Are you thinking about selling land or selling an older home that is clearly a tear-down? The best approach is not always the same as if you were listing a house for sale. Consider the following items that will impact your sale. It is important to gather as much information as possible before you have conversations with family members, realtors, developers and anyone else who can help.
Know your zoning.
Your zoning determines what a future buyer or developer can legally build on your land. Your land might have never been developed or it might have a tear down on the property that was once a home or office. Since the time when you first acquired the land, zoning for the property might have changed. It is important that you get all the details regarding what types of buildings could be built in the future and what portion of the lot could be used to build due to wetlands and other restrictions. It is also important to know if your land can be subdivided into 2 or more parcels and what type of street accessibility each parcel would have. You should also get the details about surrounding parcels of land and what types of structures could be built on them, as this will impact views from your property.
Get an appraisal.
It’s almost impossible to be impartial about the value of your own land. Retain an appraiser and get the facts on recent sales. Appraisals are more difficult with land than a house because much of the recent sales data is often not on the internet so it will require digging at town hall.
Know the tax consequences.
If you or your family has owned the land for a long time you might have to pay a large capital gains tax. Have your accountant calculate the tax consequences of a sale before you go to market. This will avoid a surprise at the closing table.
Consider building on or improving the land before you sell.
There can be a benefit to improving your land before you sell to a potential customer wanting to build a home or office. If you have the resources to invest in an architect and engineer, you can draw up preliminary building plans, and get the permits and board approvals for building. You can also update infrastructure to tie into city services, water, waste and electrical lines. The investment made into land preparation is generally far less than the market value added. Along the same lines, it could also be profitable to build a spec house on your property if the supply of new homes in your city is limited and your location is ideal. A good real estate agent working with a builder can help you figure out your cost, potential profit and risk levels if you were to do so.
Weigh the pros and cons of trying to sell it yourself versus using a broker.
If you try to sell you the land yourself, you can get stuck with lots of inquiries from prospective buyers who are not serious or capable of buying. To avoid this, it is best to skip the yard sign and target developers and real estate agents currently working with buyers. You can call developers directly and most will be happy to hear about your property, as land is the primary asset developers need. You can reach buyer agents by listing your property on both commercial and residential real estate websites. If you don’t know any developers, contact realtors, architects and builders and they will give you names. If you decide to hire a good listing agent to sell your land, you will get the benefit of someone doing the work for you with the experience needed for challenging situations. Some of this work includes research at town hall, creating marketing packages, establishing your web presence, making time-consuming sales calls, responding to inquiries, vetting buyers, responding to objections, and handling negotiations. Using an experienced realtor is the best way to go if you have not sold property in a particular city before. Of course, in both cases you will need an experienced attorney.
I work with developers interested in buying land for commercial and residential developments. Element Construction is a full-service construction management firm interested in buying land. Please contact Element at 914-401-9300 if you are considering selling or improving land in Westchester County, Fairfield County and NYC.