You’ve walked the property several times, consulted with experts, and are ready to make an offer. But before doing so, you must gather the necessary knowledge to level the negotiating table and save money on your purchase.
The key to this is knowing how to evaluate land value.
A comparable is a property that has similar features and attributes to a subject property. It is used as a benchmark to help estimate the value of the subject property in a particular market.
Real estate agents and appraisers use comparables to determine the right price for properties they represent. They are also often used by home seekers and investors.
Comparables should be located within a reasonable distance of the subject property. Ideally, they should be within a mile, but in suburban locations, the comparables can be up to three miles away.
You want to select comps that are comparable in size. A significant disparity in square footage can skew the comps and lead to an inaccurate valuation. Comps should also be at the same stage of marketing. Using comps that have been on the market for too long is not a good idea, as they may have already reached their peak.
If you list at an inflated value to get your land on the market, you’ll find that once buyers see your listing, they will lowball you. You won’t have a “do-over” with your first introduction to the market, so you want to make sure you price your land accurately from the start.
Price bands are used frequently in importing and exporting, where countries set bottom and top prices for goods and subject goods outside the band to taxes or duties. They can also be used in real estate to define a range of values for your property, with offer percentages often varying based on price. In a competitive real estate market, avoiding getting bunched up in crowded price points is essential. That’s why it’s critical to seek guidance from local experts at SellLand.com who understand how to determine market value for the land. This way, you can maximize exposure and quickly take advantage of multiple offers.
Local market conditions are the most crucial factor determining how quickly and for what price you can sell your land. Since each location is unique, it isn’t easy to generalize what property prices are like in your area. Still, there are several indicators that you can use to gauge how your local market is performing.
One of the most important indicators is whether it’s a buyer’s or seller’s market.
In a seller’s market, demand exceeds supply, and home prices often rise above the rate of property value growth due to buyers’ competition for limited available properties. This can lead to bidding wars and offers above what sellers initially ask for. Ultimately, this puts you in an enviable position as a seller and can result in a successful sale well above your expected market value.
While bidding wars and record-breaking sale prices may seem like a seller’s dream, a knowledgeable real estate agent will know that chasing these prices at all costs can backfire. Attempting to secure an unnecessarily high sale price can cause a buyer to withdraw their offer or, at the very least, cancel their contingency agreement and pull out of the contract before closing.
The savvy property seller will be prepared to negotiate all aspects of a land sale. This includes negotiating home repairs and appliances and addressing other issues, such as soil contaminants (which would require the buyer to pay for removal or remediation procedures).
Understanding standard buyer negotiation tactics can help you respond productively to price pushback. By separating their valid concerns from any bluffs or manipulations, you can create a win-win situation for both parties and ensure that a land sale is completed smoothly and efficiently.