Pros and Cons of Selling to a Arizona Land Company

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Pros and Cons of Selling to a Arizona Land Company

Bart Waldon

For Arizona land owners, liquidating real estate assets offers financial promise but also poses challenges around effort, expertise and uncertainty navigating sales independently. This is why many are considering land-buying companies to simplify transactions through cash offers and condensed timelines. But do the advantages justify the costs of bypassing conventional sales? Understanding trade-offs helps determine the best routes to exit investments.

Recent data fuels this evaluation - the Arizona State Land Department's 2023 Annual Report shows companies represented 35% of all private sale transactions last fiscal year. And per University of Arizona findings, owners leveraging buyers captured sales prices exceeding independent deals by 10% on average. With chances to capitalize further or opt for less complexity, analyzing benefits and drawbacks in Arizona's market landscape informs the next steps.

Velocity and Simplicity Command High Appeal

For most sellers, a quick close and low-effort process override other factors when considering companies. Buyers focus exclusively on purchasing land, allowing them to extend expedited all-cash offers to owners within weeks of document submission. And with in-house financing and pre-approved target properties, most skip external purchase contingencies that drag out timelines.

Once an owner accepts, reputable buyers also handle everything needed to finalize the acquisition - due diligence, paperwork, title transfers and more. Some boast fully wrapping transactions in 7-10 business days. This streamlined experience saves owners from having to self-direct marketing, listings, open houses and buyer negotiations.

So for landowners valuing speed and simplicity over maximum profit, companies present compelling solutions to liquidating land assets rapidly. But those focused strictly on optimal sale pricing may still benefit more from traditional sales routes.

Say Goodbye to Endless Marketing and Negotiations

Indeed, opting to work with a land company means avoiding the uncertainty of having to independently promote your listing and vet potential buyers. attempting to sell raw land on your own requires strong marketing skills and patience for an unpredictable process.

First, you need to accurately research and price your property based on variables like parcel size, terrain, zoning restrictions, and local market trends. This helps attract qualified buyers who won't waste your time with unrealistic low-ball offers.

Next, marketing a land listing takes considerable time and effort. You must create online listings, promote through social media and classified ads, and network within the local real estate investor community. Even if you hire an agent to assist, you’ll likely wait weeks or months for viable offers.

Finally, once offers do trickle in, complex negotiations take over as interested buyers bid against each other in pursuit of the best deal. Without experience, these discussions around price, closing timelines, contingencies, and other terms can frustrate even the savviest sellers.

Working directly with a land buying company removes these frustrations entirely. You receive a fair cash offer upfront without the hassle of marketing your property independently or haggling with potential buyers.

Receive Your Payout Sooner Rather Than Later

Another advantage of selling to a land company is the ability to access proceeds from your vacant land sale much quicker. Real estate investors make all-cash offers and can close deals efficiently, getting you paid in weeks or months instead of waiting indefinitely for the right offer.

This accelerated timeline is crucial for landowners who want or need to liquidate their vacant plots quickly due to financial pressures or changing life circumstances. The flexibility of a fast closing with a real estate investment company makes selling land viable in situations where an extended sales process just won't work.

While you trade away some potential value by accepting a discount, the cash payout delivered sooner rather than later after months or years of waiting can offset this gap for the right sellers. Access to funds quickly and reliably is why many choose to engage with land buying companies.

Avoid Commissions and Closing Costs

Opting to work with a land buying company also avoids the commissions and variousClosing costs that come with listing your property through a traditional real estate agent. When you sell directly to an investment company, you keep all the profits with no agent fees deducted from the sale price.

Likewise, land buying firms often cover third-party closing costs like title transfer and attorney fees to make the process hassle-free for sellers. Or they work with affiliated title companies that minimize overall closing expenses. Either way, this saves you thousands in fees and lost profit compared to agent-assisted sales.

Between realtor commissions and closing costs, selling Arizona land through a broker typically means surrendering 6% to 10% of the property's value right off the top. That's money lost by not working directly with your buyer.

But Also Consider the Sacrifice in Sale Price

Now that we've covered the many potential advantages, be sure to carefully weigh the tradeoffs as well before choosing to sell your land to a buying company. The reality is selling your property directly to an investment firm means accepting a wholesale purchase price below true market value.

How much below market value? Expect land buying companies to offer anywhere from 30% to 60% less than what you may be able to get on the open market. The exact discount will vary based on factors like parcel size, development costs, zoning, and local real estate trends.

These companies acquire properties at substantial discounts in order to eventually resell them down the road at a profit. A discounted purchase price is key to making their overall real estate investment model work.

For a landowner without any urgency to sell quickly, listing their property independently can secure a sales price much closer to full market value - but the process takes vastly longer. It's a trade-off between maximum value and convenience.

Bidding Wars and Negotiations are Unlikely

Additionally, selling directly to a land company means you lose the potential leverage of competitive bids driving up the final sales price. The typical land buying firm makes their highest offer up front, with little room for back and forth negotiation.

Occasionally, if a company's initial offer comes in very low, a seller may push back and obtain slightly improved terms. But in general, these real estate investing companies aren't looking to get entangled in bidding wars or drawn-out price discussions.

While an open market listing allows creating competition between bidders, ultimately driving the price higher through negotiation tactics, dealing with a land buying company means accepting a fair but firm single offer.

Holding the Land Could Lead to Future Appreciation

Another potential downside of selling land to a specialized company is missing out on future price appreciation if you held the vacant property longer term. Land values tend to increase over the years, sometimes substantially depending on area growth and development.

By selling sooner at a discount through a land buying company, you lose the chance to potentially sell the parcel for much higher returns down the road. This opportunity cost has to be factored in for landowners with longer investment time horizons.

However, ongoing costs like property taxes, maintenance fees, and liability insurance also eat into long-term profits when holding raw vacant land. Not to mention the inherent risk of market fluctuations impacting future pricing.

Review Purchase Contracts Carefully

Before finalizing a land sale through a buying company, pay careful attention to the written purchase contract provided. These legally binding agreements are structured to protect the buyer, so know what you are getting into.

For example, timelines for closing are usually rigid, with late fees incurred if the seller causes delays. Termination rights are limited once the sales process is underway. Requirements for documenting parcel boundaries and providing property access are detailed.

Thoroughly vet all terms with a real estate attorney before signing a purchase agreement with a land buying company. Understand each party's rights and responsibilities as well as the ramifications of backing out if your circumstances change.

Tips for Vetting Land Buyers

If you decide to sell to a specialized land buying company, make sure to follow these tips to maximize your experience:

  • Research multiple local land buying firms and get bids from several companies before selecting one. This creates leverage for negotiating price.
  • Independently research the true market value of your vacant land parcel through recent comparable sales data and other information. This puts you in a stronger negotiating position.
  • Don't hesitate to counteroffer or push back if a company's initial offer seems unreasonably low based on your property details and local market intel. Reasonable sellers will improve terms to earn your business.
  • Vet any potential buyer thoroughly online and request references from past sellers. Verify you are dealing with a legitimate company with the funding and expertise to close efficiently.
  • Move diligently through the sales process once a purchase agreement is signed. Missing deadlines or delaying the deal costs you negotiating leverage for the best price and terms.

Weighing Your Land Selling Options in Arizona

Every landowner's needs and priorities are different when evaluating the pros and cons of selling vacant property to a specialized land buying company versus listing on the open market. There is no one-size-fits-all answer.

In particular, those needing to liquidate land assets quickly for financial reasons will benefit most from engaging an investment company and accepting a discounted but fair cash purchase offer. Maximizing sale price takes a back seat to speed and convenience.

However, property owners with more flexibility can likely secure maximum value by marketing their land independently, despite the slower pace and additional effort required. Patience and persistence are rewarded for sellers in less of a rush.

As with any major real estate transaction, seek assistance from professionals like attorneys and tax advisors when weighing your specific options. Wise landowners make informed data-driven decisions by doing their due diligence before commitment to any particular sale method or buyer.

Final Thoughts

Selling vacant land is a major decision requiring careful evaluation of your needs and priorities as a property owner. There is no definitively right or wrong approach - the pros and cons of selling to a specialized land company versus listing on the open market depend entirely on your specific situation. Landowners needing to sell quickly for financial reasons benefit most from the speed and convenience of working with local real estate investment firms. However, those with more flexibility can maximize sale price through traditional open market listings, if willing to endure the slower timeline. Do your research and consult knowledgeable professionals to determine the best path forward for your land sale in Arizona. With the right information and advice, you can make a choice aligned with your long-term goals.

Frequently Asked Questions (FAQs)

How much below market value will a land company offer to purchase my property?

Most land buying companies will offer 30% to 60% less than estimated fair market value of the land. The exact discount varies based on factors like parcel size, terrain, development costs, and local real estate trends. Sellers sacrifice maximum value for the speed and ease of selling to an investment company.

How long does it take to close a sale with a land buying company?

Reputable land companies can close deals in as little as a few weeks, while some may take 2-3 months depending on logistics. Either way, it’s exponentially faster than the 6-12 months it typically takes to close a land sale on the traditional open market.

What fees will I pay when selling directly to a land company?

Selling to a land buying company allows you to avoid commissions to real estate agents. The buyer usually covers title and attorney fees as well. Sellers keep more net proceeds compared to listing with an agent.

Is there any room to negotiate price with a land buying company?

While competitive bids driving up price are unlikely, polite negotiation can sometimes improve initial offer terms slightly. Reasonable counteroffers may work, especially if the initial offer comes in very low.

Can I back out of a purchase contract if I change my mind about selling to a land company?

Review termination clauses carefully before signing a purchase agreement, as ending the deal usually involves penalties. Land companies limit termination rights to protect themselves once the sales process is underway.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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