land22 REAL ESTATE

• Contact Us
• Login

• Home
• Land For Sale
• I Want to Sell My Land
• About Land22
• Marketing
• Resources
• FAQs
• For Agents
• News

Frequently Asked Questions

• Q: What are the most important factors that affect the price I can get for my land?
  A: Every situation is different, but in general the factors that most affect price are: 1) The general economy, 2) Zoning, 3) Location, 4) Road access/easements, 5) Electricity/Water availability, 6) Size, and 7) Terrain.  Way down the list in importance are factors such as whether it's a corner parcel or the view (unless, of course, you have an ocean view or something like that!)
• Q: What commission does Land22 charge?
  A: Our commission varies depending on the listing price of the parcel and, sometimes, other factors.  For very low priced parcels, our commission is a fixed fee, not a percent of the selling price.  For all other parcels it is percent of the selling price.  Contact us and we’ll tell you what the Land22 commission might be for your parcel. 
• Q: A broker gave me a suggestion on how I might price my parcel. But I want to price it at twice that much. A buyer can always make an offer. I mean, after all, it doesn't hurt to just put it on the market and see what happens, right?
  A: Yikes!  First, at Land22 we market our listings extensively and this costs us a lot of time and money!  See our “Marketing” page on this website. So when a seller prices a parcel too high then buyers won’t even submit an offer. They feel the seller is unreasonable and making an offer would be a waste of time. Then the parcel doesn't sell!  So, to sell your parcel it’s essential that you price it realistically.  At Land22, we can help you do that.
• Q: I see parcels just like mine priced at $X. Should I price my parcel at $X too?
  A: If a parcel is available for sale at a price of $X then, by definition, it has not successfully sold at that price.  Otherwise it would not still be listed for sale!  So parcels priced at $X may be priced too high.  Contact Land22 for a free pricing analysis of your parcel.
• Q: Is land still selling in this terrible economy?
  A: Land that is priced realistically for the current market is still selling. At Land22 we sell a piece of land about every 8 days. Buyers today tend to be investors rather than builders or developers but they’re out there and we know where to find them! 
  
• Q: Do you speak Mandarin?
  A: My last name Tengs is Norwegian.  Tengs is actually a small fishing village in Norway.  I don't speak Mandarin but I wish I did!
• Q: What does the Sc.D. after your name stand for?
  A: Doctor of Science, similar to a Ph.D.
• Q: When I search for land for sale on your website I get parcels that are pending and sold too. How can I see just those currently available for sale?
  A:  Using the menu on the left, choose the option Market Status = Unsold/Available
• Q: Why are your listings priced so competitively compared to other brokers?

  A:  At Land22 Real Estate we help sellers to price their land so that they will have a good chance of selling it in the next 6 months.  We encourage sellers who have price goals or expectations that exceed what is possible in the next 6 months to wait until the economy improves before putting their parcel on the market with Land22.  The result is that the parcels you see for sale on the Land22 website are only a fraction of the listing opportunities presented to us – those that are priced to sell in the current economy.

• Q: Do you offer financing?

  A:  Land22 Real Estate does not offer financing.  However, some of the sellers that we represent offer owner financing.  If owner financing is offered it will be noted on the Land22 website in the listing for that parcel. 

  For example some listings say Cash.  If Cash is indicated then financing is not offered by that seller.  

  Other listings say:  Cash or seller may carry the loan.  This means that financing is offered by this seller and you can submit an offer proposing a down payment, interest rate and term.  Note that your proposed down payment should be substantial (20-50% is customary) and it should certainly be enough to cover the commission and closing costs because the seller will not want to write a check to escrow in order to sell you her land!  Interest rates on owner financed land purchases range from 5-12%.  Terms usually range from 2 to 15 years. 

  A more specific seller might say:  Cash or seller may carry with $3000 down at 8% interest for 5 years. Payments would be $48.66 per month.  This means that the seller has already decided what down payment, interest rate and term they'd be willing to consider.  While in some instances you can submit an offer that differs, the seller is more likely to accept your offer if it meets their criteria.

  When a buyer purchases a parcel with owner financing, title is transferred to the buyer at closing and the seller becomes the lender.  The seller then has a lien on the parcel allowing her to take back the parcel if the buyer doesn't pay.  Land22 Real Estate and escrow will arrange the seller financing and it will be recorded with the county.  Cash purchases are the rule, but seller financing is also quite common with land sales because there are virtually no bank loans available now for raw land.  Sellers who offer financing can increase the odds of selling their land and earn an attractive rate of interest.  Some savvy sellers even prefer the interest-earning opportunity of owner financing, secured by the land, over the alternative of receiving all cash!

• Q: Is that parcel buildable?

  A: I assume you want a "Yes" or "No" answer to this question.  The answer, however, is rarely that simple. 

  Consider what it takes to build a house.  At a minimum you need zoning that allows the home you want to build, legal access, a flat area, power, water, and sewer or septic.  If the parcel you’re asking about is zoned residential, is accessible by road, has flat terrain, and has electricity, district water and sewer in the street then it’s likely to be buildable (but then you wouldn’t be asking me about buildability on parcel that’s so obviously buildable, would you?)  

  As a somewhat more difficult example, what if the parcel has everything except for legal access?  Then is it buildable?  The answer may be "Yes" if you want to go to the trouble and expense of arranging a legal easement.  So what if it has everything except that the nearest electricity is a mile away?  Then is it buildable?  The answer may be "Yes", but only if you want to go to the trouble and expense of bringing electricity to the parcel, or if you’re amenable to solar.  What if it has everything except that access is via a three block long dirt legal easement that is not technically a road, the parcel has a steep slope and there is no water or sewer?  Then is it buildable?  The answer may still be "Yes", if you want to go to the trouble and expense of paving the three block easement to county standards, and if you want to grade a flat pad on the slope, and if you want to drill a well, and if a perc test proves that the soil is suitable for a septic system! 

  On the other hand, if you don’t want to spend any additional money or do any additional work, the answer is "No".

  So, as you can see, the answer to your question is often not a simple "Yes" or "No".  In order to assess whether a parcel is buildable you will have consider all of the characteristics necessary for building, and evaluate whether the parcel has some or all of those characteristics.  If the parcel falls short in one or more areas you’ll have to debate whether it’s worth your time and money to get those things in place in order to build.  A real estate broker cannot tell you whether it’s worthwhile for you to invest your time and money.  That’s for you to decide.  This is why real estate brokers cannot generally give you a fast "Yes" or "No" answer to your question.

  You are wise to want to assess whether a parcel is suitable for building and you certainly need to get answers to your questions.  However, when posing your questions to a real estate agent, bear in mind that land brokers are not in business of building homes.  We’re in the business of selling dirt!  Real estate brokers do not have the same expertise that a building contractor would have in assessing buildability.  Brokers may not be aware of all the subtle issues related to building.  And brokers generally do not know the cost of items such as paving roads, or bringing in electricity, or grading a flat pad because their work selling land does not involve those things.  For expert advice and cost estimates you’d have to enlist the help of a contractor. 

  If you still want to seek information on buildability from a real estate agent try breaking your general query down into more specific questions such as:  "Is there legal access?"  "What is the zoning?"  "How far away is electricity?", etc.   Realtors can often be more helpful if you ask them specific questions like these instead of the bigger question “Is the parcel buildable?”  And remember, while Realtors may be able to provide helpful information about what they’re selling – the dirt – they are unlikely to have information about services they’re not selling – such as drilling a well in the dirt.

  Building a house can best be thought of as an a la carte experience.  Stated in simplistic terms, you will buy the land from the Realtor.  But to buy the water you’ll have to go to the guy selling the water, e.g., the water company, or the well driller.  And to buy the electricity you’ll have to go to the gal selling the electricity, e.g., the electric company.  Realtors are just one of many vendors that you will work with in order to buy what you need to build a house.  To get information about those other things you should contact the specific person selling them.

  Buyers who cannot get all of the details that they need from a Broker sometimes wonder whether additional information on buildability might be available directly from the seller.  Buyers mistakenly assume that sellers must be very knowledgeable about the land that they own.  The reality, however, is that sellers can rarely provide such information.  Most have not evaluated their parcel for building.  In many cases owners do not live near their land.  Commonly, land is inherited, or passed from one owner to another, or purchased at an auction, and the current owner has not even seen the land.  In any case, the Realtor has already interviewed the seller extensively to learn everything they know about the land.

  Fortunately, land buyers who are not working with a building contractor can do some of their own independent research related to building and get all of the answers they need.   For example, if you want to know the cost of bringing electricity or water to a parcel, call the utility companies and ask them.   If you want to know the cost of putting in a septic system, contact a septic installation company.  If the corners are not marked and you want to know exactly where they are, you can pay a surveyor to mark them.  If you want to know what kind of street improvements might be required to build, visit the City or County and inquire. 

  As you can see, buying land is not like buying a house.  Land buyers should be prepared to invest some time in due diligence on any parcel they’re considering purchasing.  Realtors can be helpful in pointing buyers in the right direction on where to go to get the information they’re seeking.  However, Realtors will generally not do building-related research for the buyer. 

  To summarize, when it comes to seeking advice related building, buyers should feel free to ask a Realtor specific questions to get any information the Realtor might have.  Buyers must recognize that the information that Realtors have may be incomplete and likely limited to the land itself.  To get information related to building on the land buyers will want to seek this information independently and/or with the assistance of a building contractor.  Finally, after gathering all of the information they can, buyers will have to weigh the investment of time and money that would be necessary to prepare a parcel for building order to arrive at their own unique answer to the question "Is that parcel buildable?"

• Q: How can you sell my land when your office is so far away?

  A:  This question has several variations.  For example, buyers calling the Land22 office in Palm Springs ask: “How can you possibly sell my land in Newberry Springs (or Blythe or San Diego County)?”  Buyers calling the Sacramento Land22 office ask “What makes you think you can my land in Mill Valley (or Lake Tahoe or Clearlake)?”  

  At Land22 Real Estate, we know we can sell your land because in 2012 we sold over 70 parcels all over California.  Over the years we have sold parcels in over 25 different counties.

  Land is not under lock and key.  If buyers can find it and they like it they will buy it.  We sell land by marketing it extensively and providing careful descriptions, directions and maps so that buyers can go see your land.  We find that many buyers prefer to go on their own rather than make an appointment with a real estate agent.  Some buyers don’t even tell us they’re planning to drive by.  They just call us afterward saying they want to submit an offer!  

  Our marketing is primarily on the Internet.  This is important because today’s land buyers generally begin their search on the Internet.  Buyers almost never physically walk into a brick and mortar real estate office saying they want to buy land like they did in the old days.  Now they search the web and that’s where they find Land22 Real Estate listings.  This means that the buyer for your land need not live near where your land is located.  They may have passed through there on vacation last summer and liked the area.  Or they may be investors living in New York or Switzerland and read somewhere that your county represented a good financial investment.

  There are many fine Realtors with offices closer to your land.  However, they are probably residential Realtors who specialize in selling houses and condos.  Even if they sell the occasional lot, selling land is not their focus.  Some residential Realtors seem to lack enthusiasm for selling land.  It is unlikely that these Realtors market their land listings on the same land-related websites that we use or that they are even aware of them.  Most residential Realtors have not had the experience of selling 70+ parcels of land in a year.  We have noticed that many do not write thorough descriptions, provide detailed driving directions, or make helpful maps available.  Buyers often have difficulty locating parcels listed with these Realtors.  A local Realtor would more easily be able to “show” the parcel.  However, since land is out in the open air where anybody can see it, showing the parcel should not really be necessary if the maps and directions are amazing like ours are.  Further, in order for such a Realtor to show the land a buyer would have to actually call the Realtor to begin with.  If the Realtor is not experienced at marketing land, phone calls from interested buyers may never materialize to begin with.  No calls, no showings, no sale. 

  You clearly want a specialist to sell your land.  So your choice comes down to the type of specialization that you're looking for.  You can choose a Realtor who specializes in your City or you can choose a Realtor who specializes in the type of property you want to sell, land.  If a City specialist is important to you then you will want to choose someone in your hometown.  However, if you believe, as we do, that it makes more sense to choose a land specialist then you will want to choose a land broker.  We think our high sales volume in far flung areas, distant from our three offices, speaks for itself and the right decision is to choose Land22 Real Estate to sell your land.

• Q: What are some of the common mistakes that sellers make in pricing their land to sell in the current economic recession?

  A:  OK, so the truth is no one has ever actually asked me this question.  But, as you can see from the length of my reply, a little detail like that isn’t going to stop me from offering a lengthy answer!

  This reply is laden with examples.  The examples are based on real experiences with real sellers making real mistakes.  The names and details have been changed to protect the error-prone  . . .

  Mistake 1:  Pricing their land based on the average selling price of similar parcels

  Several years ago, at the peak of the economy, most brokers, including us at Land22 Real Estate, based their pricing suggestions primarily on the average selling price of similar parcels.  For example, suppose you wanted to sell a 2.5 acre parcel with water and road access in the location North Joshua Tree.  We might look in the Multiple Listing Service (MLS) for all parcels between 2 and 3 acres with water and road access in North Joshua Tree that had sold over the past year and calculate the average selling price.  If that average was $21,000 we would reason that since other sellers are getting $21,000 then you can probably get $21,000 too.  So we might suggest that you price your lot at $23,000 to allow room for negotiation and that would be how we’d arrive at a proposed listing price.

  This strategy worked great before the economic recession hit, but it doesn’t work in today’s economy.  This may sound counterintuitive so consider the experience of seller Pilar:  Her parcel is one of 40 virtually identical parcels in the same housing development.  Three have sold in the past year at an average selling price of $14,000.  Thirty-six are currently on the market at list prices of $11,000, $12,000, $13,000, and on up from there.  The average list price of these 36 parcels is $20,000.  Pilar owns the 40^th parcel and wants to list her lot with the goal of selling in the next 6 months.  What price should Pilar list it at?

  If you answered $14,000 (because that’s the average selling price of the sold parcels), or something like $14,900 (to give her room for negotiation), or $20,000 (because that’s the average price at which others are listing theirs) those prices probably won’t allow Pilar to achieve her goal of selling in the next 6 months.  The reason is that there are several less expensive parcels available for sale just like hers that she’s competing with.  Those parcels would have to sell first before Pilar would have a shot at selling her lot at those prices.  Because so few parcels have sold recently (3) and so many are available (36), it is unlikely that a large number of parcels will suddenly sell, getting those low-priced parcels off the market and leaving the door open to Pilar to get a higher price.

  Suppose that Pilar makes the mistake of pricing her parcel at $14,000, the average of the sold parcels, and puts it on the market in January 2011.  Because three parcels sold last year in 2010, our best estimate is that three parcels will sell in 2011.  The scenario that is likely to play out is that the competing $11,000 parcel will sell, say in the Spring, then a few months later, perhaps in the Summer, the competing $12,000 parcel will sell, then a few months later, maybe in the Fall, the competing $13,000 parcel will sell.  Until these parcels are sold and off the market Pilar's $14,000 parcel is not likely to sell.  It might be Christmas 2011 or the first half of 2012 before she sells, and Pilar doesn't want to wait that long.  She wants to sell in the next 6 months.

  So we at Land22 Real Estate would probably advise Pilar to list at something like $10,000 or $9,500, effectively undercutting her competition, in order to have a good chance of achieving her goal of selling in the next 6 months.

  Mistake 2:  Succumbing to the “Lake Wobegon Syndrome”

  In Lake Wobegon, Garrison Keeler’s fictional home town, "all the women are strong, all the men are good looking, and all the children are above average."

  This syndrome of illusory superiority has been used to describe the real and pervasive human tendency to overestimate one’s achievements and capabilities in relation to others.  For example, research has shown that 25% of people believe they’re in the top 1% of their ability to get along with others.  Ninety-four percent of college professors report doing above average work.  Only 2% of high school seniors believe their leadership skills are below average.  The Lake Wobegon effect, where nearly all members of a group claim to be above average, has also been observed among drivers, CEOs, stock market analysts, parents, and state education officials.

  This syndrome also seems pervasive among land owners.  Virtually all seem to think their land is above average and therefore deserves to command an above average price!

  In order to accurately price your property you will want to “get real” in assessing its positive and negative qualities. True, your parcel may be above average in some respects, but it is probably average or below average in other respects.  For example, you may have a great view and an electric pole adjacent, both good things.  But if you really think about it, isn’t the road access a dirt road rather than a paved road?  And isn’t it lacking district water?  And it hasn’t been perc tested for septic, has it? And there is that wash running through it making part of it unbuildable, right?

   

  Then, after assessing the positive and negative qualities the next step is to consider which attributes matter to buyers and which are less important.  For example, I’ve had countless sellers tell me that their parcel is more valuable because it’s a corner parcel.  On the other hand, I’ve never had a buyer call me and say they are especially interested in corner parcels!  Sellers routinely mention the fabulous view. Conversely, buyers call me all the time asking if I have parcels with road access, electricity and water – parcels that are buildable - but buyers never call asking if I have any fabulous view parcels!

  This is where we at Land22 Real Estate can be very helpful.  We are experts in assessing the attributes of land that buyers care about, both positive and negative, and helping sellers to understand how those attributes may affect price.  We talk to hundreds of buyers ever year and so we know what matters and what doesn’t to the people who will actually be buying your land!

  Mistake 3:  Pricing their land based on nostalgia about yesterday’s economy

  I can’t tell you how many sellers have told me that a few years ago they received an attractive offer on their land that they declined, and now they’re kicking themselves!  What they fail to realize is that they made the best decision they could at the time given all the information they had available to them to they should be a little easier on themselves.  On the other hand, they also cannot wrap their mind and heart around the fact that they cannot recover that loss.  The economy has taken a nosedive since then and the loss is “water under the bridge”.  All they can do is make wise decisions moving forward given the best information available to them today.  Or, as Oprah Winfrey says “When you know better, you do better.”

  Here is an example: Vivian had her lot on the market in 2007 for $300,000.  She received an offer for $250,000 back then but thought that was too low so she declined it.  Then in 2008 Vivian lowered her price to $269,000 and accepted an offer for $225,000.  She went into escrow in 2008 but the buyer canceled.  Now, this year Vivian is still trying to sell her land.  Vivian reasons that since she “had it sold” at $250,000 in 2007 and at $225,000 in 2008, her land is worth at least that much today.   However, in the past year, 3 parcels similar to hers have sold at an average selling price of $150,000. Thirty parcels similar to hers are now available now starting at $170,000 and going up from there.  In fact, 20 of those parcels available today are priced under $225,000.  Vivian is growing weary of dealing with the sale of her land and wants it to be over and done in the next 6 months.  How would you advise Vivian?

  If you would counsel her to price her land at $225,000 or $250,000 based on historic offers dating back to 2007 and 2008, you are probably not giving Vivian sound advice that would allow her to achieve her goal of selling in the next 6 months.  Yes, she probably should have accepted the first offer she received back in 2007 but hindsight is 20-20 and Vivian’s only choice now is to make an optimal pricing decision for today given that those historical offers are no longer on the table.  Prices on land have declined dramatically since 2007 and 2008 as evidenced by the 20 similar parcels currently available for sale under $225,000.

  At Land22 we would advise Vivian to price her land at around $169,000, slightly undercutting the 30 other parcels on the market, in order to give her the best chance of selling her parcel in the next 6 months while still getting her the highest price she can possibly get this year.

  Mistake 4:  Pricing their land based on how much money they want to make on it

  Investors invariably want to price their land based on how much profit they want to make on it.  Admittedly, there is certain logic to this. After all investors are people who buy low in order to sell high.  If they can’t sell their parcel for substantially more than they paid for it, they just won’t sell at all.  So, they reason, why not price it at whatever price they want to get and if it sells fine, and if it doesn’t, that’s fine too.

  The problem is that in the current terrible economy buyers will not over-pay for a parcel of land because there are so many bargains out there.  This means that real estate brokers do not benefit from listing over-priced parcels and may be under-whelmed about taking such a listing.  At Land22 Real Estate we never take overpriced listings.

  Example:  Johan purchased his land for $50,000 in 2006.  Because he bought it as an investment, with the goal of making money, Johan puts his land on the market with Broker Betty at $99,000 with the goal of getting at least $90,000.  Buyer Barry sees Johan’s parcel advertised for sale along with 15 other parcels just like it.  The other parcels are priced at $20,000 and going up from there.  Buyer Barry does not care what Seller Johan paid for the parcel.  Barry would be a buyer for Johan’s parcel at $20,000 but because it is overpriced Barry does not make an offer on Johan’s parcel and instead purchases one of the other 15 parcels.  Johan’s parcel does not sell during the listing period.  Broker Betty has spent time and money marketing this parcel and has not earned a commission.

  Johan’s parcel now has a high number of “days on market” (DOM) recorded in the MLS and so when he goes to list it again some buyers and buyer’s agents will see the DOM and might come to the mistaken conclusion that the listing is “shop worn” or there must be something wrong with the land.  No one has benefitted from this scenario.

  If he wants to make a profit, Johan would have been better off leaving his parcel off the market until the economy improves.

  Mistake 5:  Pricing their land based on what they have invested in it

  This is a variation on the mistake described above.  Sellers often mistakenly assume that they can take what they paid for their land, add in what they’ve invested into it, compute the sum, and that will be what the land is “worth” and therefore what they can sell it for. Unfortunately this logic rarely yields a reasonable listing price.

  As a first example, consider Thelma who purchased her lot for $20,000 back in 1960.  She’s paid $10,000 in property taxes on it over the last 50 years so she figures it’s now worth at least $30,000.  Ten parcels identical to Thelma’s are available for sale today at $26,000, $27,000, $28,000 and going up from there.  Only one parcel like hers has sold in the past two years.  Thelma just turned 85 and wants to sell her parcel in the next 6 months.  Is Thelma correct in assuming that she can sell her parcel for $30,000 based on what she has into it?

  No, Thelma is making the mistake of assuming that what she has invested in her land has any bearing on what she can sell it for in the current economy.  Given that only one parcel like Thelma’s has sold in the past two years (!), it’s clear that parcels similar to Thelma’s are not in high demand.  If Thelma wants to sell her parcel in the next 6 months, while competing with 10 other identical parcels, she would have to price her parcel at around $25,000, below her competition, and possibly lower.

  As a second example, consider Latisha and Mark who purchased their rural lot for $100,000 very recently in 2010.  After buying it, they had it surveyed, surrounded part of it with a chain link fence, removed much of the natural vegetation, and had architectural plans drawn up for their dream home.  Latisha and Mark spent $50,000 on these items.  Then Latisha unexpectedly received a great job offer out of state so their plans have changed.  They have decided to sell their lot and move.  Can the couple sell their land in the next 6 months for $150,000, what they have into it?

  The answer is no, probably not.  Buyers will likely assign value to the fact that the lot has been surveyed. Some buyers, especially those with animals or children, will appreciate the chain link fence while others may find it an eyesore.  Some buyers will appreciate that the natural vegetation has been removed, so that they can put in grass and landscaping, while other buyers will be offended and want to develop a natural restoration plan.  Buyers who want to build a new home may wish to design their own home and may not wish to use the same architectural plans.  However, most buyers in the current economy are investors with no plans to build at all.  The plans, therefore, may be worth something, but usually less than what the couple invested in them.

  To understand why their $50,000 of improvements might be worth less than $50,000 to a buyer consider an analogy of a new kitchen.  Imagine that you just installed new oak cabinets with new white appliances and new Corian solid surface counters in a house that you’re selling.  The kitchen cost $30,000.  Can you get your $30,000 back on kitchen when you sell the house?  Probably not, because a buyer may prefer walnut cabinets, stainless steel appliances and granite counters.  In fact, buyers with very specific tastes may even want to swap out your new appliances for alternate new appliances.  Such buyers may not assign a value of $30,000 to your new kitchen.  Just as you might not see a 100% return on a new kitchen, you will generally not see a 100% return on any investment in land, and for some items you will see no return at all.

  Mistake 6:  Pricing their land based on the assessed value from the county tax collector

  Some sellers mistakenly believe that value is some objective dollar figure, like the one that an official government entity assigns for tax purposes, and that price should be dictated by this Value with a capital V.

  Actually value is slippery subjective concept.  But more importantly, for purposes of selling your land, the price you can hope to sell at and the tax assessed value sometimes have little in common in the current economy.

  Here’s an example so you can see why:  Ahmed owns a 5 acre parcel that he wants to sell in the next 6 months.  Ahmed’s county assesses the value of his parcel at $80,000.  There are currently four other 5 acre parcels on the market almost identical to Ahmed’s priced at $65,000, $70,000, $75,000 and $80,000 and none have sold in the past year.  How would you advise Ahmed to price his parcel?  If you answered $80,000, this advice will probably not allow Ahmed to sell his parcel in the next 6 months because there are three parcels available at less than $80,000.

  At Land22 Real Estate we would advise Ahmed to price his parcel at something like $59,000 to help Ahmed achieve his goal of selling in the next 6 months.  As you can see, the assessed value has little bearing on the listing price that might be necessary to sell a parcel in today’s economy.  One reason for this is that assessed values are based on historical selling prices, while the price you can sell at in 2011 is more a function of the price of competing parcels available for sale that have not sold.

  Incidentally, for information on obtaining a review of the assessed value of your parcel due to a decline in property values contact your county tax assessor’s office.  Understandably, some land owners prefer to just sell their land rather than mess around with trying to get their property re-assessed with the county!

  Mistake 7:  Geographic myopia

  Sellers deciding how to price their land commonly talk to us at length about other parcels for sale within a block or, perhaps a mile, of their parcel.  These sellers seem to have a myopic world view and may be overly focused on parcels in close proximity to theirs in arriving at a strategic listing price.

  An example:  Seller Finn says “My neighbor Joe up the road has his 40 acre farm priced at $1000 per acre but I’ve known Joe for 25 years and my 40 acre farm is much better than his.  My soil is more fertile, my well is better, and I don’t live next to that trailer with all the barking dogs and the people coming and going like he does.  Plus, I’ve planted rose bushes along my driveway and all he has is oleander.  So I want to price mine at $1500 per acre.”

  Seller Finn has his blinders on, and is overly focused about on what’s happening in his local neighborhood.  He is not sufficiently aware of factors in the world around him that affect the price he can hope to attract for his parcel.

  First, if neighbor Joe has his parcel on the market at $1000 per acre but has not sold it yet, that’s an indication that it’s probably over-priced and so does not offer a good benchmark for Seller Finn.  But more importantly, Finn is competing not just with parcels on his street or in his neighborhood but also with parcels in other areas.  This is because buyers interested in Finn’s parcel are probably also looking in a variety of locations and even in other cities and other counties.  In the current economy, many couples or contractors who would like to build new homes are sitting on the sidelines and not buying land, so today’s buyers tend to be investors with no intention of building.  Investors are not looking just at parcels like yours in your local neighborhood - they're probably comparing your land to parcels of all types including residential, agricultural, multi-family, industrial, and commercial parcels in various parts of California as well as other states.

  Finally, the current economic recession blankets the nation depressing prices in all California communities and is a far more important factor in 2011 pricing than what’s going on with neighbor Joe up the road.  Seller Finn needs to remember that it’s not his neighbors, but rather the general economy, that is the most important indicator of the price he can expect.

  As an aside, a few years ago a friend of mine was searching for a vacation cabin.  He was willing to buy in any number of places including, but not limited to, Libby Montana, Sandpoint Idaho, Sisters Oregon, or Evergreen Colorado.  Cabin sellers in those towns were not aware of it but they were effectively competing for my friend’s business with cabin sellers in other states.  This is an example about vacation cabins but it applies equally well to land.  If you are trying to sell your parcel, you are not competing exclusively with the guy down the road (and if the guy down the road is overpriced, you’re not competing with him at all!)  But you may be competing with folks offering land in far flung areas so be sure that you’re priced favorably enough to snare your buyer even after they compare your land to parcels across a wide geographic area.

  Mistake 8:  Not entertaining the possible wisdom of taking a loss

  Sellers naturally have a strong emotional response to the idea selling their land for less than they paid for it.  However, sellers who bought at the peak of the economy and want to sell in 2011 may well find themselves in this position.  Of course it goes without saying, if you really need the cash now for living expenses then take the loss and sell.  However, my purpose here is to explain an under-appreciated point that it can sometimes be optimal to take a loss even when you’re not in dire need of cash now.

  Consider Eli.  He bought his land for $40,000 in 2005.  Today his broker tells him that if he wants to sell it in the next 6 months the ideal listing price would be $30,000.  Further, his broker is confident that Eli can get at least $25,000.  The tax assessed value on Eli’s property is higher at $40,000 and he is paying 1% or $400 in property taxes per year.  Eli appreciates his broker’s advice but cannot bear the idea of taking a loss.

  Suggestion:  Eli should consider the big picture of where he’ll be in the future if he a) sells at a loss today vs. b) hangs onto his land for 1, 2, 3, . . . , n years and then sells.  It can, in fact, be optimal to take a loss.

  To keep this example simple, let’s ignore escrow charges and income taxes for now and assume Eli is going to either sell now or in 10 years and those are the only two choices.

  If Eli sells this year he will get $25,000.  He will also avoid property taxes on his land for the next 10 years.  Suppose he invests the $25,000 plus what he would have spent on property taxes and earns a 5% return on all of that.  Ten years from now Eli will have over $45,000 in the bank.

  If he doesn’t sell today and instead keeps his land for 10 years, Eli will pay $4000 in property taxes over that period.  In year 10 Eli can then sell his land.  Suppose that the economy has improved by then and he sells it for $46,000.  Eli is happy because he is not selling “at a loss”.  However note that Eli’s happiness is a little misplaced because he is actually netting $42,000 (after considering all the property taxes he paid over the years).

  To summarize, in this example, Eli will actually be worse off in 10 years if he holds onto his land vs. sells it now ($42,000 vs. $45,000+).

  Note that there is something that is not considered in the above calculations, nor should it be:  the $40,000 that Eli paid for the land.  This is because no matter what Eli does, sell today or wait 10 years, no one is going to give him back that $40,000.  It's what economists refer to as a "sunk cost".  It is a curious psychological phenomenon that land sellers, and people in general, spend so much time stressing about something in the past that they cannot change.  Only future choices can be optimized, not past choices.

  Now suppose the economy improves substantially and Eli can sell his land for much more, say $55,000 in 10 years.  Then he is better off waiting.  So Eli’s choice to wait or not wait, take a loss today or not, depends in part on his estimation of how much he expects his land to appreciate in value over a decade.

  How much will your land appreciate in the future?  One thing to consider is the location.  If it’s in a remote area, with no road access or utilities, out in the middle of the desert for example, it may appreciate slightly over time but perhaps only in step with the overall economy.  No housing developers are likely to be interested in your land in our lifetime so there is unlikely to be any exciting spike in the value of your land.  On the other hand, if your land is in the middle of town or on the edge of town, adjacent to new development, has water, power and road access, then not only is it of greater value than remote acreage, but you are more likely to see appreciation in value as the economy improves.  These are sweeping generalizations so please call Land22 if you want are more specific reading of our office crystal ball!

  Note also that waiting is more of dynamic decision making endeavor rather than a static decision:  Each year you can say:  Should I sell this year?  If yes, sell, if no, wait.  Then the next year, should I sell now?  If yes, sell, if no, wait.  And so forth.  If you wait, you will have an infinite number of opportunities to sell or not sell until you actually do sell.  In reality, your decision is not a one-time decision like our simplified example of Eli’s decision.

  The point I’m really trying to make is that in deciding whether to sell now at a loss or wait until the economy improves sellers should remember to factor in the “opportunity cost” of waiting.  While waiting, you will pay property taxes.  More importantly you are losing the opportunity to invest the value of your land in another, possibly more profitable or less risky, investment vehicle.  Every day that you wait, you are paying to play.  Waiting is not free!

  Also, by waiting you are not avoiding a decision.  Consciously or not, you are actually making a decision – the decision to wait.  This decision, like all decisions, has implications.  You are aware of one implication: it opens up the opportunity to sell later.  But don’t forget the parallel implications: you are forgoing the benefits of selling now, i.e., what you could be doing with that the money over the next few years if you sold your land now.  In addition, you are incurring costs (taxes).

  At Land22 Real Estate we don’t relish the idea of our clients taking a loss and we are certainly not encouraging you to sell your land at a loss.  We are pointing out that it can be optimal for some sellers in some situations to take a loss and so the idea should not be simply discarded out of hand.  We want you to make the decision that is right for you!

  So pour a cup of tea, open up your spreadsheet, dust off your crystal ball and set your emotions aside.  Crunch a few numbers and give some real thought to whether you, like Eli, might actually be better off taking a loss!

  Mistake 9:  Chasing the market down

  Many sellers have lowered their prices in the current economy.  That’s makes sense, but most have not lowered them enough!  These sellers are “chasing the market down”.

  Here’s an example of this phenomenon:  Juan is a motivated seller.  He knows there’s an economic recession out there so he keeps reducing his price.  Juan has had his land on the market for 4 years and every 12 months Juan reduces his price by 5% hoping to find a buyer.  Unfortunately, in the part of California where Juan lives, prices on land are falling by 7% annually.  Juan is smart to re-consider his price periodically.  However, he never lowers his price quite enough.  Juan is always one step behind the price he needs to be in order to attract a buyer.  To sell his land, Juan must lower his price by a wider margin so as get out in front of a falling market instead of “chasing the market down”.

  Mistake 10:  Asking the local residential real estate agent to help you price your land

  If you needed heart surgery, would you go to, say, a pediatrician?  How about a podiatrist?  Would you go to the family practitioner in the town center just because she’s local?   Of course not - you would go to a specialist - the best darn cardiac surgeon you could find!

  Pricing and selling land is also a specialization – a different specialization than selling houses and commercial buildings.  At Land22 Real Estate we give about 300 price opinions on land a year.  And we sell about 40-50 parcels every year.  Just like a heart surgeon who has done hundreds of surgeries, when you do a lot of something, you get really good at it.  You might be able to find a residential Realtor that lives closer to your parcel but you won’t find a Realtor who is more successful than we are at pricing and selling land!  At Land22 Real Estate we're here to help you.
• Q: Are prices on land increasing yet?

  A:  No, although we appear to be near the bottom.  I investigated the average selling prices for all parcels of land in two Multiple Listing Service (MLS) systems in the month of December during the years 2005, 2006, 2007, 2008, 2009, 2010 and 2011.  Data are from the Sacramento area MetroList MLS and the Coachella Valley (Palm Springs) area Desert Area MLS.  Below are median selling prices and the number of parcels that all Realtors sold during December of each year:

  Greater Sacramento Area (MetroList MLS)
  December	Median Selling Price	Number Sold
  2005	$300,000	158
  2006	$252,000	103
  2007	$170,000	74
  2008	$245,000	55
  2009	$125,000	61
  2010	$92,000	57
  2011	$85,000	81
  Greater Palm Springs Area (Desert Area MLS)
  December	Median Selling Price	Number Sold
  2005	$76,000	128
  2006	$100,000	55
  2007	$95,000	45
  2008	$15,000	19
  2009	$45,000	35
  2010	$24,500	22
  2011	$40,000	28

  As you can see, median selling prices have declined in both parts of California since 2006.  This is primarily because buyers are paying less for the same piece of land today than they would have paid in 2006.  However, it is also because investors who might have purchased more desirable parcels in 2006 when they were flush are now buying less desirable parcels because they are less wealthy due to the recession.  This means that less expensive parcels are selling better than more expensive parcels.  A final reason is that sellers with more valuable parcels who don’t need to sell have simply removed their land from the market and are sitting on the sidelines waiting for the economy to recover, leaving only less valuable parcels on the market to sell.
• Q: When do you think prices on land will start going up again?
  A: In 3-5 years
• Q: Are there any liens or back taxes owed on that parcel?
  A: If there are liens or back taxes owed, escrow will automatically deduct them from the seller's proceeds at closing.  The buyer will not be responsible for those items.  If it makes you, as buyer, more comfortable we can explicitly write this into your offer.  However, even if it's not explicit in the contract escrow will still hold the seller, not the buyer, responsible for liens and back taxes.  The parcel will be delivered to you free and clear and you will receive title insurance.
• Q: I don’t want to waste your time, so what is the seller’s bottom line price on that parcel?
  A: We deliberately refrain from asking our seller clients to tell us their bottom line.  And if a seller happens to mention it we certainly wouldn’t tell you, the buyer!  If you would like to submit a written offer to the seller we would be pleased to help you.
• Q: What is the process of purchasing land through Land22 Real Estate?

  A:  It varies, but here are the 11 steps that most buyers take:

  1) Contact Land22 by phone or e-mail to discuss the offer you’re considering.  For example tell us the price you’re thinking about, how long of an escrow period you’re contemplating (e.g., 2 weeks? 30 days?) and how you propose to split the escrow costs with the seller (e.g., 50-50?).  We will tell you whether that offer is likely to be well received.  If we feel the seller is likely counteroffer or accept your offer we will prepare your written offer for you.

  2) To help us prepare your written offer, we will request that you e-mail us some information.  These items include: a) The name(s) of everyone who will be on title, b) your mailing address, and c) your phone number.

  3) We will prepare your 10 page offer and the 2 page agency disclosure form and e-mail or fax 12 pages you.  We can also e-mail your offer to you via DocuSign so you can easily sign elecronically.  (If you do not have access to e-mail or fax we will mail it to you.) 

  4) Everyone who will be on title will initial/sign all 12 pages.

  5) We will present your offer to the seller and contact you as soon as the seller replies.

  6) If the seller accepts your offer we will open escrow and give you the address for escrow.

  7) You will mail your small earnest money deposit directly to escrow, payable to escrow.  This initial deposit can be in the form of a personal check. 

  8) Escrow will mail you documents to sign and mail back to escrow.

  9) Land22 Real Estate will send you disclosures to sign and return to Land22. 

  10) A few days before closing, escrow will request the remaining funds.  Funds must be in the form of a cashier’s check or bank wire (no personal checks at closing).

  11) Escrow will close, your ownership will be recorded with the county, and you will own the parcel.
• Q: What is the process of listing a parcel for sale with Land22 Real Estate?

  A:  It varies, but here are the 4 steps that most sellers follow:

  1) Contact Land22 by phone or e-mail and give us the parcel number (APN) and county.  Tell us anything you may know about the parcel such as whether electricity and water are in the street, whether it has legal access, and the zoning.  If you don’t know these things, that’s OK.

  2) We will do some research on your parcel and contact you, generally the next business day, by phone or e-mail to share our thoughts about price. 

  3) If you agree to list at the price that we suggest, we will e-mail or fax you a 4 page listing agreement and a 2 page agency disclosure form.  We can also e-mail the listing agreement to one person or to multiple co-owners via DocuSign so that they can easily sign elecronically.  If you do not have access to e-mail or fax we will mail it to you.  You will arrange for all co-owners to initial/sign all pages and return the listing agreement to us.

  4) We will prepare marketing materials and begin marketing your property.  When we receive an offer we will contact you and present the offer to you.
• Q: How can I learn about new Land22 listings as soon as they become available?

  A:  Land22 Real Estate now sends out alerts about all new listings and price reductions on Twitter!  To learn about great land deals the instant they become available you can sign up to follow Broker Tammy on Twitter.  It's easy!

  Just go to the following link and click the FOLLOW button:  

  https://twitter.com/land22tammy

• Q: Will you sign that document for me?
  A:  No.  It's not legal for agents to initial or sign any document on behalf of buyers or sellers.  This includes offers, counteroffers, listing agreements and disclosures.  To be legal, signing on behalf of another person requires a written power of attorney.  Although you may wish, in a certain instance, to give us "permission", you have not given us a written power of attorney, so Land22 will never sign for you.
• Q: Can my spouse/friend/family member/lawyer sign that document for me?

  A:  No, not unless you have given that person a written power of attorney.

• Q: Can I buy 1 acre of that 10 acre parcel?
  A:  No.  In order to sell you 1 acre of a 10 acre parcel the owner would have to legally subdivide the parcel. This takes many months and would cost the seller a considerable sum of money.  Further, it would only be possible if the city or county zoning allowed it.  For example, a 5 acre parcel zoned “Rural Living 2.5” could, in theory, be subdivided into two 2.5 acre parcels.  However, an owner offering a 5 acre parcel for sale is not interested in subdividing it in order to sell you a portion.  You may notice on the Land22 website, and perhaps other websites, the price per acre in addition to the price.  Display of the price per acre is not meant to imply that you can purchase just 1 acre.  We show price per acre so that buyers can compare a kind of “unit price” across parcels of varying size. 
• Q: Do you use electronic signatures?
  A:  Yes, Land22 has access to DocuSign so that buyers and sellers can sign electronically by e-mail if they wish.  No more printing, faxing or mailing paper listing agreements and purchase agreements, yeah!  Just click click click to initial and sign.  Of course we are also happy to send you documents anyway you want:  by e-mail attachment, fax or mail, no problem.