What Is Your Vacant Lot Really Worth?

a reality check list”

Welcome To Reality - What Is Your Vacant Lot Really Worth?

Land owners are not altogether surprised at the general price range their land might sell at. However some hope or expect to hear a higher value than what an objective analysis concludes.

 

The market value of your land is not:

  • What you have in it
  • What you need out of it
  • What other properties are listed at
  • What the tax assessor says it is worth
  • Or the highest list price suggested by one of the agents that you are interviewing

The true market value of your land is what a Buyer is willing to pay:

  • Based on location
  • Based on today’s market
  • Based on today’s financing
  • Based on today’s competition
  • Based on today’s economic conditions
  • Based on how long it has been active on the market

Land that will sell are those that:

  • Have easy access
  • Are well and thoroughly marketed
  • Are perceived as a good investment
  • Have Soils Reports, Topography and Surveys – this is a plus.
  • Are value priced and properly prepared at the start of marketing

As a final reminder to the Seller:

  • You cannot control value
  • You can control the price you ask
  • You can control access to the property
  • You can control the condition of the property
  • You cannot control the motivation of your competition
  • You cannot control market conditions, including Buyer financing, appraisals, et.al.

Note* Land owners can have the will to sell (but that is not always enough), Land owners have to be prepared to sell.

I have been a realtor and real estate land specialist in Los Angeles for more than 15 years creating opportunities for land-owners and Buyers, brokering vacant land throughout the Greater Los Angeles area. I can be contacted at sales(@ )westsideland (dot) com and information from http://www.westsideland.com

Know Your Dirt

Site Consultation for Developing Raw Land: Before purchasing land it is always smart to find out what you are getting yourself into. Would you buy a car you have never heard of without doing some research first? Probably not. With that in mind, it is usually a good idea to ‘kick the tires’ so-to-speak, when considering a vacant land purchase. But, unlike buying a car, where you can read consumer reviews and such online, information on a given piece of land may not be readily available. Additionally there are other factors to consider when doing your research. You may ask yourself: What are my goals? What do I want from this investment? Can this particular piece of vacant land be used to obtain my goals?

Many of the answers you may be able to find yourself, by simply having a defined sense of purpose. But the big answers will likely be elusive, like whether or not you can build what you want within the constraints of the property. Professional consultants are extremely helpful in this area.

A professional consultant can help you to make an educated decision when purchasing vacant land. Professional consultation is not free. But considering what it can save you in the long run, it is always a wise investment. Many people often brush aside consultation until it is required for the design and building process. You may spend plenty of money on design, not to mention the land itself, only to find out later that you have soil conditions on site that will prevent you from building what you actually want. The money lost at that stage can be tenfold the cost of an initial site consultation. Soils Engineers and Geologist are consultants who are very helpful when considering the purchase of vacant land.

Let’s start by understanding a few key definitions. Given the nature of the planet upon which which we live, our structures are placed upon foundations, which are supported by the earth. The earth, simplified, can be considered as soil or rock and or a combination of the two.

The application of the knowledge obtained from the study of soil and rock, along with the application of engineering principles in solving problems dealing with soil, is generally known as ‘Soil Engineering’. The term ‘Soil Engineering’ will often be used synonymously with the term ‘Geotechnical Engineering’ or ‘Soil Mechanics’. A Soil Engineer is a licensed engineer tasked with the evaluation of soil, rock, or other earth materials for the purpose of determining design parameters for a structure. A Soil Engineer is the individual who prepares a Soil Report, also commonly referred to as a Geotechnical Report. A Soil Report can be simply a basic background and preliminary report on a property, such as whether or not the site is buildable considering the condition of the earth materials present. It can also be a complete and inclusive design report providing all of the recommendations for a given project.

Often working together with the Soil Engineer will be a Geologist. Geology is the study of the physical material of the earth. A Geologist provides important information, and plays a definitive role in predicting and understanding natural hazards that may exist on, or beneath a plot of land. A Geologist typically develops a report separate, or in conjunction with the Soil Engineer, commonly referred to as a Geology Report. The information provided within the report plays an essential role in the formulation of design recommendations by the Soil Engineer. For example, a Geology Report may identify a potential landslide on a property based on certain historic data and current soil and rock conditions. The Soil Engineer can then apply that knowledge to develop design recommendations to repair the landslide, or avoid it altogether.

Now back to the goal. Most individuals who purchase vacant land want to build something on it, for example a house. With that in mind, now comes the difficult part. Finding vacant land that fits the Buyer’s needs. The real estate agent will handle that. Afterwards, the process should progress as follows:

Selection
The Buyer has found the perfect piece of land. But is it? He/she has an idea of what they want to build, a house. Let’s say it should be 5,000 square foot modern design. Prior to retaining the services of an architect, find out if the land is buildable. At this stage the Buyer would want to consult with the Soil Engineer and Geologist. The information and recommendation from the Soil Engineer and Geologist can help the Buyer determine if the land is buildable, safe, what should be avoided, and why. If it looks bad, or there is uncertainty, resume your vacant land search. Keep in mind though, that this is a general case, and that even a clean bill of health from the consultants does not mean anything will work on the site. A long way is still to go.

During escrow, and after one has an idea of the soil conditions on site, one may want to consider preliminary design. Now would be a good time to retain an architect for preliminary concepts. The architect can work with the consultant’s recommendations to put together ideas that meet what the Buyer wants. Additionally, the architect can put together some rough concepts to present to the local design review board, or homeowner’s association (if there is one), to get an idea of the feasibility of the project. if what is desired does not work on the selected property, one can still resume the land search.

Purchase
Now that the land has been purchased, the real work begins. At this stage one should have a more confident approach for achieving one’s design goals.

Design
Design will likely involve different professionals: the architect, structural engineer, Soil Engineer and Geologist. The design will have to be approved by outside entities, both government and citizen. Government entities would consist of the local Building and Safety officials, planning officials, utility providers, and in some cases, environmental health. Citizen entities would be the design review board or association in the respective neighborhood where the land is located. The design may have to be modified to comply with the requirements of such entities.

Additional input, in the form of calculations and design recommendations specific to architect’s plans, should be expected from the Soil Engineer and Geologist. The additional input is required because during the preliminary land selection process, the consultants only had a general idea of what was proposed. Now that the architect has a more exact design, Building and Safety requires consulting engineers to provide design recommendations specific to the architect’s plans.

The design stage can consume a lot of time and resources. It should be planned for accordingly. In some localities, the design process can proceed quite quickly. In others, it can be drawn out due to the various government agencies that have to grant approval.

This is the stage where the initial site consultation pays off. Can you imagine if this stage was reached, an considerable time and money were expended, only to discover that there are poor soil conditions on site, or, worse, a landslide that makes the site unbuildable?

Build
Once the design is completed, and the appropriate building permits and approvals have been obtained, one can commence building. During the building process, the Architect, Structural Engineer, and Soil Engineer will be involved to monitor progress, and to ensure compliance with the approved design recommendations.

Enjoy
Once the building is complete, the Buyer can move into the home and enjoy, or sell it and reap the well deserved benefits. So as can be seen, the process involves more than just buying vacant land because it has great curb appeal and a view. Just because it has a view, great curb appeal, or is in a great location, does not mean that something can be built on it. When a Buyer finds a piece of suitable vacant land, consider the above, and by all means, consult a Soil Engineer and Geologist.

I have been a realtor and real estate land specialist in Los Angeles for the past 15 years, creating opportunities for land-owners and Buyers by brokering vacant land throughout the Greater Los Angeles area. I can be contacted at sales (at) westsideland (dot) com and information can be obtained from www.westsideland.com

Buy it – Build it – Live it

What is so exciting about buying land and building one’s own house, is that the Buyer of the land gets to build and live in their dream house and not somebody else’s house that forces the Buyer to compromise his or her dream.

But in pursuing this dream, Buyers must understand that all land is not created equal. In terms of geology, history, views, curb appeal, location and current and potential value, even similar pieces of land can look very, very different on paper. Whether the Buyer is shopping for a piece of land for a house, a ranch, a multi-unit complex or a new housing development, it is critical to understand that a piece of land is not just a piece of land. Equally, marketing vacant land is not the same as marketing homes for sale. The audience is different, the media is different, and the approach is different.

If the Buyer is not paying all cash, then financial pre-approval can make the difference between getting the land the Buyer wants and losing it to another Buyer. Pre-approval gives the Buyer a very clear picture of their financial readiness; it allows them to preview land in a realistic price range and make an offer confidently when they find a desirable and vacant lot. It will also allow the real estate agent to negotiate on their behalf from a position of strength.

Real Estate law is extensive and complex. The Land Purchase Contract is a legal and binding document. An improperly written Land Purchase Contract, may cause the sale to fall through, cost the Buyer dollars, time, unnecessary headaches and in a worst case scenario, a lawsuit. It is important that the Buyer and their real estate agent fully understand the Land Purchase Contract and the process that they are agreeing to and signing off on, so as to conclude the land sale transaction in a smooth and timely fashion.

Buying land is an educational process and the Buyer must participate fully in this process. The main roles of the real estate agent are to co-ordinate with and provide access to the land, for both Buyer and the Buyer’s hired professionals, i.e. geologist, soils engineer, civil engineer, surveyor, architect and general contractor, amongst others, so as to complete their due diligence and provide written reports for the Buyer so that a informed and educated decision can be made by the Buyer before deciding to purchase the vacant lot.

This is a rare time in our Real Estate history where vacant land is so well priced, thereby creating incredible opportunities for people who wish to buy a vacant lot, build a home that they desire or simply ‘cure’ the lot and hold on to it for a future sale. Buying land and building a new home, like anything else, is a process or better still a road map – to when the Buyer first walks onto that vacant lot until they turn the key in the front door of their brand new dream home. The land buying process seems daunting at first but supported by the ‘right team’ so-to-speak, will bring rich rewards at the end of this process.

With so many fabulous new and interesting building concepts nowadays, on how to be creative, build smart and efficiently and with state of the art technology, now is the time to buy land and Just Build it!

I have been a realtor and real estate land specialist in Los Angeles for the past 15 years, creating opportunities for land-owners and Buyers by brokering vacant land throughout the Greater Los Angeles area. I can be contacted at sales (at) westsideland (dot) com and information can be obtained from www.westsideland.com

Lot Creates Splitting Headache

‘the law of the land’

A Buyer wanted to purchase vacant land that could be subdivided (split) to build two houses. The Buyers agent, found a vacant lot in the Multiple Listing Service (MLS) described as “all usable 2.62 acres, county states 1 acre min. lot size could be split”

The Buyers agent confirmed with the Sellers agent that the lot could be split. The purchase contract gave the Buyers the right to investigate and inspect the vacant lot within 21 days of acceptance. After the sale closed, the Buyers learned from their civil engineer that the lot could not be split because the county had designated it ‘impact sensitive’ requiring a 4-acre minimum lot size. The Buyer sued the Sellers agent for intentional misrepresentation.

At trial, the Sellers agent argued that the Buyer had ample opportunity to inspect and investigate the requirements for Lot Splitting before the sale closed. He also testified he had talked on the telephone “to the county” and was assured the lot could be split. The Buyers made it known to their agent and the Sellers agent that they wanted to purchase a vacant lot that could be subdivided so as to build two houses.

Though the sales contract had an exculpatory clause that said the Sellers did not guarantee the condition of the property, the judge said, the MLS Listing and the Sellers agents statements led the Buyers to believe that the lot could be divided. The fact the Buyers had 21 days to investigate and inspect the property to verify whether it could be divided did not create a legal obligation to do so, the judge emphasized. The evidence presented at trial indicates the Sellers agent intentionally misrepresented the vacant lot, he noted. Therefore, the exculpatory clause in the sales contract does not protect the Sellers agent from liability for deceit, and the Buyers may proceed with their lawsuit for damages.

I have been a realtor and real estate land specialist in Los Angeles for the past 15 years, creating opportunities for land-owners and Buyers by brokering vacant land throughout the Greater Los Angeles area. I can be contacted at sales (at) westsideland (dot) com and information can be obtained from www.westsideland.com.

Why use an Expediter?

‘time is money’

There is no magic to processing land use applications with a City or County government, but an expediter who has a broad level of knowledge and skill that most land professionals do not have, is the ‘go-to-person’ who should be consulted for assistance with such applications.

A competent expediter knows and understands the laws that govern the type of land use applications their clients need, and a good expediter will act as a consultant, often finding better, faster and less expensive ways to reach their client’s goals. While most City Staff at public counters really want to assist, they are often less experienced personnel and their knowledge is confined to only their particular job. They do not have the range of knowledge needed to provide clients with options and a clear overall picture of the intended build. For example, the Planning Staff will understand the Planning and Zoning Code procedures, but may not fully understand issues with other City Agencies.

A good expediter can and should act as the clients’ advocate, speaking at community meetings and before City officials who will actually make the final decisions. An expediter who only does the paperwork is not providing the best service a client needs to succeed. Technical aspects of filing paperwork, while important, are not the most crucial aspect to getting the necessary approvals.

While no expediter can guarantee the results of a particular case, good ones will be able to give an honest evaluation of the likelihood of success or failure, or offer possible alternatives, and most importantly, greatly increase a client’s chance of success.

I have been a realtor and real estate land specialist in Los Angeles for the past 15 years, creating opportunities for land-owners and Buyers by brokering vacant land throughout the Greater Los Angeles area. I can be contacted at sales (at) westsideland (dot) com and information can be obtained from www.westsideland.com

Something of Value

‘place a value on; judge the worth of something’

Appraisal: An appraisal is an assessment or estimation of the value of the subject property, with respect to its worth.

Land Appraisals: Selling land, begs the question, why does a Seller need a land appraisal before putting it on the market for sale? He/she needs, to appraise the land for many reasons with a qualified Land Appraiser. Sellers have confusing ideas as to what their land is really worth, especially when it comes to valuing same, as comparables are often few and far between. It is important to note, that in appraising land, city ordinances, city zoning, and plotted easement reports amongst others, all have to be taken into consideration to find true land value. Without an appraisal, Sellers may list their land for sale and subsequently become very disappointed in the listing agent when they get no attractive results, except ‘low ball’ offers and their property languishes on the market for months and months. The agent, who has the listing will spend time and incur advertising costs, including showing the property, all to no avail.

Restricted Report: By obtaining a Restricted Report aka Estimated Value Report, Sellers, Buyers and Agents will get a more realistic value of the subject property. This report is summarized, costs less than a full report and saves all parties time and money. This report is for internal use only and cannot be used by a Buyer for lender purposes.

Regular Appraisal Report: The regular appraisal report is a more complete report, designed to stand up to audits, which can be used by the Buyer for lender purposes but will cost more than a Restricted Report.

Since the 2008 collapse of the Real Estate market, it is my opinion that raw land has lost almost 30% to 35% of it value, and with the new City of Los Angeles’ Baseline Hillside Ordinance (BHO) www.baselinehillsideordinance.com which comes into effect in April 2011, land in residential hillside areas will lose even more value. Moreover, Banks are not lending on the purchase or raw residential land and those that did in the past, have at the present time, completely ceased making all cash land sales the best option for both Sellers and Buyers.

I have been a realtor and real estate land specialist in Los Angeles for the past 15 years, creating opportunities for land-owners and Buyers by brokering vacant land throughout the Greater Los Angeles area. I can be contacted at sales (at) westsideland (dot) com and information can be obtained from www.westsideland.com

Out of Bounds

A fence or a wall is not necessarily one’s property line.

It is my opinion that before one purchases any property, one must, at least, obtain, a Boundary survey performed by a qualified surveyor, to ensure complete knowledge as to, what one is purchasing. In this connection, it should be noted that there, are various kinds of surveys, that a surveyor can offer.

Boundary Survey: This is a survey, in which, boundaries are set at, or near the corners of the property. Should one have concerns that a neighbor is building ‘something’ that may encroach on one’s property, or should one want to build a fence or wall, one will need a Boundary survey to establish the exact location of the property line.

Topography Survey aka Topo: A Topo survey is one, which shows structures, trees, fences and or driveways on a map with dimensions to the property line. If one is not sure whether one’s neighbor owns the fence or wall, one should call for a Topo survey which will determine the exact location of the fence or wall in relation to the property line.

Architectural Survey: This survey is comprehensive and will show on a map almost everything on one’s property including boundary stakes. If one is planning to remodel or build a new home, one will need an Architectural survey. This survey will locate and measure everything on one’s property, including elevations,(as related to sea level) major structures, hardscape surfaces such as walkways, landings, and driveways, all shown accurately on a map.

I have been a realtor and real estate land specialist in Los Angeles for the past 15 years, creating opportunities for land-owners and Buyers by brokering vacant land throughout the Greater Los Angeles area. I can be contacted at sales (at) westsideland (dot) com and information can be obtained from www.westsideland.com