CHECKLIST FOR SELLING RURAL LAND NEAR HOUSTON

Someone once paraphrased Proverbs by saying, “For everything there is a season, including a time to sell.” Many landowners find themselves faced with selling their land for a variety of reasons including; taxes, probate, desire to redeploy funds, relocation of owners, etc. I can’t advise you whether you should sell our not, I hope you don’t unless you want to.

THE PROPER STEPS IN THE RIGHT ORDER

There is an orderly process to take once you have decided to sell your land. Regardless of the reason for sale, the common goal should be to receive a fair price in an efficient manner in a reasonable time period. The following checklist represents a list of steps which, hopefully accomplished in the right order, will help you achieve a successful conclusion.

• Choose the rIght Land Broker
• Decide what your property is worth
• Create a marketing plan
• Consider owner financing
• Get a survey
• Minerals
• Prepare a Sales Brochure
• Presentation
• Be honest about the pros and cons
• From contract to closing

CHOOSE THE RIGHT LAND BROKER

This will be by far the most important decision you make. Hands down. This is not the time for a residential or commercial agent. I suggest you use a Land Broker. The top tier of rural land brokers often have the ALC designation. The Accredited Land Consultant (ALC) is awarded by the Realtors Land Institute (RLI) after a rigorous program of education and experience. The land broker who has earned this designation has spent years developing their skills. An ALC will be well connected in the rural land community. Once you choose a land broker stick with them. Sign an exclusive right to sell listing agreement and let them do their job. Working with multiple agents will almost always be counter productive.

DECIDE WHAT YOUR PROPERTY IS WORTH

I don’t mean what you want your property to be worth. Let the market speak. If you ask too much you probably won’t get any offers. Price it too low and you leave money on the table. Todays buyers are knowledgeable. Your asking price sends a message to the market about your seriousness. Spend time with your land broker regarding this issue. What are nearby properties similar to yours actually selling for? While asking prices provide an introductory guide, the actual prices paid for property comparable to your land is the best data for your decision making. Your land broker can research sales data which you can use to establish the market value of your property. Ask your land broker to provide you with a comparable market analysis or a brokers opinion of value.

CREATE A MARKETING PROGRAM

Ask your land broker to provide you with a comprehensive written marketing plan. You will need to work closely together. This will definitely be a joint effort. Land brokerage in todays market is, in large part, driven by technology. Discuss internet marketing with your land broker to include their website, email mailings, Ad campaigns, whether they blog and their presence on social media.

Suggestions from a sign on the fence to an online presence should be considered. Everything in between including; content marketing on the internet, email list contact, a presence on rural land websites, using a professional for videos and photos including some shot from drones, direct mail, advertising in high end magazines and more. Your agent will be making presentations at various luncheons and other venues so using print material to include brochures will be necessary. Marketing is expensive so agree with your land broker on a budget and who is responsible for which items.

CONSIDER OWNER FINANCING

Being willing to agree to owner financing will increase the pool of available buyers. Factors to consider include; credit worthiness of the buyer, commitment (cash down payment) on their part, term length, balance due provisions, balloon payments and interest rate. Always consult an attorney regarding legal documents (notes and deeds of trust) and your accountant about possible tax implications. Ask your land broker to suggest professionals with experience in the area of owner financing.

PROVIDE A SURVEY

Eventually a survey will probably be required for closing the transaction particularly if financing is involved. Accordingly, consider having a survey conducted if you do not already have one. A survey is based in large party on research of the deed records and will prevent surprises prior to closing. Your land broker will be familiar with surveyors in the area. Ask for a boundary and easement survey at a minimum. A lender may require improvements being included. Also a survey is a good marketing tool. Serious buyers will almost ask for one as part of their initial inquiry. An older survey may not suffice. The lender and/or title company will make the decision. The party paying for the survey is negotiable.

WHAT MINERAL ESTATE DO YOU OWN

In Texas we have all been taught since childhood to never sell the minerals. We have also had it drilled in our head that when buying always demand all the minerals. So, you see the problem. At some point, an agreement has to be reached. Ideally, you the seller will know based on title research the nature of the mineral estate you own. The buyer is going to ask. Don’t look uninformed. The fact that you don’t know could be that the minerals aren’t that important to you. If serious negotiations are ongoing, try not to let minerals prevent a successful conclusion. Sometimes the decision is obvious. If you are selling 5 or 10 acres and you are not sure of your mineral estate it could be that you can give in on this point and get the deal done. If a significant acreage is involved there are access issues which must be considered and necessary to be negotiated. Each case is unique. Seek advice from an attorney experienced in mineral estates. I hasten to add here that I am not an oil and gas attorney or a petroleum landman. My main point is don’t be dogmatic or emotional about the minerals. Make a business decision.

PROVIDE A SALES BROCHURE

A sales brochure is different from the marketing plan discussed above. Prepare a checklist of all the information a potential buyer is likely to be interested in to include; any disclosures, mineral estate owned, description of all improvements, utilities, land use restrictions, location map, annual operating costs such as utilities and taxes and condition of water well. Include information regarding the water well and septic systems if any. Be sure to include numerous photographs. This package should be available on your rural land brokers website and in print format for distribution. Any personal property not for sale should be moved or noted in the sales brochure.

Ask your land broker about any disclosures that are required by law. Texas requires disclosure regarding homes and other improvements. Both the Texas Association of Realtors and the Texas Real Estate Commission provide forms which must be used for this disclosure. Your land broker can provide these to you but cannot fill them out for you. Make it as easy as possible for a potential buyer to make a decision about your property.

WORK ON PRESENTATION

Talk to your land broker about what can be done to freshen up your property. Every property can use a little TLC. There is no need to spend significant funds on an item which will not increase value. If there is a residence or other buildings on your property consider the deferred maintenance a buyer will incur. Think about what can be done to enhance the entrance, cleaning road frontage fence line, mowing, road and trail blading, trash and debris removal, etc. First impressions are important. You are so familiar with the property that you may overlook a little neglect. The buyer won’t.

If you have personal (moveable items) on the property that you do not want to sell, move them to another location. If moving them is inconvenient, try to isolate them and put a NOT FOR SALE sign on them. Ask your agent to post this information on his website posts regarding your property. Misunderstandings about personal properties have resulted on many contracts to fall through.

BE HONEST (TO YOURSELF) ABOUT THE PROS AND CONS

At this point a significant amount of information has been gathered. You know the extent of title you hold. You are aware of what similar property is selling for. You know your property will be judged relative to other similar properties in the area. Ask yourself what characteristics and factors define the property. Accessibility, school district, utilities, topography, flood plain, easements, and improvements will all influence the market. Some of these factors will be positive, others negative. The market will not pay for legacy, emotions or sentiment. At this point objectivity is important. How does your property compare? Market value will trump emotions.

FROM CONTRACT TO CLOSING

Rely upon your Land Broker to write the farm and ranch contract and to negotiate with the buyers any changes to the contract. After both parties have agreed to the contract and signed it your agent will present it together with the earnest money contract to the title company and get a receipt and date of execution.

There is an old saying in the land business, “Once you get the contract to the title company the easy part is over.” That may an over dramatization but a lot of things do take place during the option period after the opening of title and before the actual closing. Hopefully any required surveys and disclosures will have been furnished before title is opened. In the case of financing, underwriting to include the appraisal of the property and the loan approval of the buyer must both be accomplished. Often the contract will provide for various inspections including; residence, barns and other buildings, electrical systems, HVAC systems water wells, septic systems, ponds, etc. Occasionally, the contract will need to be renegotiated. Seek your land brokers advice during this process.

Selection of the title company and financial responsibility for the various closing costs are usually spelled out in the earnest money contract. A very general rule is that costs pertaining to proof of ownership are paid by the seller (land owner). Some of these costs would include; survey, title insurance, title policy, deed preparation, broker commissions, etc. The buyer is responsible for costs of financing to include inspections and the appraisal. In the final analysis closing costs are negotiable. Ask your land broker to advise you during this process.

SUMMARY

Selection of your land broker is crucial. Hopefully you will use one that has the ALC designation awarded by the Realtors Land Institute (RLI). Rely upon your land broker to guide you through the selling process. Make a good business decision based on the information you have developed. Be realistic about your property. Best of luck.

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Allen Realty Advisors represents buyers and sellers of fine quality rural land near Houston. We specialize in weekend retreats, country estates, farms and ranches, recreational property and investment land. Our market area is generally within 100 miles (two hours) of Houston.