This article is focused more on the buyer who wants land for family recreational purposes and not a timber land investor. Most timberland investors have a very good idea of timber values, proximity to mills, timber growth rates and bare land values.
The first priority is to make a list of the amenities that you want if you could find the perfect property. Do you want a cabin, a fishing lake, a barn, established wildlife plots, etc. Some buyers prefer a “turnkey” family hunting/fishing property but this costs much more than “raw” land. Some buyers have the desire and expertise to construct amenities which takes time but saves a lot of money.
The second priority is to decide how much you want to spend on a property. If you need financing to buy the property you should meet with a lender who specializes in land loans. In Alabama, two of the most aggressive lenders are Alabama Ag Credit and First South Farm Credit. They will ask you for tax returns and a credit report. You may need about 15% – 20% of the estimated purchase price for a down payment. Your lender will be able to tell you in a very short time the loan amount, interest rate, term (number of years) and the monthly payments.
The final thing you need to do to prepare to buy land in Alabama is to find an experienced real estate agent to help you. The term is a Buyer’s Agent and it costs you nothing! Ask your banker, CPA, or friends who have bought or sold land to give you a short list of agents. Then look at their “bio” on their website to see if you feel compatible with any of them. Pick one and call him or her to discuss your property requirements. If they promptly send you some tracts to look at, then they may be a good choice to work with. Hopefully, you can meet him, tour some properties and get comfortable allowing the agent to represent you. When you are ready to buy, your agent can prepare the sale contract and assist you with the details to a successful closing. Please give John Hall and Company a call at 334.270.8400 and speak with one of our experienced sales agents to discuss your perfect property. www.johnhallco.com.
-John E. Hall, Jr. CCIM
There are many ways in which a landowner can get an idea of how much their property is worth. John Hall & Company along with other land brokers can give a landowner their opinion of value simply based off of recent comparable sales in the area. There is also the route of hiring an appraisal company to provide you with a value of your property. The total value for a property can be broken down into sub-categories to come up with the total value. Many recreational and timber properties can be broken down to the “bare land” value, timber value, and value of amenities. In this article I want to share my thoughts on the aesthetic appeal to a property and how it can affect the “bare land” value of your property.
The aesthetic appeal to a property can be the difference in the land selling at $900 an acre for the “bare land” or $1,300 per acre for the “bare land. It is nothing more than the aesthetic appeal but adds value to your property. The location of a property has a lot to do with the “bare land” value of a property but if the property is not maintained or provided some TLC you will not see the same return in value. Aesthetic appeal of land can consist of something as simple as mowing and trimming limbs along a road system. Think of it as vacuuming your home and mowing the yard. If you were trying to sell your house and you had not vacuumed your home or cut the grass in over a year, do you think the potential buyers who come to view the house would even make an offer or if they did do you think they would be willing to pay a premium price? A few other aesthetically pleasing but small costs that can improve the value of your bare land can be planting fruit trees or other mast producing trees around food plots, having a gated entrance to the property, adding culverts to creek crossings, or adding rock to creek crossings to give it a hard bottom. To compare to residential real estate think of this as decorations and furniture to make the home look better.
When buyers are viewing properties, and see that a property needs a lot of upfront work they most of the time discount the price they are willing to pay. This is to adjust for the upfront costs they will need to apply to the property when purchased. The value of the “bare land” in negotiations, although many times not specifically stated, is typically the value that will fluctuate the most. Buyers are willing to pay more for a property that is maintained and accessible over properties that are not. Recreational buyers tend to be willing to pay more for property than timber companies or individuals strictly interested in the timber. Therefore, in order to obtain the best value for your property it may be beneficial to manage your property catered towards recreation. However, this does not mean the timber value is not important because it can be a large portion of the total value of the property.
A maintained property is an aesthetically pleasing property. It is in the best interest of the landowner to keep that in mind if they are looking to obtain the best value possible in a sale. Sometimes landowners do not live nearby, have the time, or have the ability to maintain their property, and in that instance, we suggest leasing the hunting rights out. A hunting lease can be structured so that your roads will be maintained, food plots will be planted, and the property will be accessible.
John Hall & Company would be pleased to assist you with your land needs and would be happy to provide our opinion of value. John Hall & Company has been in the business of selling land since 1987 and we would be love to talk land with you!
Hoke Smith IV
Hoke Smith helped close a sale on a beautiful property, for a great customer. Call us today to find you the land you’ve been dreaming of!