In a competitive, multiple offer situation, being able to close quickly is a huge positive which will usually help you win with your offer.
Five things which help land close quickly:
- Paying in Cash – Skipping a new Survey (sometimes)
- Significant Due Diligence Money
- Buying “as is” with no rezoning or site plan approval
- Know soils ahead of time
Eric: How do you win a multiple offer on a land listing?
Interviewer: Land listing. Well, that’s going to be really rare. I mean, it’s common in residential right now. I mean, I had a top producer’s lunch today and many of the agents there were talking about 10, 20, even 30 multiple offers on residential real estate. We’re not seeing that so much in land, but it does happen every now and then. We get a nice piece of land up for sale, several people are going to be interested in it. If you want to be in first position, okay, first of all, don’t say something silly or stupid like it’s going to be cash. It’s land, it has to be cash. That’s another video we’ve already done that. It has to be cash. You have to be strong in that regard.
I’ve had a situation before, as the buyer, do you want to get a survey? And we have videos on that whether or not I should get a survey. If you want to get a survey that’s certainly within your rights, it is probably better to get a survey. But if you’re in a competitive multiple offer situation, it might be better to say, “I’m not getting a survey.” There’s some risk for that. If you have a hundred acre track and you say, “I’m not going to get a survey,” might be 95 acres, might be a 103 acres. We don’t know until we actually have a survey, and there could be encroachments. There could be a barn, fence, or a farm, or somebody’s house on the line of the adjoining property.
You should be able to take a look and see whether or not there’s any encroachments. It might be close, but those are your mitigated risks. If you’re a seller and you say, “I’m going to buy it. We’re going to close in three weeks,” that’s great. If you’re going to buy a big piece of land right now, I mean, surveyors are so backed up. They’re backed up two, three. We had a survey estimate today. The guy said six months. They’re just really, really backed up. If you want to be competitive, you’ll say, “Forget it, no survey.” And you just have to know that has risk. So cash, no survey. Now, the other thing we’ve talked about is due diligence money. You want to give them a bunch of due diligence money.
This is money that says, “I’m serious. I’m going to buy this. This is compensation to you to take the property off the market. And you have to figure out what is it worth to you.” A lot of people say, “What’s the amount that I need to do.” It’s the amount that you’re willing to lose if the deal were to go south. That’s one of the ways to figure it out. So, a hundred thousand dollars piece of land, maybe $5000 or $10,000 due diligence money. Then the other thing that’s real, real important is there’s such a shortage of residential lots right now that some of the big boys, some of the developers are buying these lots right now to do a development. And to do a development, they might need rezoning, and they’re probably going to need a site plan.
Well, in order to get that done right now, we’re probably talking a minimum of 10 or 12 months, but it’s more likely it’s going to be in the 14- to 18-month range. If you’re in a competitive offer situation, do you want to tell the seller, “Oh, you got to wait 14 months for your money.” Well, a seasoned land listing agent will tell the sellers in order to get this premium price, they’re going to want it rezoned and site plan approval. We tell them ahead of time, it’s going to take a long time, but in a competitive market, the buyer can do something and say, “You know what, I’m buying it as is. I’m not going to do the rezoning. I’m not going to do the site plan.”
Or we might meet somewhere in the middle and say, “Look, you’re selling this as a potential commercial property. It’s not zoned commercial. Well, as long as I get the rezoning done, I don’t have to have site plan approval. But as long as I know I got the zoning I want, I’m okay with this.” So, that could be like a 4- to 6-month closing, instead of a 14- to 18-month closing, and so these are things. You want to eliminate some of the entitlement contingencies to clean up your offer as well. In the multiple offer situation, of course, you come in strong with your price, bunch of due diligence money, quick closing time, no survey, no rezoning. And then the other thing we have is soils. Yeah, you better know your soils ahead of time, because you want it to close quickly.
If you can get it done quickly, that is what’s really going to stand out in a competitive, multiple offer situation.