Tips for selling an unbuilt lot

weedyacresJune 15, 2011

We have a house on 7 acres that's 2 neighboring lots. We plan to sell the house in a couple months when we're done with all the final remodeling/updating. We will sell the extra lot separately, because I think we'll get more money total for 2 transactions than for a single one (plus it will allow us to price our house in a lower bracket than we would be able to with the extra lot).

In the meantime, until the house is ready for prime time, we figured we could go ahead and put the lot on the market. There's a lot of traffic from the Parade of Homes last weekend through this one (new neighbor's million dollar house is on the tour), so we put up a basic painted sign: For Sale, 3.5 acres, Prime Lakefront, phone #.

What other tips do you have for selling a building lot? How do people usually search for building lots? What do they look for? Ideas for marketing it?

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There is no better way to market real estate than the local MLS. Try to get it in there.

    Bookmark   June 15, 2011 at 2:43PM
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Get it into MLS through a real estate sales agent.

    Bookmark   June 15, 2011 at 2:44PM
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How about directly contacting local custom home builders? Some way want land for building a spec house, and who knows, maybe one or more even has a client looking for land to build on. (Also agree with getting it listed on MLS.)

    Bookmark   June 15, 2011 at 2:59PM
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craigs list but put a new ad approx every week. incl pix. it is free. just use as one of many ways to market.

Can you include flyers near your painted sign?

agree about MLS. you might find a discount agent to get the listing into MLS for a small fee. But once in MLS, you need to come up to a percentage to give the selling agent for commission. usually approx 3% for homes. It might be more for land. Didn't land used to get 10% for full price broker...5% each seller and listing agent? Not sure what land is these days for realtor commission.

    Bookmark   June 15, 2011 at 6:29PM
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You need to market to people that are able to get a construction to perm loan. Otherwise, you will be looking for a cash buyer. Not many of them around.
You can make the lot more attractive by doing most of the legwork for the buyer... survey, obtain the septic and well permit, mark the buffer zone from the Lake if there is one.
Forget a builder putting a spec home on it... builders are not building specs right now... especially the higher end homes.

    Bookmark   June 16, 2011 at 7:05AM
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Lots of folks might buy the lot outright with either cash or a lot loan(are lot loans still around?). Then later they do the build. This is pretty common for high dollar waterfront lots in my area. Some folks hold onto these lots for awhile (years) and some might change mind and sell rather than build.

Often with an expensive waterfront lot, the home is custom designed to fit the lot. This takes some time and usually the lot is purchased outright before the design/planning takes place.

    Bookmark   June 16, 2011 at 1:24PM
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Agree to get listed on MLS. Be sure to get comps. At our old neighborhood where we recently sold a neighbor had a lot of sale FSBO for awhile then I saw it was listed on MLS (seemed to be a discount listing). Anyway, the price was just ridiculous. There were other lots of sale in the same acreage subdivision at prices about a third less. Why would anyone ever buy the overpriced lot?

Bear in mind that your ultimate buyer might be someone who does want the lot and the house. I agree about selling the lot separately if you get an offer but for some buyers they would love to be able to buy the next door lot.

I do think there are still cash buyers out there for lots.

    Bookmark   June 16, 2011 at 3:12PM
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Thanks for all the feedback so far. I figured people would mostly shop for lots by driving around (that's what I'd think to do), but if they hire realtors and browse the MLS, I'll find a flat-fee MLS broker and do that.

Our original plan was to list the house with one lot and let potential buyers know the neighboring lot was also available, and just hold onto it and sell it later if they didn't want it. But given the Parade of Homes traffic, we figured we'd go ahead and put up the sign.

What would you recommend putting on a flyer? There's not much to say compared to a house listing.

I'll contact our county building office to get some details on the permit stuff to see what prep stuff we can do. We're on septic, but they installed a new sewer line down the other side of the street a couple years ago, so that's probably available now. The neighbor had his land surveyed a few years back, so those stakes are in place.

On pricing, this is what I've got for comps:
--New neighbor with million dollar house: paid $225K for 8 acres (reportedly a reluctant seller, but it's still a valid comp)
--Neighboring subdivision on same road just north of ours, 3 lots sold in past year, range $70-78K. Newer subdivision but smaller (1.5 acre average) lots.
--Golf course subdivision across the road: haven't looked at sold comps, but asking prices are $100K+ for 1+ acre lots.

Lot is rectangular, 150' wide and however long it takes to make 3.5 acres. We're asking $85K. Does that seem reasonable?

    Bookmark   June 16, 2011 at 3:54PM
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your lot is on the water, correct?

for the comps, which are on the water, how many feet of waterfront? what is the view on the water for each? is is boatable or otherwise waterfront(beach/swimming/is a dock possible) that is in demand?

for example, the more feet of waterfront, generally the more the land is worth. the better open water view gets a higher price. having deep enough water for a boat is better than water that is 6" deep.

Maybe get an appraisal on the lot which costs approx $300 +- from an appraiser or have a realtor give comps.

In my aream, you don't even compare waterfront against non-waterfront property, even if directly across the road. The water lots can be 5x the price of dry lots. the big water views get the most money and that can be considerally different than a canal view. waterfront lots can be very tricky to price properly.

What if your lot is worth $140k and you priced it at $89k?

    Bookmark   June 16, 2011 at 4:18PM
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Forget a builder putting a spec home on it... builders are not building specs right now... especially the higher end homes. They are here, starting at ~$1.5 and up. Maybe it's a regional thing. (Granted it's not as many as before, but I still see several going up.)

    Bookmark   June 16, 2011 at 6:47PM
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Chicagoans... are those spec homes or custom built with buyers already in place? Either way, there is not much spec building going on here in Charlotte, and we are better off here than in a lot of other areas.
As far as comps go... just what Sweettea says... only compare waterfront lots with waterfront lots. Like Sweettea says, then adjust the feet of waterfrontage, the view, water depth, is it dockable...
It has been my experience that RE agents give better lake front valuations than does an appraiser who perhaps has never appraised a waterfront lot.

    Bookmark   June 17, 2011 at 7:24AM
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Chicagoans... are those spec homes or custom built with buyers already in place? I'm assuming the ones that have for sale signs on them are specs. And since weedy is looking to sell a lot, is there really any harm in just sending an email to local custom builders? If nothing comes of it, so what? Not much time wasted.

    Bookmark   June 17, 2011 at 10:58AM
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For a flyer on a lot I'd put the following info:

- Size - 3.5 acres, Including dimensions
- Water/Sewer/Electric/Phone availability, Not all lots have this in our area. It was important to us as we wanted Rural water and not have to do a well.
- If you had a survey of the lot I'd put a smaller view of it on there to show
- if no survey available, mention any setback rules, any Deed Restrictions that would be positive (such as no mobile homes allowed)
- Info on water access and what is allowed on the lake.
- HOA if one exist - positive to some not to others.

    Bookmark   June 17, 2011 at 2:50PM
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Here's a satellite photo of the general area, showing how we fit within the surrounding area.

The lake we're on is 50 acres and boats 5hp or less are allowed on it. Decent fishing and putzing around. Most people have docks (ours was destroyed by a beaver).

Waterfront footage on the spare lot is maybe 200 feet. On the main lot it's close to 2,000 because of the triangular shape. That makes sense that the waterfront footage would count more than just acreage. So 2 lots with 200 feet of waterfront, if one was 2 acres and one was 4 acres, the larger one wouldn't be worth double the smaller one. That would explain why the lots in the northern subdivision, which are half (or less) the acreage but 75% of the waterfront, would sell for more than 50% of the larger lots to the south.

    Bookmark   June 17, 2011 at 3:15PM
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It is also worth notifying custom builders as they may have potential buyers who are looking for land to build a home on.

    Bookmark   June 17, 2011 at 5:43PM
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Put it in the MLS... that is where most of the ready, able and willing buyers and builders are looking. No one on this forum is going to be able to price your lot. Lots are more difficult to value than SFHs.

    Bookmark   June 18, 2011 at 9:34AM
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You many want to wait until your house is ready to list.

Seems to me you have a bargainng advantage to exploit. You could list: 1) Your house on it's lot; 2) Your house WITH the extra lot; 3) Each separately. Could be you could sell both to the same buyer, maybe taking a little less for the extra lot, and be done with this.

You wouldn't want someone to move fast and start digging up the extra lot before your home is sold.

    Bookmark   June 18, 2011 at 11:08AM
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Lyfia: Thanks for the list. I can gather all that info and provide it on a flyer/website.

NC: I certainly wouldn't price my house based on internet friends' assessments. :-) But it is helpful to understand the assessing mechanisms and the factors that go into valuing waterfront lots.

Chisue: Our original plan was to do what you suggest. But Mr. Weedy bumped into the neighbor a few weeks ago, mentioned we'd be selling, the neighbor said he was interested in buying the lot, we actually discussed a price, and then a week later they changed their minds. Since we had mentally started travelling down that road (I had contacted our mortgagor about a partial lien release), and the Parade of Homes was coming up, we decided to hang out a shingle and see if anything bit.

I think we're going to go back to Plan A at this point. We did get 2 inquiry calls from the sign, and we'll leave it up. But we'll refrain from actively marketing the lot until we put our house on the market and see if the buyer wants the lot as well. If not, we'll kick the marketing into high gear and follow the advice above.

    Bookmark   June 21, 2011 at 4:10PM
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