Land Sales Expert Eric Andrews discusses how long it takes to sell land or homes with land in North Carolina in 2021. Currently, homes with a few acres are in extremely high demand and may sell in hours. Due to financing issues, homes with over 15 or 20 acres take longer to sell. Raw land with no house on it often takes around 1 – 1.5 years to sell, however, it can take longer depending on the size and the demand.
Speaker 1: Why do homes with more acreage have more days on the market?
Speaker 2: That’s a good question. So, so we know that residential is crazy. The, the days on the market right now are the least I’ve ever seen. I mean, we’re, we’re – the only reason why we have three to five days on the market right now is because the sellers and the listing agents want more people to have the opportunity to see it.
And so, you know, they’re usually in a multiple offer situation. So land, land’s, land’s so quick, it used to be, if a house was on the market for three or four months, we’d say what’s wrong with it. Now, if a house is on the market for a week, we say what’s wrong with it.
I mean, that’s not fair, but that seems to be where it is. And some of the sellers are getting real, real aggressive for where they’re pricing it. But, but those are your traditional neighborhood, cookie cutter, quarter acre, half acre, you know, traditional neighborhoods.
Then you have the other extreme, land. Land’s average days in the market around here is two years. You know, even on now, that’s, that’s on your bigger rural tracks, but even, even residential lots, average days in the market is close to a year.
We have seen an uptick in how quickly a lot can sell right now. So if it’s a residential lot under a hundred, it’s probably selling within 30 days right now, which is a huge difference for us in the land game. But big tracks of land, you know, people say what’s wrong with it. It’s been on the market for two years. I’m like, you have no idea. I mean, there’s nothing wrong with.
I just sold one last month. It’d been on the market for 15 years, 15 years that I finally sold last month.
Speaker 1: Wow.
Speaker 2: So, you know, and I had, I had another one, it’s been on the market for nine years and we didn’t sell it, but it got its first offer in like forever.
So, you know, land is this extreme. And then we got houses, next thing. So you’re going to have something in between with homes, with acreage. And you know, if it’s, if it’s a home with three acres, it’s not going to be that bad. But if it’s a home with 40 or 50 acres, it’s going to be bad.
It is very, very difficult to get a loan on a home with acreage. So you have a lot of, so it really comes down to the lenders. So you have a lot of credit unions. And I know people that use Navy credit union, federal credit unions, state employees credit union. They’re not going to be happy if you go above 10 acres, like that is their cutoff and everything. Every now and then they’ll stretch out to 20 acres, but they don’t like it. They don’t like the land values to exceed 20% of the overall purchase price. And that confuses a lot of people.
But so if you determine that the land value is a hundred thousand, the bank is going to be happy with like a $500,000 to $600,000 product overall combined. So if it’s listed for 500,000 or 600,000.
So you can see if you had a right now, if you had a really nice home in Chatham County, 2,400 square feet, let’s just for the sake of argument say that’s worth about $300,000. Ideally the bank is going to want that house to be on a $60,000 to $75,000 lot. And if you go to, you know, like if you got 50 acres right now, well, 50 acres would be 250,000. Well now we’re really close to the land being the same value in price as, as the home, a 50/50 or a 60/40 ratio. And the banks just don’t like that.
So you have to have someone that has a lot of strength to buy, a lot of financial strength, to buy a home with acreage. So they’re, they’re doing a couple things. They’re either putting an incredible amount of money down. A minimum of 20% down on an acreage heavy property or the bank’s going to get a little cutesy and say, let’s cut out the house and 10 acres and we’ll do that as one loan.
And then the remaining 40 acres we’ll do as another loan or you’ll pay cash for. So it’s just two different programs or whatever. So because there’re these complexities, there’s a lot, lot more days on the market. And then, and then it’s just the product itself, you know.
Homes right now, a home was acreage is going to be outside of the Pittsboro area. You know, if you want a home with acreage right now, you’re driving 10, 15 minutes to a grocery store. Doesn’t seem as bad at first. But you know, after a while you get sick and tired of driving 15 miles to a grocery store.
I mean, but I think to have that land certainly makes up the difference. I mean, I think that’s special to have that acreage. So that’s why we have more days in the market. It’s just, they’re just harder to sell.