That is the most frequent question that we are hearing today from landowners and lenders. Challenging economic times and doomsday media reports can cause even the most confident land owners to lose sleep. The most vexing question most have is, "Do I sell or do I hold?" While valid arguments can be made for both options, it is important to look at all the facts so that you can make an informed decision. Every deal is different, so there is no absolute right answer. However, there are some strategic decisions land owners can make based on costs and potential revenues.

So, what questions do you need to consider when deciding to sell or hold your land?  

• What is the real current value of your property and are you prepared to price to the market?
• Who is the competition?
• If sold at today’s prices, will the mortgage be paid off?
• If not, what are the carrying costs to hold the property?
• Is it worth putting money into a property that may never be recouped?

The REAL value of your land today is not based on what an appraiser says; it’s based on what today’s buyer is willing to pay. Due to the credit market freeze and the inability of land buyers to obtain acquisition financing, the only transactions that are actually closing these days involve cash buyers. Carefully consider what cash buyers have paid for properties comparable to yours within the last six months. With the constant fluctuation of the current land market, sales over six months old will not provide an accurate reflection of today’s market. And while it may not be what you were hoping, your property must be priced relative to the market if you expect the cash buyer to consider it. For an example of the current market prices for land, check out what's selling at what prices below.

If current market value for your land is less than the loan amount, it may be time to talk to your lender about refinancing options or short sale alternatives. Otherwise, the only choice may be to hold the property until the market recovers, hoping for better days to come.

You decide to sell.  Now what?

If you’ve decided to sell, here are the things you need to do:

Have the facts on your property compiled and readily available.  Buyers have many properties to choose from right now and the sophisticated buyer will pass over your property if the answers to their questions are not immediately available. It is well worth the money and effort spent to have the following information available to the buyer:

• Updated survey
• Status and expiration of governmental approvals and permitting
• Soil tests
• Environmental reports
• Proposed site plans
• Proposed development costs on and off site
• Other carry costs or financing obligations
• Property taxes
• Traffic report
• Phase 1 Environmental report
• Topographical information
• Aerial and location maps
• Names of all consultants / vendors (if any) who have conducted work on the property
• Zoning and land use

Collecting all this information could seem overwhelming or unnecessary, but it could very well make the difference between procuring a buyer or not. The availability of this information will capture attention while allowing the buyer to focus in on your deal and make a buying decision. Additionally, for every piece of information you do NOT provide, the buyer may assume the worst and look to discount their offer. Therefore, immediate access to as much information as possible will most likely increase your chances of selling at a higher price in a shorter period of time.

Have a sophisticated marketing plan.  If it’s worth doing, it’s worth doing right. You wouldn’t go to a foot doctor for a toothache. Likewise, you can’t depend solely on a sign and the MLS/LoopNet to effectively market land. Hire a professional who specializes in developable or developed land tract transactions instead of leasing warehouses or selling office buildings. Some of your professional’s marketing tactics should include a professionally designed website and the means to make most, if not all, information on your property available via the internet. They should have a sophisticated e-marketing plan through which they can contact a specific target audience from a diverse network of contacts.

If you’ve decided to hold until the market recovers and financing is available to buyers, the most daunting concern is predicting whether or not the costs to hold will pay off in the long run. Understanding all of the costs involved and weighing the potential profits now and in the future are crucial in determining whether or not to hold. If you’ve decided to hold, here are the things you need to do:

Secure the asset. If there are improvements to the property, protect your asset from vandalism. Install security fencing and "No Trespassing" signs. Remove any valuable assets from the site.

Protect any zoning, permitting and entitlements.  If possible, it is imperative to keep current zoning and permits active or renewed to protect the future value of the asset. Too many times, property owners neglect the expiration dates on development orders, permits, etc. only to find they have lost millions in land value by simply not staying on top of these issues. Just as it is well worth the money to hire a professional to compile/confirm information about your property, it is also worth it to have that professional track expiration dates as well as government officials /regulations that could lessen your property rights through things such as decreased density, zoning re-classifications, etc.

8/27/08 - Charlotte County, FL - Raw Land

• Ryals Ranch sold 1,600 acres to Charlotte County for $26,450,000 or $16,531 per acre.

• Howe Family Trust sold 18.5 acres of  citrus / grazing land to Custer for $305,300 or $16,502.70 per acre.