Land Owner News 3rd Quarter 2018

I WANT TOP DOLLAR, WHEN IS THE BEST TIME TO SELL?

Hard quick answer: 2-3 years before market peaks. Crystal ball anyone? If you look at the pricing box, you see that top dollar is offered only if buyer is allowed 2-3 years to entitle (get approvals for construction) the property. While I will be negotiating significant deposit releases (cash to you), and developer will spend tens of thousands on reports and applications, they will walk away from several hundred thousand dollars or more, if the market is not there for their product.

Where is my property on User/Developers desirability chart?

Orange County was first to rebound for houses and now any developable land is HOT, Corona was next, and then Riverside/Murrieta/Temecula areas has huge interest. Lake Elsinore / Perris / Moreno Valley / Wildomar began getting warm last year, and Beaumont, San Jacinto/Hemet are just starting. We are just seeing first developer offers on raw land east of the 215 since the Market crash. The main reason the first one received interest was that all the infrastructure is in place and new construction/new home sales are going on 3 sides on finished lots left over from last recession. There is a large number of residential acreage parcels that have Tentative Tract Maps (TTM) along the 215 corridor (and East into the Winchester/San Jacinto/ Hemet area) that have been sitting idle for over a decade. These properties will sell before any raw land does, with a few exceptions. HOWEVER, many of these will not sell or be developed until the   infrastructure is in place.

I HAD AN OFFER FOR ALMOST TWICE THAT!  WHY ARE PRICES STAGNANT?

Well, you’re not alone… In the run up of real estate prices prior to the market crash of 2007, everyone was trying to get in on the craze. Even inexperienced people with a little extra cash, became speculators and were buying up anything real estate related. Builders were trying to keep up with the demand for bigger and better estates. The talk around the water coolers, in the little league stands, the cocktail parties and everywhere was how much one’s home could sell for.  Reality is, properties were never really worth that much. The last 10-20% of appreciation before a crash is people paying too much. 

When the market drops, land sales stop! Escrows on land fall out, even builders and developers default on their loans. Walking away from hundreds of thousands of dollars invested was smart business strategy if your product was no longer desirable. 

It’s all supply and demand. Just because demand disappeared, supply never stopped. I still see listings that have been on the market over 10 years! Many have put their land up for sale over and over again. From 2008 to 2014 virtually no one was buying land except for some savvy investors that were able to pick up land from distressed (bankruptcy, divorce, bank repos) sellers at pennies on the dollar. Land sales began to happen again in 2015, but because of oversupply we will probably never (in our lifetime) get back to those astronomical prices of 2006, except for certain, extreme situations of high visibility, freeway off-ramp type unique properties. There was a high of 697 land sales in March 2018…but that was out of 39,000. land listings in the Inland Empire; less than 2% SOLD.

 We have about a 3-year supply of land (vs. 3 months with houses). Houses have regained all of their losses and are now back to 2006 price levels. Land is still at about 50% of the peak  average.

I have a 10-acre parcel in Perris that I own. I was in process of getting a TTM had offers around $820,000. For when the map was final. The crash happened before my engineer got  approval and I have had no offers when listed at $495,000. I did have a property that I paid $180,000 for in 2002 that I let go for $90,000. A few years ago…it was the best I could get at the time and I wanted to use the money for other things. I also accepted that it was not going to go up much anytime soon. Until we reduce the inventory land prices are going to remain stagnant.

What’s the problem? Sellers and Agents! To be more specific: Unreasonable sellers and Inexperienced agents!

Sellers: Face it, most land owners are not really under any deadline to sell. “I’m in no hurry to sell,” is a common phrase I hear. Which is fine, I’ve been in Real Estate for 35 years, so I’ll be around when you're ready. I give a free estimate of value and they usually call back when the time is right. Often land has been passed down and other family concerns come into play. When the comment is “we’re going to wait until the price goes back up,” I’m okay with it but try to explain the whole supply and demand thing about why that is not happening anytime soon. I have had a few call me year after year, only to be told about the same value.

WHY WE SELL MORE LAND... THAN ANY OTHER REAL ESTATE TEAM

1. The ROBILLARD Consulting Group lists property in both residential MLS and commercial websites - The others do not! it’s simple: Residential Offices do not have access to CoStar/LoopNet commercial websites (Reason: costs in excess of $15,000 per year, not justified for occasional use. Commercial Offices are not in MLS because it is primarily residential and the MLS rules do not fit their business plan.
2. YOUR LAND is OUR PRIORITY – Land is 95% of our sales! Residential Offices priority is on selling houses; Only 12% (4,556) of MLS sales in 2017 were land sales (mostly single-family lots). Commercial Offices priority is Commercial and Industrial Buildings sales and leases; they also sell land (but they sold none of the 4556 pieces of land that sold through MLS) for development, but land sales are a fraction of their business.
3. EVERY SINGLE Sign call is answered directly by one of our trained and knowledgeable buyers agents - With our system, every call rings on Steve, Jerry or Bob’s phone, first to answer gets to work the caller through every aspect of the buying experience. Ever call for information on a vacant land sign? Did you talk to a live agent or get a call back? Yeah, me neither!
4. We expose your property to the MAXIMUM Number of BUYERS and AGENTS! We share the commission with other agents in the MLS and with the Commercial Brokers…we publish the price (strange but a considerable number of listing in commercial websites don’t show a price!) 
5. YOU, the seller, are Larry Robillard’s PRIORITY!  The agent who represents the buyer/developer (even my buyer’s agents) are going to write the offer to their buyer’s best advantage. I have no long-standing relationship with these developers, I am looking out for you! I will be putting in (countering) provisions for your protection, reading the fine print, and making sure your interests are protected!

Honesty is our policy… Brutally honest in fact! I will not be telling you what you want to hear, I will be telling you the facts. Period. I know this sounds basic, but it is very competitive out there for listings. Residential agents are used to everything selling so quickly, they will list at whatever price a seller asks, often not understanding the various pricing strategies or other factors to consider. Commercial agents can be real good on high visibility freeway off-ramp or other properties in super high demand, but otherwise lesser properties are often thrown to the rookies to get their feet wet and/or rely on computer generated data that may not reflect reality.