Unlike finished homes, rural land appeals to a smaller pool of buyers and often sits 6–18months (or longer)on the market. Hold times vary widely depending on the individual dynamic of the local market, available supply in that area, demand in that area, acreage size, amenities, price point and a multitude of other factors. Here’s more details on why that happens

1. FEWER BUYERS

Most buyers want a finished, move-in ready home, not raw land.Raw land, by contrast, is rarely “move in ready.” Just by its nature, the initial capital outlay to buy raw land is just the beginning of ongoing expenses. Most raw land requires a buyer to commit to a number of additional expenses after the sale to improve it and condition in the way they wish to use it. This can create a further deterrent to potential sales, depending on the buyer’s financial situation. Specific types of vacant land attract even smaller buyer pools (Example: hunting and recreational properties, tracts lacking power or county water lines nearby, tracts with heavy wetland exposure, agricultural tracts, timber properties, etc.)All of these land types will attract a small subset of the overall buyer pool.

2. PICKIER BUYERS

Land buyers evaluate utilities, access, terrain, floodplain, timber quality, and more.Depending on available supply, price point and other factors, buyers are likely to quickly move on to other listings if your tract does not have key amenities they are looking for, butmay be readily available in other tracts in the local market

3. HARDER FINANCING

Banks rarely finance raw land unless buyers have strong credit and large down payments.Most traditional banks require as high as 30 to 50% down payments, while credit unions regularly require 25 to 40% down payments to unlock lending lines. Specialized farm and land lenders–who are often in short supply and usually lend only in specific areas-may allow for lower down payments such as 20-35% down payments, but even then this is higher than a typical home purchase.

Lenders will typically require a land appraisal, and if the property is not priced above the local market, the loan could be denied, or the buyer will be asked to make up the difference.

4. MORE PREP WORK NEEDED

Lenders will typically require a land appraisal, and if the property is not priced above the local market, the loan could be denied, or the buyer will be asked to make up the difference.4. MORE PREP WORK NEEDEDLand often requires clearing, surveys, access clarification, or soil tests, all added costs abuyer must incur to ensure the property will fit their needs. Depending on circumstances and market dynamics, many land buyers will expect sellers to share in some of those costs.

In some cases, lenders or title companies can not close a property that has not had a recently updated deed in some time, or has been previously subdivided or altered, without afresh survey and legal description generated by a licensed surveyor.

Another point to make-a property that has not been used or has been neglected for long periods of time and is not easily viewed or walked due to over growth will undoubtedly deter many would be buyers from considering.If they can’t walk around and see what they are buying, they are much less likely to make an offer.

5. ACCESS ISSUES

Landlocked or narrow-frontage parcels sell slowly, as they are considered by most buyers as deficient.If a property can not be legally accessed and is considered “landlocked,” it typically can’t be easily viewed or walked. The type of buyer willing to accept a vacant land property in that sort of condition is going to be extremely small, and the pricing will have to be sold at a fraction of typical market values just to attract those buyers to your listing.Landlocked properties almost ensure a listing will sit on market much longer than a typical listing.

To correct the landlocked issue, landowners must secure an access easement through a neighboring landowner’s property leading to usually a county-maintained road or better. This can oftentimes be a tall order–neighbors are oftentimes reluctant to encumber their own properties and may not agree to an easement, or may require a substantial payment to consider one.

Regardless of what common land ownership wisdom may say such as “no property is landlocked” or “no one can deny me access to my property, it’s my legal right”–a legal remedy correcting a landlocked property, such as going to court to correct the issue, is not a guaranteed solution. It is not uncommon for a landowner to incur $25,000to$50,000 in legal costs(or more)in attempts to secure an access easement from an uncooperative neighbor through the courts–and losing. Sometimes the owner with the biggest bank account, willing and able to spend more on legal fees -may win the access battle simply by outlasting the other party and burying them in legal proceedings and legal costs, regardless of who is legally right or wrong.

Further most title companies will not issue title insurance on land locked properties, which in turn will make the pool of lenders willing to lend on such tracts small to non-existent.

Given the high cost of land, without the use of lenders, the typical buyer depending on lenders will be eliminated from consideration for your landlocked property.Without a lender, the only sort of buyer able to purchase the property then would be a buyer a) willing to accept the landlocked condition, and b) have enough cash to purchase it outright, making such a buyer even harder to find.

Given the high cost of land, without the use of lenders, the typical buyer depending on lenders will be eliminated from consideration for your landlocked property.Without a lender, the only sort of buyer able to purchase the property then would be a buyer a) willing to accept the landlocked condition, and b) have enough cash to purchase it outright, making such a buyer even harder to find.Also important to note-properties that appear to have legal access but lack a recorded deeded easement will usually be considered landlocked to title companies

6. LAND IS A “WANT,” NOT A “NEED”

Most buyers browse casually and take their time.Land is seen by most buyers as a major purchase, involving multiple steps to purchase, particularly when lenders are involved.Buyers will often not engage a seller without a number of conditions being just right for their personal situation.

SOLUTIONS:

-Price realistically, and revisit pricing regularly if listing is not attracting buyers. Improve access if possible, and secure deeded access easements where possible. Clear minor overgrowth, address any glaring issues that are driving buyers away. Order a survey and use professional aerial/drone photos- or rjust simply sell directly to a reputable land investor for a faster and simpler, hassle-free exit to avoid most of the above.

If you prefer not to wait months or years, Land Pearl Ventures offers a fast, direct sale option with no agents, alterations or repairs needed