Data Matter

We have relationships across the state within the real estate and land industry. My father has over 35 years of investing in Alabama by treating people fairly and running our business with intergity. In addition, our trusted relationships with appraisers and financial institutions allow our clients to get excellent customer service throughout the selling process.

John Hall and Company has an incredible database of comparable sales that we have collected from transactions spanning three decades. The data, knowledge, and experiences give us an advantage over other brokers and agents. Most importantly, when negotiating a price we have the years of data to justify it.

Holistic Marketing Plans

The biggest tool in our arsenal is our holistic marketing plan we have implemented to help identify and target buyers. Quite simply, our strategic reach is second to none. We are continually educating ourselves to remain on the cutting edge. Marketing in this day and age is constantly evolving. After creating a personalized brochure of our client’s land, we advertise the listing on a host of aggregator websites. This provides us the opportunity to expose your land on a local, regional, and national level.

Digital marketing is important, too. We attract the right buyers by utilizing social media campaigns, Search Engine Optimization, drone videos, and interactive mapping software. In addition, newly listed properties are blasted out via email. The email blast reaches thousands of past clients and persons interested in acquiring land. Plus, every land broker and residential agent in the state receives a copy of the marketing brochure. We encouraged them to bring all offers to the table for consideration.

Start Today

Our agents love the land and understand that the value of investing in land is more than financial. Memories are made for a lifetime. Families pass down their values through hunting and good stewardship. This cannot be measured in dollars and cents. Subsequently, the financial gain that results from investing in a hunting plantation is realized when the land is sold.

In conclusion, when it comes time to sell your land you can trust John Hall and Company to guide you from the initial assessment through closing. I welcome you to take advantage of our knowledge and unique skill set in order to maximize your investment. Call me today to get started with John Hall and Company.

-Pete Hall, (334) 312-7099

Read additional articles in this series:

 How Does Selling Land Work? by Hoke Smith (Part 2: Selling Land In Alabama)

Selling Land in Alabama–  What is My Land Worth? by Josh Hall (Part 3: Selling Land in Alabama

What Does it Cost to Sell Land in Alabama? by Robert Smith (Part 4: Selling Land in Alabama)

Preparing Your Land To Sell to a Recreational Buyer by John. E Hall, Jr (Part 5: Selling Land in Alabama

Land – The Ultimate Investment During Uncertain Times

As Alabamians began returning to work, the reality of the new normal began to take shape. I, for one, was excited to get a haircut and to grab a meal from my favorite restaurant, but it quickly became clear that the new economy looks vastly different than what we are used to.

Safety measures are being enforced. Social distancing is in effect. Bars, restaurants, retail, and the service industries are limited to the number of customers allowed in their stores.  Don’t even think about going to Costco without a mask! Gone are the days of cubicle farms as the down-sizing of office space continues. Similar precautions are in place everywhere from the dentist to manufacturing plants.  And how long will it be this way? By all reasonable accounts a vaccine will not be created, tested, and available to the masses for a year to 18 months.

In fact the more we open the economy, we find there are more questions than answers. What will universities and schools look like next fall? Will the manufacturing and supply chains throughout the country bounce back quickly or will there be enough demand? Will the stock market continue to vacillate wildly on any given day? Is my portfolio sufficiently diversified? Is my 401K safe?

Tony Robbins, the great motivational speaker has an insightful quote that says, “The quality of your life is a direct proportion to the amount of uncertainty you can comfortably tolerate.”

So how do we respond? We focus on what we can control and find ways to help our fellow man. We make sacrifices both large and small to protect one another as we adapt to the new normal finding dependable resources in the process.

JOHN HALL & COMPANY’S DEDICATION

These tenants are not new to John Hall & Company. For 33 years we’ve built our business around them. And because we implemented a holistic marketing strategy before the epidemic hit we were well situated to flourish in the new normal. In fact, our clients have found that we have been able to provide the same level of customer service they have come to expect and depend on.

Fortunately, our team has not experienced a disruption in our productivity as land outperforms other investments. We continue to list land and market our customers’ property through a variety of digital marketing techniques including social media campaigns, email blasts, and Search Engine Optimization. We have been able to show land to potential purchasers through drone videos and interactive mapping software. For our sellers, we still go out and physically evaluate their land to provide an assessment of value. We provide comparable sales data and up-to-date market analysis, and then maximize their return by exposing the property to the right buyers. And despite the shut down of “non-essential” businesses, we still close transactions electronically and continue to connect our clients with services they need such as closing attorneys, surveyors, foresters, etc.

What many may not realize is that while the stock market continues to fluctuate and other commercial investments falter land values have remained strong. In fact, we have seen as much or more interest in recreational hunting and timber tracts than ever.

My father, who started John Hall & Company is 75 years old and has had a few health scares over the last three years. He personifies the category of those most vulnerable to the virus. While he took all the necessary precautions, isolated, and worked remotely the single biggest blessing we realized was the family farm. The farm provided a safe place for him to go and find purpose. He drove out there several times a week, strategized with a consulting forester about our timber cutting program, fixed up roads, worked on the fishing lake, and managed all those small projects we talk about doing but never quite get to. I can’t think of one other investment or asset that can provide a place of refuge, financial security, and purpose other than owning a piece of land.

If you have been thinking about buying land in Alabama there’s never been a more prudent time. Call us and let our company find an asset that will allow you to pass down your values and create a legacy to leave for future generations.

Pete Hall

Accredited Land Consultant

John Hall & Company