Tammy Tengs

Cost-effective improvements you can make to sell your land faster and for more money

Sellers sometimes ask me what they can do to improve their land for sale? Land owners want suggestions that will yield a positive return on their investment. They want to spend $1 on an improvement and get back $2 on the price, that kind of thing. And they definitely want to avoid the hassle of spending $1 to get a return of $1. No point in that.

Based on 13+ years of experience in land sales, and no hard data whatsoever, I have noticed that some improvements really affect the price my clients get for their land. Other improvements, not so much. So here are my top suggestions on things that you can do to improve your land that might offer a positive return on investment:

Mark the Corners

Buyers just love-love-love to know exactly-exactly-exactly where the corners are. Aerial maps are useful, definitely. But there’s nothing like actual corner markers in the dirt to give buyers a sense of security that they know what they’re buying. However, don’t mark the corners yourself as that may open you up to more liability if they’re off. Hire a surveyor to do it.

Money saving tip: Don’t spend money on a new fence just so buyers will know where the boundaries are. If there’s no fence already it will generally not be cost-effective for you to install one now just to sell your land. Fences are too expensive and you may not get your money back on it. Plus, there are some buyers who will actually consider your fence a negative. They may not like the look of it and think it’s an eyesore. Just arrange for a surveyor to mark the corners in some highly visible way. Corner markers go a long way toward improving the value of your land and the ease of selling it.

Record an Easement

Many land parcels do not have legal access for ingress and egress. They’re not on a road. They are surrounded by privately owned parcels and there is no easement across the neighbor’s land. That is, they are “landlocked”. That dirt path you’ve been taking across your neighbor’s land to reach your parcel will not be enough for the title company to insure for access. When buyers see the title report, they may get scared and run away. So, take care of the situation before you put your parcel on the market. Talk to the neighbor, hire a surveyor, and arrange to record an access easement with the county.

Money saving tip: There is usually no need to bulldoze a road. My suggestion is to create legal access, not necessarily physical access. It’s a paperwork-thing not a dirt-moving-thing. With legally recorded access, the title company will probably insure for “marketable access”. That’s the main thing you need to get more money for your land.

Drill a Well

City folk, who are used to water districts providing the water that comes through their faucets, have a hard time wrapping their brain around the idea of buying a parcel of land with no district water. They imagine nightmare scenarios of buying the land and attempting to drill a well only to find no water. Further, they are unsure about the cost of drilling a well. So, take all of this uncertainty and fear out of the equation and drill the well for them. Provide a well report showing the flow in gallons per minute etc. (This suggestion to drill a well obviously applies to land in rural areas where there is no district water in the street.)

Money saving tip: I am not necessarily suggesting that you install expensive equipment on your new well. There is no need for that yet because you are selling the land, not building a house, and there’s no need to pump water anywhere. Plus, above-ground well equipment may be stolen. To get more money for your land what you need is a hole in the ground with well casing (i.e., a capped well) and a written well report.

Order a Perc Test for Septic

In areas where no sewer is available, a septic system will be needed. Buyers will wonder if the land has had a percolation test for septic and whether that test was favorable. Without a perc test, buyers will imagine scary scenarios where they buy the land and then find later that the parcel does not “perc” for septic. How will they ever build a house with no toilet, they wonder? How will they resell the land? Savvy sellers can take buyer’s uncertainty away and pay for a perc test in advance. Provide a perc test report. Then, charge more for the land.

Money saving tip: Bear in mind that any reports you have on the land, such as a perc test report, must be disclosed to buyers when selling your land. Regardless of whether the perc test is successful or unsuccessful, you must disclose. If the perc test reveals that an unusual expensive engineered septic system will be needed, sellers must disclose this too. Land owners should keep disclosure requirements in mind when considering whether or not to even order a perc test to begin with. You do not want to create a situation where you pay for the perc, get bad news in the perc, fail to disclose, the buyer purchases the land, and then the neighbor toddles over and tells the buyer about the failed perc test. Because then you will have a lawsuit on your lands. That will cost you lots of money in attorney fees. So, my two money-saving tips for sellers are: 1) Pay for a perc test prior to selling your land only if you are fairly certain the result will be positive, and 2) always disclose material facts to buyers regardless of whether they hurt you or help you.

Create a Clearing and Walking Path

Buyers like to walk the land. Naturally, they want to see what they’re buying. If your land is completely wooded, or if it has impenetrable brush, carve out a walking path. Cut back the vegetation to create unobstructed lanes in the vegetation so that buyers can reach parcel corners, which they will surely want to verify. Clear a larger location where a house might go. If there is a view, clear enough vegetation out of the way so that buyers can appreciate the panorama.

Money saving tip: Don’t clear the entire parcel leaving large areas of bare naked dirt. Many buyers like natural vegetation. While you might view that sage brush or yellow flowering gorse as just a nuisance, just in the way of walking and building, buyers might appreciate its natural beauty and view it as “god’s creation”. Buyers may want to decide which areas get cleared and which areas don’t and it will take years for natural vegetation to grow back. Also, when it comes to trees, be aware that there may be rules about tree removal in your area. So, don’t go crazy with your clearing. Just make sure buyers can walk the land, see one area large enough to build, and enjoy a view of distant scenery that is unobstructed.

Grade a Pad

If your land has a fairly steep slope, you may find that buyers lack insight into how they will build a house on an incline. The wonder if a flat area can be graded that is large enough for a house. They will want to walk on the parcel but they can’t because it is too sloped. So, reduce their uncertainty and grade a flat pad. Or tiers. Also create some kind of access to the flat area, like steps.

Money saving tip: Grading requires a permit. Without a permit you could be fined, so look into that first.

Haul Away Debris

Remove any debris that creates an eyesore. Examples include anything manmade such as old tires, a shopping cart, an old broken-down car, etc. Your land will photograph better. Plus. you will avoid the situation where buyers try to negotiate down the price in anticipation of having to deal with the debris themselves after closing escrow.

Money saving tip: Consider that there may be “good” debris and “bad” debris. What I mean is there are certain situations in which some kinds of debris are actually helpful in selling your land. For example, one time I was selling a parcel buried deep in a forested area. The seller had wisely cleared some open areas creating paths and meadows in the forest but he left a big pile of twigs and branches. He asked whether he should remove it? I advised him that the pile was actually helpful because it served to “mark the spot” where the land was located making it easier for buyers to find the parcel amidst all the trees. As another example, I was selling a parcel with an old fallen down rickety shack. This was actually helpful debris because it served to reinforce the idea in buyer’s minds that the land is buildable. After all, there was once a house there so it’s easy to imagine a house there again. As a final example, skilled photographers can use fallen logs and branches to add visual interest in the foreground when photographing an otherwise bland parcel of land. So, to summarize, save money by hauling away only “bad” debris. Discuss with your Realtor before investing the money.

Remove Negative Barriers to Entry

Take down those no trespassing signs. Remove the lock on the gate. Leave the gate open. Roll out the red carpet for buyers while your land is on the market. You want them to feel like they are invited and valued guests when they arrive at your land. Buyers should feel free to walk the land, unaccompanied by an agent, without worrying that they are not supposed to be there.

So, to Summarize

Land buyers love certainty and hate uncertainty. Anything you can do to reduce their uncertainty about the features of your land will likely yield a positive return on investment. That’s why things such as flagging corners and obtaining a perc test for septic are so helpful.

But don’t go hog-wild improving your land for sale. Invest only in those things that you expect to yield a positive return. Consider also that there are situations in which the best investment may be no investment. In some situations, selling land “as is” for whatever price it can fetch is the best option.

Your Realtor will be able to guide you on whether or not an improvement that you are contemplating will yield a substantially higher selling price and/or make the land much easier to sell.

How to write good driving directions

by Tammy Tengs

Finding land for sale is not like finding a house. Houses have addresses posted right on them. You can Google the address, get in your car, and easily drive to a house. Locating land is more difficult. Typically, vacant land parcels will not have an address.

Realtors who want to be successful at selling land must provide two things to help buyers: 1) Clear directions, and 2) Good maps. This blog post is about the first of those two critical items. I explain how to compose good driving directions.

The Audience for Driving Directions Has Changed

I know you’re wondering, why are buyers going on their own to see land for sale anyway? Isn’t it the Realtor’s job to take the buyers there and “show” them the land? Is the Realtor being a lazy-ass? I know that’s what you’re thinking. I’m a mind reader.

We’ll here’s the scoop on that…a little bit of history…

Back in the day, Realtors hoarded listing information in thick Multiple Listing Service (MLS) books. The only way for a buyer to get directions to a property for sale was to call the listing agent and make an appointment to see it. And that’s just the way Realtors liked it because it made the phone ring.

As the MLS moved from books to the Internet, Realtors started entering their directions into online databases. Still, only Realtors had access to the MLS at that time so the audience for directions was other Realtors. Listing agents got in the habit of writing driving directions in a kind of short hand, using phrases and abbreviations familiar to all local Realtors who lived in in the area and were “in the know”.

Today in 2017, Realtors are no longer the gate-keepers of the land listing information. It’s all over the Internet: Zillow, Trulia, Realtor.com, everywhere. Further, with land, unlike houses, there’s no door to unlock. Land buyers have realized that they don’t need, or even want, a Realtor along just to take an initial look at land. Buyers jump in their car, unaccompanied by an agent, and go for a Sunday drive to look at land for sale.

A lot of buyers do not even call the listing agent so the agent has no opportunity to show them the land even if they wanted to. The buyer just heads on out to the land.

Wise listing agents will adapt to the times and understand that the audience for driving directions has shifted from other Realtors to the potential buyer.

The buyer might be coming from 100 miles away or she might be in town from Shanghai on a business trip. Thus, buyers may be unfamiliar with the area. So those brief one line directions that used to be fine for an audience of local Realtors will not work anymore.

It’s time for Realtors to stop writing those confusing directions that only the agent who’s lived in the City for 30 years might understand and start writing thorough directions so that any intelligent buyer who can read can visit the land on their own if that’s what they choose to do.

The Basics: How To Write Good Directions to Land

Good directions begin at the beginning. Remember, Agents, most buyers will not be coming from your home or office. Start by asking yourself, who is the likely buyer for this land? What is the location those buyers will be coming from? For example, when selling desert land in Palmdale California, perhaps most buyers will be coming from the Los Angeles city area. When selling rural land in Hood River Oregon, perhaps most buyers will be coming from the Portland Oregon area.

Next identify the major artery that buyers are likely to travel on. If you anticipate that buyers may be coming from some distance away, this artery may be an interstate or highway. If you think buyers will be more local, this could be a major thoroughfare or street. The first word in your directions should be the word “From”:

“From Hwy 1…”

“From Interstate 5…”

“From Martin Luther King Blvd…”

The next thing in your directions will be an exit or a turn. However, even though you have given some thought to where buyers may be coming from, recognize that you’re uncertain about that. So, this means you are uncertain which direction the buyer will be travelling on the initial major artery, and therefore also uncertain whether they will be turning left or right off that artery. For example, the buyer may be approaching from either the north or the south on I-5. So, when they exit I-5, it’s not clear whether they should turn “left” or “right”. However, it is clear whether they should turn “east” or “west”. So, on this first turn off the major artery use the directions east/west/north/south:

“take exit 999 and turn west on…”

“take exit 999 and turn east on…”

“turn north on…”

“turn south on…”

After that first turn off the major artery, all subsequent directions should be “left” or “right” rather than north/south/east/west. This is because most people lack an internal compass and so understand left and right better. Plus, from this point on it will be clear what direction they are approaching from.

“Turn right on….”

“Turn left on…”

After giving a series of left and right directions, your directions will eventually put the buyer at the street the parcel is on. Now be sure to mention which side of the street the parcel is on:

“The parcel is on the left side of Elm Street.”

“After Maple curves to the right, the parcel will be on the right.”

Take Advantage of the Addresses of Nearby Homes

The land you’re selling probably does not have an address. Even if it does, that address probably does not appear posted on the dirt. Thankfully, the land is near some houses that do have posted addresses. Take advantage of them!

When writing directions, indicate that the land you’re selling is “after, and adjacent to, 1234 Main Street”. Or “across the street from 2345 Main Street”. Or “behind, and adjacent to, 3456 Main Street”. Or “between 4560 Main Street and 4580 Main Street”. Or “as you face the house at 5678 Main Street, the northern border of the land will be 1000 feet to the left.”

Here are some real examples:

“From I-84, take exit 5 toward OR-213/82nd Ave. Turn right on NE Multnomah St. Turn right on NE 82nd Ave. Turn right on NE Fremont St. Turn slight left on NE 91st Ave. Turn right on NE Rocky Butte Rd. The parcel is near the top of the hill on the left. It is after, and adjacent to, the house at 3145 NE Rocky Butte Rd. Take the maps.”

“From Hwy 210 take exit 78. Take Del Rosa Ave N north. Continue onto Quail Canyon Rd. Parcel is on the right. It is before, and adjacent to, the house at 1394 Quail Canyon Rd. You will see the yellow gate across the driveway. Park next to the yellow gate at the bottom of the paved driveway near the street and walk a few yards up to the land. Take the aerial map.”

“From Hwy 49 turn left on Sutter Ione Rd. Turn right on Spanish St. Turn right on Badger St. Turn right on Allen Ranch Rd. The parcel is on the left. It is after, and adjacent to, 110 and across the street from 141 Allen Ranch Rd. Take the aerial map.”

Refer to Landmarks

Use landmarks to orient buyers. Anything unusual that sticks out can be a landmark. These include houses, barns, commercial business signs, intersections, colored flags, fences, and even a pile of rocks! Landmarks give your buyers confidence that they are on the right track. You want them to think to themselves “Hey, there’s that red barn mentioned in the directions, I must be in the right place!” or “Yeah, there’s that tall white PVC pole marking the SW corner that was described in the directions, now I can really tell where the land lies from here!”

When giving directions, you might say “Turn left on Conifer Street at the red barn.” Or after passing the geodesic home on the right, go 3 more blocks and turn left on Mission Rd.

On the land itself, you might say things like “There is a white rail fence along the west border.” Or, “the row of mail boxes is near the northeast corner.” Or “the river marks the north boundary.” You get the idea.

Here are some actual examples:

“From Hwy 49 west of Loyalton, turn left on Sage Rd. Continue driving on Sage Rd past the first intersection. At the second intersection, at the dome home, turn right on right on Moss Dr. Before the big log home, turn right on Woods Ln. Parcel is at the end of Woods Ln at the top of the hill. Woods Ln is a dirt road with small rocks. It can be driven with a four-wheel drive. Half way up is a wide spot in the road where you may see my sign with an arrow. I parked there and walked the remaining couple blocks or you can drive the whole way if you want to.”

“From Hwy 101, turn west on Seabird Dr. Parcel is on the left/south side of Seabird. Look for the mailbox on the left marked 1152. The parcel is on the left, between that mailbox and a row of tall trees, close to Beachloop Dr. A pink flag appears to be close to the southeast corner. Take the aerial map.”

“From I-10 take Hwy 62, Twenty-Nine Palms Hwy, to Joshua Tree. When you reach the US Post Office on the left at the lighted intersection, there is a fenced-in parcel on the right. This parcel for sale is to the left of that fenced parcel. Take an aerial map.”

“From I-5 exit and take E 30th LCC exit. From E 30th, take the Spring Blvd exit. Drive south on Spring Blvd. Turn right on Firland Blvd. Turn left on Shasta Loop. Turn left on Spring Blvd (again). Turn left on E 43rd Ave, a dirt road. The parcel is on the right. It is between the addresses 2420 and 2620. You will see white signs posted for these addresses so parcel will be easy to find. A stake with pink ribbon near the street marks the approximate northeast corner of the parcel for sale. Parcel is not exactly rectangular and boundaries in aerial map are only approximate.”

Avoid Abbreviations

Don’t use abbreviations that buyers may be unfamiliar with such as “PIQ” (agent-speak for “parcel in question”). Abbreviations such as Rd, St, Ave, and Hwy may be OK but don’t use L for left and R for right unless you absolutely must because there’s so little space in the MLS database field. Never abbreviate street names or place names. Avoid all abbreviations if you can.

Find Directions Online

Fortunately, it is not necessary to compose your directions from scratch. Directions are available online from Google, Mapquest and Bing. Grab online directions from a reasonable starting point to the land and then edit them into a paragraph.

Here’s how I do it using Google Maps: First, I enter the starting point and the ending point. The starting point will be where I think most buyers will be coming from, e.g. “Sacramento CA” or “Medford OR”. The ending point will be the land. After Google produces directions for me, I cut and paste the directions into a word processing file. Using the tips mentioned above, I edit my word processing file into a paragraph so that it is very succinct and clear. Then I cut and paste that paragraph into the MLS and other marketing venues.

For the ending point, if the land doesn’t have an address, you could enter longitude and latitude. In lieu of that, you have two options: One option is to enter cross streets of the nearest intersection. A second option is to identify the address of a property that is near or adjacent to the one you’re selling and enter that as the ending point. The goal is to trick Google Maps into giving you directions to somewhere nearby. Then, when editing the directions that Google produces down to a paragraph, you’ll have to revise them because they are not exact directions to the land itself.

Do a Practice Drive to the Parcel Using the Directions

I write directions before I even visit the parcel for the first time. That way, I have something in my hand to test out to see if they’re clear when I go out there to photograph the land.

When you’re on the ground it is common to notice that street signs are different from the street names online. Or signs may be missing entirely. You may find that your directions are incorrect in other ways too. You might get the great idea to include things such as “Turn left on Country Ln after the sign for Serene Vineyards on the right” and the like. Based on your insight, go back and edit your directions to match what you see in the real world.

Think of writing directions as an iterative process, not a one-time thing. Even after writing the best directions I can possible write, and posting them in the MLS live to the world, I sometimes find that additional editing is needed. One time I found that buyers were confusing Fremont St with Upper Fremont St and arriving at a house with a similar address rather than the land for sale. So I edited the directions later to shout “Upper” Fremont. Or you many discover later there are two turnoffs for Huckleberry Ln that you didn’t know about and buyers are confused about which turnoff to take. Or maybe buyers are blocking the neighbor’s driveway as they park to walk the land and the neighbor doesn’t like that so you need to instruct buyers where to park in your written directions. When you get feedback, edit your directions online so that they’re clear. When you know better you do better!

What to Do When There are No Street Signs

Sometimes one of the streets on the route to your land will have an official name in Google Maps but when you get out to the rural area on your practice drive, you will see no posted sign for that street.

When writing driving directions, if the street has a proper name, use it. However, in your directions, acknowledge that there is no street sign there so that buyers driving to the land will not be confused when they get out there and see no sign posted. For example:

“Turn left on Rattlesnake Rd, a dirt road with no sign.”

You can also add distances so that buyers will know how far they must drive before turning on the unsigned road. For example:

“Turn right on Sycamore. Drive 8.2 miles on Sycamore and turn left on Rattlesnake Rd, a dirt road with no sign.”

Addresses posted on houses can also come in handy in this situation:

“Turn right on Sycamore. After passing the house at 8765 Sycamore, turn left on Rattlesnake Rd, a dirt road with no sign.”

Streets with signs are also useful even if you don’t want the buyer to turn there:

“Turn right on Sycamore. Pass the Gopher Rd intersection then turn left on the next street, Rattlesnake Rd, a dirt road with no sign.”

Remind Buyers to Take the Aerial Map

At the start of this blog post I mentioned that agents needed to provide two key things to help buyers locate land for sale: 1) Clear directions, 2) Good maps. Now that you are an expert at writing good directions buyers will flock to your land listings. But when those potential buyers get to the land, on their own, a choice they made, they will inevitably want to know where the boundaries and corners are.

That’s where the aerial map comes in. If you’re a Realtor, you will post one in the MLS and online of course. But in the directions, which is what we’re talking about now, be sure to remind buyers to take the paper aerial map with them. Why? Because there might not be any cell phone reception in that area when they get there so they may not be able to pull it up on their smart phone when they’re standing on the land. That’s why.

Final Exam for Agents

Realtors, here’s your final exam. Don’t worry it’ll be fun. It’s only one question, multiple-choice. Which of the following voice mail messages would you like to receive?

a) “Hi, it’s Friday at 4 pm and I was wondering if you could meet me out at that $50,000 parcel you’re listing 2 hours from your office and show me where it is?”

b) “Hello, I’m out here in this rural area looking for your vacant land listing and I can’t find it. I was on the paved road then I turned on the dirt road and then I curved left and then I crossed some railroad tracks but I have no idea where it is and I don’t know the name of the street I’m on. I’m leaving this message Sunday morning at 7:30 am. Can you call me back on my cell phone right now and give me directions on how to find it?”

c) “We drove by your parcel last weekend. Thank you for writing such clear directions, not all Realtors do that and my wife and I really appreciate it. Well, the land is super awesome and we want to submit an offer. Will you help us?”

As an agent, of course you prefer “c”! So, take a moment to write clear directions!

Selling land? Write to the neighbors!

by Tammy Tengs

People who already own real estate in your neighborhood don’t need as much convincing about the fabulosity of the area. After all, they already bought real estate in the same area, right? When selling land, your neighbors may be your best prospects!

How can you make them aware that your land is for sale? Maybe you have a sign on your land. The neighbors surely see the sign, don’t they? That’s what you’re assuming anyway. Plus it’s in the MLS and advertised all over the Internet. So why write letters to the neighbors too?

Six Reasons to Write to the Neighbors

Your vacant land parcel probably has other vacant land parcels near it. By definition, the owners of those vacant parcels don’t live on their land and might even live in another state. They will not see your sign. So write to them!
The neighbors who do live nearby may have glanced at your sign when it went up. But now your faded sign doesn’t even register with them anymore. To them, it’s become more debris stuck in the weeds as they rush off to take the kids to soccer practice. But if they receive personalized invitation to buy your land in the mail – now that will have impact!
Mailing a letter sends a message that you are serious about selling your land. Why? Because not every seller does it. Your neighbor will likely realize that you are sending letters to all the neighbors. That’s a good thing. It will start to dawn on them that if they don’t buy your land someone else will (!) and then they may have a McMansion blocking their view. Or they may wake up one morning and find a single-wide mobile home and bunch of barking dogs on the parcel that they’ve been thinking of as their informal side-yard all these years, yikes.
Even if the neighbor isn’t interested in purchasing your land, they may know someone who is. If they have a paper brochure they can easily hand it to a friend or relative.
A letter gives your neighbors a kind of “heads up” that they should expect to see strangers (potential buyers and their agents) out walking on your land. This way they are less likely to fret about unusual people in the neighborhood. Warning the neighbors reduces the chance that they will disturb buyers, causing buyers to feel unwelcome.
A mailing gives your broker the opportunity to indirectly market their services to the neighbor in the event the neighbor wants to sell their property too. Now wait a minute, you wonder, why the heck is this good for you, the seller? There are many reasons: a) If your parcel is landlocked (i.e., does not have road access or a legal easement) and the neighbor owns the parcel between your land and the road, it would benefit you to have your Realtor list the neighbor’s land for sale at the same time. b) Buyers might want larger acreage. By offering two parcels for sale, buyers can purchase both, increasing the odds of selling your land. c) Your neighbor may have a well while you do not. Buyers might purchase their parcel for the well and yours for the additional acreage. d) The neighbor may have a structure or fence encroaching on your land or visa versa. Sell both parcels together to the same buyer and the problem is basically solved. e) With two listings, there will be twice as much marketing for land in your neighborhood. Buyers could see an ad for the neighbor’s parcel but submit an offer on your parcel….I could go on and on with examples on how this could be in your enlightened best interest.

My Letter to the Neighbors

Dear Mary Jones,

I am writing to let you know about the availability of a parcel of land near property that you own in SomeCity, California. The parcel for sale (parcel number 1234-567-89 at 987 Main St and your property (parcel number 1234-567-90 are shown on the map in the enclosed brochure.

I find that neighboring property owners are sometimes interested in acquiring nearby land. With that in mind, I am writing to ask whether you might be interested in purchasing my client’s parcel? The asking price is only $200,000.

More information is available at www.land22.com.

I would be happy to answer any questions you might have. Thank you for considering this opportunity.

Sincerely,

Tammy Tengs, Sc.D.

Principal Broker

Land22 Real Estate

Important Features of the Letter

Keep it short. Include a longer brochure with the letter that has all the details on your land. Don’t repeat those details in the letter.
Direct the letter to each neighbor by name, not to “Dear Neighbor”.
Your neighbor may own more than one parcel of land so orient them right off the bat to which of their parcels you’re writing to them about. Include the city and state. If it’s in a well-known area or neighborhood within a larger metropolitan area, mention the local area in addition to the the city. For example, you might say that it’s in “Silver Lake, Los Angeles” instead of just “Los Angeles” in case the seller owns other parcels in the greater Los Angeles area.
It’s critical to include not only the parcel number (APN) of the property you’re selling but also the APN of the neighbor’s parcel. This way the neighbor can easily see that the APNs are very similar. This allows them to gain insight that the two parcels are near one another. For example, if you’re selling APN 1234-567-89 and the neighbor’s APN is 1234-567-90 you want the neighbor to say to herself “hey, those numbers are almost the same so that lot for sale has to be right near my land!” People are more likely to buy land that is close to the land they already own.
If the land you’re selling has a street address, include that too. If an address is unavailable, include just the street name. If the parcel is not on a legal street but it is near a legal street say “off <street name>” instead of “on <street name>”. Again, your goal is for the neighbor to immediately realize “gee, that’s (just around the corner from) the street my property is on.”
The letter must be well written with no typos. Use the spell- and grammar-check features in your word processing software.
Use the mail merge feature in your word processing software so that you don’t have to draft a separate original letter for each neighbor. Create a little data file of the names, addresses, and parcel numbers and merge them into a single form letter so that the letter appears customized for each recipient. I enter my neighbor-addresses into my Filemaker Pro database and then I export them into a file that I use for mail merge into a Microsoft Word letter.

Important Features of the Envelope

Envelopes that appear to be junk mail will end up in the garbage. Direct marketing researchers actually study the features of envelopes that increase response rates. Based on what I have read about direct mail research, and my own experience, here are my tips for your envelope:

Use colorful stamps. Do not use the standard flag stamps and never meter the envelopes. Any crazy stamp will do. The less staid it is the more likely your letter will look personal and the more likely the recipient will open it. Remember, you’re not trying to look professional here – you’re trying to get your letter opened.
The return address should be the Realtor’s first and last name and mailing address. Do not include the real estate company name or the neighbor might toss it without even opening it thinking that it is just another general solicitation from a Realtor. (The letter inside should be on company letterhead however.)
Do not use address labels or see-through window envelopes. There is research showing that if you hand write the address on the envelope the recipient is more likely to open it and not discard it as junk mail. If the mailing is small, and if you have time, consider handwriting addresses on each envelope. (I don’t hand-write because I don’t have time – I feed envelopes through the printer for addressing but if you do you might improve your response rate.) The goal is clear though: it to should look like personal correspondence not a mass mailing. This way the neighbor is more likely to open the letter.
Use the neighbor’s actual name whenever possible. Try not to use impersonal entity names. For example if the property is officially owned by the “Mary Jones Separate Property Trust 1998”, address the envelope (and direct the letter) to just “Mary Jones”. If it is owned by “Bob Anderson Construction Inc.”, address the envelope to “Bob Anderson”.
Omit Mr., Ms. or Mrs. The reason for this advice is that title records do not include gender and you don’t want to get it wrong. A Mr. named Leslie will almost certainly be offended if you mess up and call him Ms. Also a Ms. might be unhappy to be called Mrs. and a Mrs. might be miffed to be called Ms. So just omit this stuff entirely. Start your letter with “Dear Leslie Thompson” not “Dear Mr. Leslie Thompson” or “Dear Mary Jones” not “Dear Ms. Mary Jones.“

Single Most Important Feature of the Brochure

The brochure should include things like the price, size of the parcel, zoning, availability of utilities, photos, contact information for the Realtor, etc. Here I will mention only the single most critical feature of the brochure for the purpose of writing to the neighbors: You should add to the brochure a map where both the property for sale and the neighbor’s property are highlighted.

I usually do this in color on a black and white plat map but you could do it on another type of map such as an aerial map. The purpose of this is to show the neighbor where their property is located relative to the land for sale. For example, if their property is adjacent to the one you’re selling it’s especially important that they see clearly that the borders of the two properties touch. Use colored highlighting to accomplish this.

In theory you could do the highlighting neatly on the computer but I do it by hand with a colored highlighter pen. The rest of the brochure is computer generated so this hand-drawn touch draws attention. I highlight the parcel for sale as well as the neighbor’s parcel in two different colors. Be sure to write a note such as “your adjacent property” or “your land across the street” and draw an arrow pointing to the neighbor’s real estate. It is important to include this note because you don’t want the neighbor to get alarmed thinking that you’re mistakenly trying to sell their parcel.

Here is an example. The property for sale is highlighted in orange and the neighbor’s property is highlighted in blue:

You might wonder: Why am I showing the neighbors where their own land is located? Don’t the neighbors already know? No, many do not! And even if they do, most could not locate it on a plat map. They still need to be shown where their land is relative to the land you’re selling. Plus you’re trying to get them to think visually “hey, the acreage our house sits on could be twice as big if we only bought that land!” Or “Gosh, that would be a sweet spot for Grandma’s doublewide, I can see it’s right near our house!” The parcel number (APN) is helpful but not sufficient. So pull out that colored highlighter!

Where Do You Get The Mailing Addresses?

If your land is listed for sale with a Realtor, your agent can easily access the names and addresses of your neighbors from an online title records database. One such database is Realist. Realist is integrated into California MLS systems so available to most California Realtors. Since sellers cannot log into the full MLS, Realist is not available directly to sellers. Realtors in other states may also have access to Realist or something similar or can get addresses from title companies or other online sources.

One way an agent can locate the names and addresses in Realist is to use the parcel number (APN). For example, if your parcel number is APN 1234-567-89 and the Realtor wants to locate a number of parcels near by, she can search on just APN 1234-567 (omitting the -89 at the end). This will generate a list of owners with APNs 1234-567-01, 1234-567-02, etc.

If the parcel you’re selling is located at the corner of a plat map you may wish to search for neighbors on adjacent plat map(s) too. The way I do that is to poke around using the aerial map feature in Realist. I locate the parcel I’m selling on the Realist map and then click on the map depiction of adjacent and nearby parcels to see who owns them, one by one.

Then I enter each address into a database manually: Name, mailing address, parcel number (APN). This takes about 30 minutes. For all of you computer aficionados or millennials, wondering why I do this manually, it’s because there is no simple way I could translate my thought process on neighbor selection criteria to create data export rules. It varies by parcel and it’s an art. I could probably automate the process, cast a wide net, and blast out a huge number of letters to everyone within a mile or something. But then I’d be spamming a bunch of people who would have no interest in this parcel and I don’t want to do that. It’s not nice. Better to be more selective.

Which Neighbors Should You Write To?

The number of neighbors that your broker should write to depends on the circumstances. Here are some rules of thumb:

Always send a mailing to every adjacent property owner.
Send a mailing to the property owner(s) across the street.
Mail to any property owner who would be disadvantaged for any reason by someone building on this parcel, e.g., because their view would be obstructed. These neighbors may be motivated to purchase.
Send a mailing to “like” property owners on the same or adjacent plat map. For example, I am currently listing a commercial-zoned parcel that is near other commercial lots but also near residential and multi-family property. I reasoned that the commercial property neighbors may be investors interested in expanding their commercial holdings (they are “like” neighbors) but the single-family homeowners may not be so interested so I skipped them.
Don’t hesitate to write to neighbors some distance away if you think they may be buyers. After all, it’s only costing you a postage stamp and the time to enter one more name into your data file. For example, if you’re selling agricultural acreage, it doesn’t hurt to write to other farm owners a mile away.
Skip owners who are not going to buy your land. An example would be a bank. The reason a bank owns a parcel of land in your neighborhood is because they foreclosed on the previous owner. They do not want more land. They want less land.
I often send mailings to 50-100% the property owners on the same plat map and several who are on the adjacent plat map. I write to 2-25 neighbors per property, depending on the circumstances. Sometimes I will do this in two stages: I will write to a small handful of the closest neighbors and then, if I don’t get any response from them, I will do a second mailing, enlarge the pool, and write to those farther away.
After the first mailing, if the seller later drops the price, I will send another mailing to the same neighbors. This time I only send the brochure with the new price clearly shown. I do not include a letter and do not repeat the highlighting of the two parcels. The purpose of this second mailing just to get the new lower price in front of the neighbor.

Examples of Success in Writing to Neighbors

Example 1: A couple years ago I was listing a Gold Country parcel in Northern California. I wrote to nine neighbors. The seller lived in the state of Nevada and was not in communication with his California neighbors. Two neighbors who received my letter called me to express interest. One neighbor submitted a full price cash offer. The seller accepted it. Afterwards, the second neighbor’s daughter asked to submit an offer but the parcel was already in escrow.

Example 2: Title records revealed that only two landowners dominated ownership of all the lots in the immediate area of a Central California lot that I was listing. Since there were only two neighbors I sent only two letters. Of the two neighbors, it was the landowner who owned the fewest parcels who called to submit an offer. The seller accepted it. The buyer lived several hundred miles away. I had advertised the land widely all over the Internet. However, in the end it was the money I spent money on two postage stamps the caused the land to sell.

Example 3: When I told the seller of this Riverside County parcel that one of my common sales practices was to write letters to neighbors inviting them to buy the land, my client seemed a little alarmed. She agreed that I could write to the neighbors but instructed me NOT to write to a particular neighbor. I didn’t ask why but I said OK. I sent out the first mailing. Unfortunately, none of the neighbors responded. Later the seller lowered the price. As I was preparing a second mailing, the seller told me I could now write to the excluded neighbor, so I did. The originally excluded neighbor contacted me and asked to buy the land. It turns out she was the seller’s estranged sister! The sister wanted to fold the acreage back to the “family farm” that she had inherited so that her parent’s farm would be intact once more. I assisted the sister with a full price cash offer. By close of escrow, the two sisters were on cordial speaking terms.

Example 4: I was listing a parcel in a fancy gated community in Southern California. I wrote to 9 neighbors. Some of the neighbors called me to let me know that they did not like “strangers” (buyers and agents) coming through their community gate to view the land for sale. (Sigh, oh well…) The owner who lived adjacent to the land I was selling had a cool log home in a private location at the end of a road. He was tired of all the people coming down “his” road to look at the land for sale. So when he received my letter, my e-mail address was conveniently at his fingertips. He immediately sat down at his computer, negotiated a price by e-mail, submitted an offer via electronic signature in DocuSign, and closed escrow 30 days later. The seller was happy and the buyer was pleased to have no more “strangers” coming down “his” road.

Conclusion

As you can see, writing to the neighbors works! Try it. When selling land, encourage your Realtor to write to the neighbors!

The imperfect relationship between selling prices and tax-assessed value for vacant land

by Tammy Tengs

Sellers frequently ask me to assist them with pricing their land for sale. After I spend 30-45 minutes on my research, thoughtfully considering price from every angle, the seller will sometimes say: “But my tax-assessed value is a different number.”

Um, and that’s important why?

It’s almost like some land owners believe the tax-assessed value is some officially correct number, the TRUE value of their land, handed down from on high by the trusted GOVERNMENT. They think that if a Realtor gives them a different number then it is the Realtor who got it wrong.

This attitude frustrates me every time.

So today I want to do a little research for you. We’ll look systematically at whether there is any relationship between government-issued tax-assessed values and selling prices. Let’s just see if the taxman can help you price your land for sale or not, shall we?

Method

I extracted data from the MLS – specifically I gathered sales prices from the California Regional Multiple Listing Service (CRMLS) and 2016 tax-assessed values from Realist.

In the MLS, I identified land parcels that sold between 9/13/16 and 9/16/16. Because I was interested in vacant land, I excluded listings that described structures such as barns or houses or where build-to-suit was included in the selling price. I also excluded listings offering two or more parcels. Finally, I omitted listings with incorrect parcel numbers (APNs). My sample consisted of the first 50 listings that met these criteria.

Tax-Assessed Value vs. Selling Price

Below is a scatterplot of all 50 vacant land parcels that sold. Tax-assessed value is plotted on the horizontal x-axis and selling price on the vertical y-axis. Examine any point and you will see that they are generally two different numbers.

Due to the many points clustered in the low price range, the pattern there is difficult to see. So in this next figure I show just those sales where the tax-assessed value is under $50,000:

If tax-assessed value and selling price were the same then all sales would fall neatly on the white line. However, as you can see, the orange points do not fall on the white line – some are below the line and some are above.

Below the line are parcels where the tax-assessed value is higher then the selling price.

Above the line are parcels where the selling price is higher then the tax-assessed value.

Consider Parcel A for example. This parcel had a 2016 tax-assessed value of $40,600 and yet sold for substantially more at $100,000.
Similarly, Parcel B had a tax-assessed value of $12,733 but sold for over four times that at $54,000.
On the other hand, Parcel C had a tax-assessed value of $47,092 yet sold for a lower price of $37,500.

Don’t Leave Money on the Table

Let’s do a thought experiment. Imagine a world where all 50 of these sellers had priced their land at the tax-assessed value.

What would have happened?

The sellers who should have priced their land at more than the assessed value would probably sell their land quickly in this imaginary world. However, compared to the price they could have gotten, they would leave money on the table. How much money would they lose? The loss can be calculated as the difference between the tax-assessed value and the selling price. Collectively, for these 50 sellers the loss would have been $3,308,249.

Don’t Waste Time

But wait, in our thought experiment, what about the sellers who priced their land under the tax-assessed value. What if they had priced it right at the assessed value instead? What would have happened to them?

The answer is, those parcels would still be on the market today, unsold.

How do I know?

I went back and looked at the average “days on market” (DOM) for those parcels and discovered it was 129 days.

So it’s not like these parcels flew off the market in a day, a week, or a month just because they were priced at less than the tax-assessed value. Those sellers were not “giving them away”. Apparently buyers were not lining up to purchase these particular parcels.

Due to their unique, and possibly undesirable, characteristics, these parcels were actually priced correctly at less than tax-assessed value and still took an average of over four months to sell. If they had been priced incorrectly, higher, right at tax-assessed value, they probably would not have sold at all and they’d still be on the market today as I write this one month later.

My Last Three Sales

Finally, I looked at my own sales at Land22 Real Estate to see if I could find any relationship. I did not cherry pick these examples for dramatic effect, I just chose the last three sales:

334+ acres, 6 parcels, in Clearlake Oaks, Lake County, were priced at $325,000 combined. There were two offers so these parcels sold for over the asking price at $330,000 after 132 days on market. The 2016 tax-assessed value for all six parcels combined was lower at $161,800.
19 acres in Moreno Valley, Riverside County, was priced at $60,000. It sold for $50,000 after 289 days on market. The 2016 tax-assessed value was higher at $65,419. This parcel had legal, but strange, access and a neighbor had posted huge “no trespassing” signs, affecting value. Just one example of something the tax assessor might not be aware of.
1 acre in Topanga Canyon, Los Angeles County, was priced at $179,000. It sold for $130,000 after 309 days on market. The 2016 tax-assessed value was lower at $31,349.

Conclusion

There is little relationship between tax-assessed value and actual selling prices for vacant land. Compared to the government tax assessor, your Realtor will do a far better job helping you take into account the specific characteristics of your particular parcel, the current real estate market, available listings that you are competing with and other factors when assisting you in pricing your land for sale. When pricing vacant land, it is unwise to base your list price on tax-assessed value.

Can the seller counter over the asking price?

by Tammy Tengs

Recently, I received a full price offer from a Realtor who was representing a buyer. I was representing the seller. Surprisingly, my client declined the full price offer. He gave the buyer a written counteroffer that was higher than his asking price.

Let’s just say that my client had his reasons.

The Realtor representing the buyer went absolutely ballistic! She threw a tantrum and sent me several flaming e-mails. She implied there was some conspiracy afoot.

I listened politely. I mean, gosh.

So while that other Realtor is taking a time-out in the naughty-girl corner, let’s talk, just you and I. From this experience, it became clear to me that not all buyers, and perhaps not all agents, understand that it’s acceptable for sellers to decline full price offers. Buyers and their agents may not grasp the reasons why a seller might do that. Further, sellers may not realize the drama that they unleash when they counter over the asking price.

Does The Seller Have To Accept A Full Price Offer?

The short answer is “No.”

Real estate is not like shopping at the supermarket. When you go to the grocery store and an item is marked $1.29 you can be confident that when you take it up to the cash register you will be allowed to purchase it for $1.29. Even if the computer register makes a mistake and shows it at $1.50, for example, you can still talk to a manager and he will likely give it to you for $1.29 because that’s the price marked on the item.

Real estate doesn’t work that way.

Does the Seller Have to Explain Their Reason for Declining A Full Price Offer?

No. In fact, the seller does not even have to reply to the buyer’s offer at all, even a full price offer. The seller can remain entirely silent.

Of course the listing agent may well explain the seller’s reasons to the buyer’s agent if she feels it is in her client’s best interest. For example, if the seller wants the buyer to re-submit a revised offer, the listing agent might explain to the buyer’s agent the reasons that justify the higher price. However, there are times when the listing agent, acting as the seller’s fiduciary, will feel that it’s in seller’s best interest to say nothing. In that event, she will remain silent.

Why Would a Seller Decline A Full Price Offer?

First, rest assured that the vast majority of sellers will accept a full price offers. Or, they may give a buyer a counteroffer on a couple of details but accept the full price.

However, there are reasons why some sellers may not accept full price. Here are a few of those reasons:

1. The seller may have received another written offer

In fact, the seller may have not just one additional offer – he may have two or more. The other offer(s) may be higher than your offer, lower than your offer, or the same as your offer. Regardless, the seller is free to accept one offer, counter one offer, counter multiple offers, or decline all offers. There is no “first come first served” in real estate.

In practice, the way it usually works is that when a seller receives two or more offers, the seller will either 1) accept the best offer, or 2) counter one offer on a couple of details, or 3) counter two or more offers. In the event of a bidding war, the parcel is likely to sell for over the asking price.

2. The seller may have received another verbal offer

Even if the seller does not have another written offer, he may have received another verbal offer via his agent. He may be hoping to get more from the competing buyer. It could be that the other buyer is planning to put their verbal offer in writing any day now, but has not gotten around to doing that yet.

3. The seller may be unhappy with the terms

Offers are not all about price. Offers consist of price and terms. Sure you may have offered full price, but did you ask for a 120-day escrow period so that you would have time to come up with the money? Is your offer contingent on selling your house in another state? Did you ask the seller to pay for all of the closing costs including your portion? Did you say you were going to get a bank loan on vacant land with 5% down when the seller knows that no such loans exist? Did you ask the seller to pay for a perc test for septic, a well inspection, and a survey? If you answered “yes” to any of these questions, the seller may be saying to himself “Give me a break. I’m not even going to reply to this frivolous offer” even if it is full price. Sure, the price is fine. But the seller doesn’t like the terms.

4. The buyer’s agent may have “shown her hand” to the listing agent

The agent representing the buyer may have inadvertently or deliberately disclosed to the listing agent the buyer’s extreme motivation to purchase or even the buyer’s willingness to pay more if necessary. The buyer’s agent may have said that she thinks the parcel is a “good deal” or “very well priced”. She may have called the listing agent incessantly asking if there are competing offers, or pressuring the listing agent for a response. This is a “tell” that the buyer is very interested and is pushing her agent to get a response from the listing agent and seller.

The listing agent (who is the seller’s fiduciary) may advise the seller that she believes the buyer may be willing to pay more than the asking price. This advice may cause a seller to decline or counter a full price offer even when the seller has no other offers.

5. The listing agent’s phone may be ringing off the hook

If you think a parcel is so awesome that you are motivated to offer full price, then it stands to reason there are other buyers just like you. The listing agent may be receiving considerable interest – a high volume of phone calls and lots of e-mails. The listing agent has likely shared this information with the seller. The seller may take this as a sign that he can get more than his initial asking price for the parcel.

6. The seller may have had a change of heart on list price based on reliable or unreliable new information from outside sources

After signing the listing agreement at a particular price, the seller may discuss the price with his “financial advisor” Spike, his neighbor Mary Sue, or his favorite uncle Herb who used to sell real estate back in 1958. New advice (reliable or unreliable) may cause him to change his willingness to sell at his original list price. Wisely or unwisely, this may cause him to decline your full price offer.

7. The seller’s confidence in the economy may have improved since he listed the parcel

The actual economy for land sales typically does not change in 3-6 months, the timeframe of a typical real estate listing. However, the seller’s psychological confidence in the economy based on news reports could easily change in a period that short. The seller may be thinking “sure I listed my property at $X five months ago, but now the economy has improved so I want more money for my land”.

8. The buyer or the buyer’s agent may be acting like a jerk

Sellers do not want to sell their land to buyers who are acting like jerks or who are represented by agents who are acting like jerks. An example of a jerky thing to do would be to submit a full price offer and then get angry, threatening litigation if the seller doesn’t immediately accept the offer (like the agent who inspired this blog post did). Any mention of the L-word for any reason is naturally a huge turnoff to sellers. Sellers do not want to do business with buyers who seem litigious or who might create a complicated unhappy escrow experience. As a pure business decision, a seller is unlikely to accept a full price offer from someone who is acting like a jerk.

Advice to Sellers

Yes, technically you can ask a buyer to pay more than the listing price. But let’s face it – you will create an unhappy melodrama between the buyer, buyer’s agent and listing agent. More importantly for you, a move like this is unlikely to be successful.

Countering over the asking price may cause the buyer to disappear. There are some buyers who, upon receiving such a counteroffer, will think you’re an unfair meanie and will walk away just on principle.

As a seller, it’s far better to list the property at a price you are actually willing to accept. If the price you are willing to accept changes, then talk with your Realtor immediately about modifying the advertised listing price.

Also listen to your Realtor. Ask your Realtor to do some updated research. Maybe the higher price you think you can fetch is ill-considered and you should keep the list price the way it is. After all, it hasn’t sold at current listing price yet, now has it?

As a strategy, countering over the asking price should be reserved for only the rarest of circumstances. And only when you’re mentally prepared for the buyer to say “no thanks”.

Advice to Buyers

If you think a parcel is an awesome deal, it is likely you’re not alone in that opinion. When you find a fabulous real estate opportunity, be aware that multiple offers and counteroffers over the asking price are a possibility. The best way to avoid a bidding war is to write a “clean” offer. That means you should offer full price and, in addition, offer 50% of all closing costs including title insurance. To increase the odds of acceptance, write into your offer that the seller can choose the escrow and title company. Finally, submit your offer quickly before anyone else sees the listing!

Advice to Agents

If you are a buyer’s agent and you submit a full price offer and get no response please don’t jump to the conclusion that there’s some conspiracy afoot against your buyer like the agent who inspired this blog post did. There are many reasons why a seller would decline a full price offer that have nothing to do with you and your buyer. Even if you get no reply, remember, a non-reply, while no fun, is legal.

Further, the buyer’s agent should remember that the listing agent has a fiduciary responsibility to the seller, not to you or to your client. The listing agent has no ethical responsibility to tell you what the seller is thinking. A seller could be declining your full price offer for any number of reasons and the listing agent has no duty to tell you the reason. She may. She may not.

Just politely contact the listing agent to inquire about the status of your buyer’s offer. Be careful about seeming too desperate and “showing your hand” because the wily listing agent may use that to her client’s advantage. Monitor the MLS listing daily to see if the seller might have increased the listing price. If you get the news that your full price offer is declined just ask your buyer if they want to submit a better offer.

As the economy improves, you will see more and more bidding wars, declined full price offers, and counteroffers over asking price. Just take a deep breath and take it in stride.

When you are acting as a listing agent, make sure your sellers know that they should list at a price they are actually prepared to accept. If the price they are willing to accept changes, encourage them to contact you immediately to discuss whether it makes sense to officially change the listing price.