Pros and Cons of Selling to a Missouri Land Company

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Pros and Cons of Selling to a Missouri Land Company
By

Bart Waldon

Missouri's abundance of farmland, forests, lakes and recreational properties has long attracted landowners and investors. As of 2022, the average per-acre price for vacant land sat at around $2,800 according to the Missouri Realtors association. However, the Show-Me State’s real estate, like most regions, experiences periodic swings in valuation and sales velocity in response to economic shifts. During slower periods or when holding onto lackluster land, owners often consider offloading to local companies specializing in land acquisition. Selling directly brings unique advantages but also important considerations before signing over the deed.

The Potential Advantages of Working With Established Land Buyers

For those with the flexibility, selling directly to an established Missouri land company can streamline the sale process significantly compared to traditional listing options.

Speed and Efficiency 

Perhaps the main appeal of selling directly to a land buyer relates to expedited timelines. Unlike listing a property and waiting indefinitely for the right buyer to emerge, those who opt to work with specialized local firms often receive an offer and complete the sale of their land within approximately 30 days once key variables get clarified. For instance, companies focused specifically on land buying and asset management can devote full resources to valuation, risk assessment, contract generation and payment processing.

Whereas open market buyers might take months deliberating or securing financing, bulk land acquisition companies often pay purely in cash. They maintain sufficient liquidity from prior deals, partnerships with investors and access to short-term lending to enable swift closes. By having all the systems in place for rapid turnaround, these dedicated movers of real estate assets are capable of remarkable speed compared to ordinary home buyers requiring mortgages and extensive decision-making.

For owners motivated chiefly by convenience and fast access to funds whether to finance urgent needs or reinvest capital elsewhere, few avenues stack up against the efficiency of established land merchants. Those facing specific timelines or deadlines especially benefit more from directly engaging an entity focused singularly on acquisition. Attempting an open listing adds unnecessary timing variables and stress when simply needing to sell land non-strategically.

Guaranteed Sale of Difficult Parcels 

Landowners also sell directly to tap into buyer demand even for parcels that may languish on the open market indefinitely. Swamp areas, landlocked plots surrounded fully by other private owners, or tracts without documented road access often deter potential buyers regardless of how attractively agents present and advertise listings. The isolation and presumed hassles rightfully give pause. However, experienced land acquisition entities well familiar with local landscapes may still see latent investment potential and make fair offers to take the land off the owner’s hands. For those holding particularly encumbered, unattractive or hard-to-reach land, this represents an easier disposal avenue than praying for that rare buyer willing to take over the headaches.

Selling challenged properties directly to merchants fluent in easements, drainage solutions and bushwhacking also avoids situations where listings expire again and again without any showings or bids over multiple cycles. Those who have already weathered the disappointment of listing land unsuccessfully are often primed to explore direct sale options before wasting more time hoping for a response. Whereas the battered expectations of the open market mostly yielded silence on difficult parcels before, a focused land buyer may finally provide action and closure for owners tired of waiting.

Avoiding Open Market Listing Hassles 

Opting to sell directly sidesteps multiple complicating factors associated with the uncertainty of listing a property and hoping the right buyer comes along eventually. Land located in remote rural zones distant from metro hubs can suffer lag times of 1-2 years or more before attracting an offer, if one ever materializes. During such extended periods, owners must continually accommodate property showings at short notice and drop everything to go unlock gates or meet agents according to others’ unpredictable schedules.

Once offers do finally trickle in after months of spotty communication, motivated sellers in far flung locales then face the tasks of thoroughly vetting potentially flaky buyers notorious for wasting sellers’ time in these rural outposts far from major cities. They must suss out which prospective purchasers legitimately have financing lined up, asset bases verified and the wherewithal to follow through rather than leave everything in limbo midway as often occurs out in the hinterlands when working with random one-off home shoppers.

After navigating this series of hurdles to at last identify a credible buying party prepared for the closing process after ages of ineffective marketing attempts, rural land owners must then gather legal and financial records, negotiate terms, coordinate documentation schedules and generally babysit the deal every step of the way to eventually collect payment. However, by electing to directly engage established land buyers from the outset, owners hand off these substantial burdens to companies with teams and protocols expressly built to absorb such acquisition complications themselves.

The Potential Drawbacks to be Mindful Of

While offloading land directly to trusted local companies can make practical sense in many situations where convenience and raw economics matter more than maximum theoretical selling prices, landowners would still be wise to reflect on a few potential drawbacks associated with direct buyer deals to make fully informed decisions about their land assets.

Receiving Below-Market Value Offers

The chief risk sellers face is that dedicated bulk land acquisition companies with economies of scale often lead with aggressive offers at significant discounts compared to estimated open market retail prices an individual buyer may pay. For example, focused land merchants may propose to acquire vacant plots at 50-60% of potential market value based on metrics like appraisals or recent area sales data for buildable rural land. And such offers account for the underlying costs, taxes and holding expenses buyers know they will eventually need to recoup down the line when reselling inventory.

Agreeing to large under-market offers today due to convenience or time constraints could lead to seller’s remorse later when observing hypothetical returns had they exercised more patience. Regret compounds exponentially if the land dramatically appreciates in raw dollar terms over the coming years and decades. Thus financially motivated sellers prioritizing maximum returns must gauge if they feel fully comfortable locking in such extreme bargain pricing in the name of speed and convenience.

Missing Out on Long-Term Growth Potential 

Even land that looks mundane today may demonstrate immense development potential years later as surrounding lots fill in. For example, an isolated 40-acre tract in the middle of the Mark Twain National Forest may appear rather pointless and valueless currently. But significant appreciation could occur across such remote parcels if nearby tourist attractions emerge, new parkland gets dedicated or conservation groups start assemburing buffer land around federal forests.

Alternatively, parcels situated farther out from population centers at present may evolve into prime exurban communities in the decades ahead as expanding regional economies lift rural property values and catalyze construction closer to metro fringes over generations. Thus early selling fever could mean offloading land far too soon if strictly chasing immediate liquidity, failing to appreciate master planning signals.

Trustees of inherited family land face particularly complex trade-offs between unlocking instant cash and honoring legacy stewardship obligations. Even remote heirs now relocated thousands of miles away might one day wish to retire on or otherwise reconnect with cherished ancestral homesteads. Liquidating such emotional holdings purely to simplify legal and tax considerations could spark immense regret once the land leaves the family’s hands permanently. Thus fiduciary agents should weight bonds to the past accordingly against present needs before responding automatically to buyer offers.

Acquiescing Control Over Deal Terms 

Those who directly engage established land buyers also commonly face accepting contract terms around property access, closing timelines and post-sale land usage substantially oriented to favor buyer interests. For instance, some merchants retain rights to access sold land freely for up to two years after purchase for assessment purposes or to undertake activities like logging, drilling and mining if certain commodities get discovered. And they may deploy boilerplate conditions prohibiting future structure development on sold parcels. So loss of control and limited leverage need factoring into the decision around direct deals.

Key Factors to Evaluate Before Committing to Sell

Weighing upfront guaranteed sale payments flowing from a direct buyer against speculative longer-run appreciation timing represents the crucial trade-off Missouri landowners face. But focusing intently on personal financial realities and partnering only with highly reputable buyers can provide essential context easing this complex decision.

Assessing Personal Liquidity Requirements 

Sellers cashing out properties chiefly to quickly raise emergency funds, finance pressing healthcare bills or launch small businesses must emphasize speed. Likewise, those retiring imminently or needing to rapidly downgrade land holdings before geographic moves simply to shed tax and maintenance headaches may care little about theoretical market valuations years hence so long as they secure a reasonable check now. Under such scenarios, direct sale to an established land merchant could suit far better than waiting indefinitely for open market offers without any reliability around if or when credible bids might actually materialize.

Evaluating Unique Attributes of the Land Parcel 

The next step calls for honestly assessing land quality, locale desirability and true marketability based on zoning, terrain, road access and other factors. Parcels with strong near or medium-term development potential based on location, ecosystems or natural resource deposits likely warrant owners' patience to court broker listings aiming to secure highest-quality open market bids. But swampy, landlocked or otherwise challenged land not justifying much inherent appeal or conferring any strategically special characteristics will probably not suddenly accrue high open market value without some black swan type disruption utterly transforming the surrounding economic landscape.

In fact, the endless carrying costs of county taxes, fire insurance premiums and basic maintenance on difficult rural land could become extremely onerous over time without any serious offer prospects on the horizon to provide an exit. Thus in cases where properties demonstrate no envision able purpose or economic potential for the foreseeable future, it makes reasonable sense to shed such assets sooner than later while some amount of buyer demand persists, sidestepping unnecessary sunk holding expenses dragging owners deeper into negative cash flow territory with each passing year.

Analyzing Long Term Financial Objectives 

Missouri land sellers must also balance their own liquidity needs and intuitions against stewardship obligations directing wealth to future generations or charitable causes down the line after passing. For instance, those focused squarely on funding college savings accounts soon or paying down debts may feel fully comfortable with smaller guaranteed payouts today from reputable merchants in order to square away pressing obligations now.

In contrast, trustees holding land explicitly intended to substantially enrich inheritance payouts someday likely need to patiently court maximum open market value bids to fulfill legacy wishes rather than automatically defaulting to direct buyer offers merely chasing quick cash. Setting clear long-run targets here provides helpful perspective when contextualizing the instant liquidity payouts associated with selling land directly to an acquisition firm. Small immediate numbers may be suitable for some while deeply unsatisfactory to others.

Vetting Potential Buyers’ Track Records and Integrity

Missouri landowners exploring direct sale options should thoroughly research prospective land buying firms' histories before ever reaching contract signing stages. Merchants specializing specifically in land brokering and asset trading shape entire business models around managing county recorder procedures, development feasibility assessments, remediation logistics and local real estate codes. Relationships with county zoning administrators can powerfully impact transaction efficiency also. Thus ideal partners possess extensive experience navigating the many nuances driving rural land deals to support smooth acquisitions at fair prices.

Upstart or fly-by-night companies lacking policy depth should give pause by comparison no matter how appealing upfront offers may seem. Balancing both attractive deal terms and demonstrable competency ensures sellers best protect interests while still capitalizing on direct sale benefits. One option for reference, Land Boss maintains five years industry experience and over 100 completed land transactions for example. But always verify other landowners’ experiences can vouch for buyers’ integrity and consistency as well through public documents and testimony. This establishes trust in partners’ good faith and qualifications to govern entire processes from contract through keys handoff and beyond.

Parting Thoughts

The decision to authorize the sale of land directly to specialized merchants in Missouri rather than testing patience listing on the open market ultimately links closely with personal financial situations, risk tolerance and end goals for the land itself. Larger future valuation represents a possibility but not a guarantee landlords can necessarily bank on while still needing to fund pressing near term obligations or navigate ownership hassles offering little reward currently. Vetting buyer reputation proves equally paramount when assessing options. Fortunately when armed with full visibility into the trade-offs and choices on the table, Missouri landholders can make effectively informed decisions about selling or holding assets in ways aligning with both practical realities and long-run wishes.

Frequently Asked Questions (FAQs)

What are some advantages of selling to a land company? 

Some main advantages are that land companies can offer faster sale timelines, guaranteed purchases even for difficult properties, and avoiding hassles of traditional listings like open houses or negotiations. Land companies also take care of closing procedures.

What price can I expect when selling directly to a company? 

You can typically expect land buying companies to offer below market value, often between 50-60% of estimated fair market prices. This allows them room to make a profit when reselling. The convenience factors offset potential higher bids from open market listings.

Does the land buying company need to see my property before making an offer?

In most cases no, established land buyers have enough local market data to provide initial assessments and offers remotely based on location specs and acreage without an in-person visit. But they may ask to survey the land later in the sale process.

How long does the process take selling from initial offer to closing? 

Reputable land companies can close deals within approximately 30 days or less once an agreed price gets established. Much faster than typical open market sale timelines.

What research should I do before selecting a land buyer? 

It's crucial to thoroughly research a company's years in business, number of completed deals, local reputation through reviews and references, and any state-level licensing to confirm an ethical, experienced buyer that will provide a smooth transaction with fair terms.

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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