Selling inventory
You are almost done! This is the last, and honestly the most important, step of the land flipping process. Without a sale, all you have is a piece of land. It’s your job to match this land with a willing buyer.
1. Determining the retail price for your property
How much is your land worth? The first way to determine the retail price for your property is to look at the comps (sale numbers for similar properties). You should have already done a majority of this work in your due diligence process to know if the land was worth buying in the first place.
This is where you check your numbers. Look at historical sales, average listed vs average sold ratios in the county, and make sure the numbers still work. If there are major deviations from your previous numbers either you added something wrong or a major event has happened and you should look at the news reports for the county and surrounding areas.
Most of the time though, your numbers should hold up and the retail price will be the same as when you were researching.
2. Who is a good buyer for your property
What makes a good buyer? A lot of that depends on what would the buyer would want to do with the land? Are they using it as an investment? Will they build on it? Are they buying it as a buffer for an adjacent property? Who your best buyer would be determines how you market the land. Think about what kind of buyer would pay the most for this piece of land.
Once you have that ideal buyer in mind, think about where would they find the advertisement for this land? On Facebook Marketplace, Craigslist, MLS, Zillow, Redfin? Sometimes the numbers don’t support posting to every platform, so it helps you to think about where the most effective place to post your ads or listings will be.
Another good way to find buyers is sending out letters to neighbors. I have a killer letter and process that I’ve used to close 25% of my deals. It’s a cheap and effective way to find very motivated buyers that are already familiar with the land.
3. Talking to buyers
Once you find a buyer that’s interested in buying the property, make sure they see the property before getting under contract. It’s important to determine if the buyer is serious before going under contract. You don’t want to tie up your land while someone is just browsing because you might miss out on a serious buyer. You want to make sure they are serious before you go under contract.
The first step to this is getting them to see the property if they are in the area. Have them go out and take a look for themselves. If they are serious, often they will take the trip out and look at the property with their own eyes. Next, find out what are their plans for the property. If they aren’t willing to see the property in person and don’t have any ideas about what they would do with it, they probably aren’t a serious buyer.
One quick shortcut to all this, if they have an agent typically they are serious.
One final thing to consider, do they have the money to buy? This can be tricky to ask, but there are ways to do it without sounding like a jerk. You are just trying to make sure they are serious about the property.
4. Negotiating buyers
Once you are under contract, it’s important to know that your retail price might not be the price they offer. Sometimes that works out, but often they will try to negotiate with you.
If you have your numbers right, you will know what price you can sell your land that makes sense for you and your investors (if you have them). Stick to your guns and politely decline very low offers. Let them know that the numbers simply don’t work for you.
Once you get an offer that works for your numbers to give you a healthy profit, it’s time to close and sell the land.
5. Contact title and escrow
Unless the profit potential is very low, it’s almost always a good idea to contact a title and escrow company to handle those services for you. You will save hours of headaches if you do.