Selling Land The FSBO Way

For sale by owner is the best way to get more money selling land, but it can be extremely difficult. This is because top dollar can only be had by performing improvements (or at least planning them). This helps the buyer see the land’s true potential. As a result, buyers will be willing to pay full market value or even higher.

The vast majority of realtors are unfamiliar with the nuances of land. If the location is convenient, they might drive by and take a photo or two and put up a sign. And you can forget about a buyer-enticing description of the property – unless it happens to be in a well known subdivision. The bottom line is that 99% of Realtors don’t know how to stage land and they don’t know how to market it. As a result, they are regularly unsuccessful at getting full market price for land.

This is why many land owners either sell to investors, like us, or consider the FSBO approach. Our goal at Property masters is to solve real estate problems. So if you want to take the FSBO way, this article will help. Even though it’s difficult and time consuming, it’s often the best solution. This article will walk you through all the steps we use. So we suggest others use them as well. The steps are somewhat similar to selling a house the FSBO way. We said “similar”. They are not exactly the same. And that nuance makes all the difference in the world.

Follow these steps to get more money selling land that you own:

1. Brainstorm potential uses for the land
2. Determine your land’s market value for each potential use
3. Estimate the cost to stage (improve) your land for each potential use scenario
4. Select the potential use; this is your target market
5. Plan and implement the staging (improvements) of the land
6. Market the property

Most people are not visionaries. They can’t draw pictures in their mind in order to imagine what a property will look like when everything is done. This is why realtors will tell you how important it is to stage a home before putting it on the market. Staging creates that visual picture for your buyers.

Simply placing a comfortable chair and a floor lap in a corner helps people see its potential use. They may see the space as a reading nook or a place to knit. Maybe they see a place to put up their feet and watch TV. Or they might imagine being surrounded by family and friends. Buyers see all this and more from just a chair and a lamp!

But if the space is empty, then the only thing most people will see is an an empty corner. Realtors know this and so they emphasize staging as key to getting the most attention and more offers. Staging land is similar – in theory. The way you go about staging land is quite different than a house. Yet like staging a home, staging land starts by identifying the space’s potential uses.

Brainstorm potential uses

We’ve already discussed why you need to be the visionary for your buyers. Start the process by identifying how the land could be used. First identify what your property’s current zoning is. This information is printed on your property tax statement. It’s also available on your county assessor’s website.

Once you know what zoning is assigned to your property, you can dig deeper to find it’s potential uses. There are a few ways to get some help with this. Start by opening a map application (like Google Maps) and navigate to your land. Then zoom out to see what else is near the area.

Farms & ranches, custom homes, high-density housing, light or heavy industrial complexes, and retail spaces are broad examples of land-use you might see near your land. If your land is zoned for a particular use (e.g. Residential) but you see a lot of something else (e.g. Commercial) adjacent to or very near your parcel, the call the county assessor and ask about the rezoning process.

I’m not suggesting you have the property rezoned at this time. But a quick phone call can give you an idea of how easy or difficult it might be for your particular property. Be sure to ask them to look at the surrounding area with you on the map. They can look at it just like you can! We have learned that most county assessor staff are extremely helpful and kind people.

Enlist some help

Next talk with family, friends, and coworkers. Tell then what you’re trying to do and ask for ideas. It may surprise you to learn who are the visionaries within your own network! Even if the ideas they provide are ones you already considered, let them talk through those ideas in a bit of detail. Sometimes those conversations trigger additional thoughts of your own.

Finally, use all this information to imagine what the potential uses look like. For example, some Residential uses of land include custom built homes, mobile homes, multifamily buildings. Multifamily starts at small duplexes, includes townhomes and condos, and extends to large 500-unit apartment buildings. Examples of Industrial use manufacturing plants, production facilities, and distribution centers. Commercial usage examples are businesses that interact with the public. They include convenience stores, restaurants, grocery stores, medial services, and more. Don’t forget about the agricultural uses.

Determine your land’s market value

Once you have an idea of your land’s potential uses, you need to determine each use’s market value. This information will be important in subsequent steps, so don’t skip it. The steps are fairly straightforward and you will complete them for two or three of the potential uses you identified above. Doing this gives you options later.

Begin your search by looking for similar properties in your land’s area that have recently sold. For example, if you’ve identified a custom built 3000sqft house as a potential use, then be sure you’re looking at data for houses near that same size. Similarly you should exclude 3000sqft homes if your potential use is a Park Model mobile home on a slab. Below is a list of real estate search sites to help you with this. Be sure to use the search system’s filters to get as close to your potential use as possible.

Get organized

At this point, getting organized means tracking the potential value information as you find it. For example, use a simple spreadsheet to track the information you gather is a great system. This spreadsheet would have column headings across the top for the major pieces of data about each property you find. Examples include: status (for sale or sold), Address, size of dwelling/building, acreage of lot, asking or sold price, days on market, the condition of the property, and the link to that property ad so that you can look at it later if needed. If you identify other attributes you’d like to track, add columns for those as well. And having the link to each property’s listing is helpful when you need to backtrack to add new attributes you didn’t think about adding until you had looked at a few other properties.

As was implied above, collect data on similar properties that are currently for sale as well as those that have sold. And when inputting a Sold property on your list, take note of the last asking price before it was sold. You might have to scroll down to the sale history or home details section (each site is different). Taking note that properties often sell for less (or more) than the asking price helps to identify the market trend. Is the market trending up or down? This information will be vital when evaluating the market for you potential use(s). We also suggest limit Sold properties to those that have sold within the recent 6 to 12 months maximum (depending on how many properties have sold in that area).

Create one sheet for each type of potential use. And try to get at least 3-4 for sale properties and 3-4 sold properties for each potential use type. If the properties you’re finding have extremely different prices, dig deep to understand why. Often the condition of the property is one reason, but location is another. So add a Notes or Observations column to your spreadsheet where you can capture comments that you can use later.

Here are the sites you can use for this research:

Some of these sites might not have sold data for your area, but they may have the best for sale data. We’ve included them all because their strengths can vary from one city, county, or state to the next.

Estimate the cost

Estimating the cost to improve a property can be daunting at first. But it doesn’t need to be complicated and you don’t need to get exact costs. You’re looking for what project managers often call the “raw order of magnitude” cost estimate.

Before you can begin this process, you’ll need to make a high level task list of the improvements that will be needed.

Your tasks will likely fall into these three main categories:

• Clearing: timber or debris removal
• Utilities & Services: fresh water, energy, waste
• Construction: from backfilling or compacting dirt through the final build

For each item, consider the professionals you’ll need to hire. And consider where you can combine tasks to one firm. For example, the builder may be able to perform the clearing for you. They may also have a spec home design you can select or architect recommendations for a truly custom design. If you get stuck, call the county’s planning and zoning department. They can point you in the right direction.

Now you need to search for those professionals, start making calls, sending emails, and taking a lot of notes. Remember that you’re going for high level estimates. Be honest with the companies you call. They’re happy to give you an idea of what something may cost, a ballpark cost per square foot, or a cost per hour and an range of time typically spent.

Don’t pay for anyone to visit the property, but do give them the address or coordinates. Reassure the people you talk to that you’re not asking for a quote. You’re simply trying to get a rough idea. Ask if they are familiar with the area and have done work near there or in areas like it.

Also ask if they have any tips based on their area of expertise and if they have any referrals for the other work you might need to have done. In our experience, these professionals are happy to share their knowledge. They tend to appreciate talking to people who are doing their homework in advance.

Select the potential use

By now you have a ton of information. It’s time to narrow down your potential uses to just one. The best use for your property might have started to surface in the prior step. Or an option may have been eliminated. If so, the step you’re on now will be simple.

Your goal is to find a use that will cost less than the market value of the finished product. Start by referring back to the spreadsheets you created in the market value step. Then look at the cost estimates you just created. Do the math and you’ll have your answer.

You might find that all of your cost estimates exceed the market values. If that’s the case, you need to either reduce the cost sided or increase the market value side. Look at both again. We often see people try to “overbuild”, which increases costs. So look at that. Or maybe you undervalued the property. Double check your market valuation work again. Look at the details of properties that sold for more versus those that sold for less. And then try to figure out why the price differences exist. Is it the location? Maybe it’s time (the market changed)? Could it be a specific design element?

If you still can’t make the numbers work, then you need to find a different use for the property. Go back to the first step and find another potential use to research. If you are still stuck, then your best choice might be to offer the land to a neighbor, one of the professionals you contacted earlier, or even an investor like Property Masters.

Plan and implement

All of the work you’ve done so far has set you up for success in this step. Even if you’ve decided that you won’t be paying to have a structure built, you will get more money selling land if you have the basics started for the next buyer. For instance, buyers of a remote property will want a well for water and a septic tank for waste. Buyers for properties near a city will expect power to be at the property line. And for an inner city lot, you’ll want to clear it of debris and install appropriate fencing. The costs for all of these things vary, but they always result in much higher sales prices and many more potential buyers.

Dig out all the work you did to estimate costs. Narrow down your vendors for each thing you’re planning to do. And then let them help you with the plan and implementation timelines.

Market the property

You’ll want to develop your marketing plan while the improvements are in progress.

Take a look at the market valuation data you gathered earlier. Look at those comparable properties again. Look at the photos to identify the things that caught your eye. You’re looking for the attention grabbers. The things that made you stop and look.

Next read the way the listing was worded. What phrases pulled on your emotions? Did they describe the property use in an inviting way? Take some notes on these. And then begin to craft the description for your property.

Like the chair and lamp staging described several paragraphs above, you need to create a visual for potential buyers. Especially since you likely didn’t build a house or construct an office building. Instead you’ll need to be creative. Consider hiring someone with a drone to capture some aerial views of your property. Then add arrows with comments like “perfect house site”. Use your imagination and ask friends or family for their suggestions. If you don’t know how to create the images, again ask your family and friends. Chances are that someone you know can do this (or they known someone who can).

With everything done, you’re now ready to list your property on the market. You’ll usually be able to do that on the same sites that you used to do the market research!

Final Thoughts

Selling vacant land for full market value is not easy work. There are substantial costs involved to improve land and there are also some risks. But there are benefits and you wouldn’t have read this far unless you already realized that!

We truly wish you the best of success in this process. And we’ve worked hard to compile everything you need to be successful in this one article.

But if you decide this approach isn’t for you, we hope you’ll consider selling your property to us. It would help us with our mission of creating Great Homes for Great People.