5 Reasons a Cash Offer for Land is Better
There are essentially three ways to sell land. The traditional way to sell land is through a real estate agent. Real estate agents list the property for you and handle most of the paperwork. You could also sell land by owner. You’ll need to do everything yourself, but you can save the sales commission when selling without real estate agents. You can also sell land for cash. Getting a cash offer for land is different because you can sell land quickly. Which is best for you depends on your priorities and timeline.
In this article, find out the reasons why a cash offer for land may be better. We also cover how to negotiate the offer.
What is a fair cash offer?
A cash offer for land is when a land buying company offers to buy your land fast without contract contingencies. Fast land sales take about two weeks, depending on where the land is located and how complex the real estate transaction is.
There are many types of contract contingencies. Contingencies give the buyer the chance to check the property to make sure it meets their needs after the contract is signed. Here are some of the common contingencies that you avoid when selling land for cash:
- Financing contingency - that the buyer is able to get a loan for the property
- Appraisal contingency - that the property appraises for a certain value
- Septic system - that the property passes a percolation test to install a septic system
A cash offer also means you’ll be selling the property at a discount. How much of a discount depends on your area and how much demand there is for land. It’s common for cash offers for land to be between 30 - 70% of market value.
Cash buyers are buying your land to make a profit. Before the cash buyer can make a profit they will have many expenses. Here are some common expenses for the cash buyer:
- Cleaning up the land
- Having a survey performed
- Advertising the land for sale
- Real estate agent commissions
- Closing costs
These expenses often add up to thousands of dollars. The cash buyer also takes the risk that something about the property is discovered later and they are not able to sell it.
Why is a cash offer better?
1) Sell Land Fast
Often, the main reason to accept a cash offer is to sell land fast. There can be many reasons for wanting to sell a parcel fast. You may have moved away or no longer visit the property. Or maybe you inherited the property and want to tidy up your affairs. Or maybe you just want to use the money for something else.
2) Sell Land for Cash As-Is
Selling land as-is means you don't have to make any improvements to sell the land. Often, some improvements are needed to make properties attractive to buyers. These improvements could be anything from cleaning up the land, taking down vacant structures, or repairing fences or driveways.
These improvements can be costly and take time and effort you may not want to spend.
You won't have to make any of these when selling to a cash buyer. A land buying company will usually buy your lot as-is. They will make any improvements that are needed after they buy your property.
3) Sell Land Without Contract Contingencies
Contract contingencies protect the buyer by making the sale contingent on terms specified in the contract. For the seller, contingencies make it more likely the sale will fall through. For example, a contract with an appraisal contingency may fall through if the property does not appraise high enough.
The contingencies also mean it takes longer to sell the land. For example, a survey is a common contract contingency. The survey allows the buyer to confirm the property boundaries. The survey also shows the location of any easements.
A cash offer usually does not have contingencies. That's why a cash buyer can buy your property quickly.
4) Convenient Way to Sell Land
Some sellers are looking for a convenient way to sell land. When you have other things going on in your life, convenience may be a higher priority than getting the best price.
There can be many reasons for this. If you don't live near the property it can be a big hassle to get the lot ready for sale. Or maybe you're just simplifying your life and selling the land is one less thing to worry about.
Selling land for cash is the most convenient way to sell. You won't have to make any improvements, interview realtors, or negotiate any contracts. A We Buy Land company will handle the sale professionally and make the process easy for you.
5) Avoid Costly Fees
Sellers often overlook how many costs they'll have when selling land. Here are some of the typical costs when selling a lot the traditional way:
- Transfer taxes
- Real estate agent commissions
- Professional photography
- Legal fees
- Recordation fees
These costs can add up to thousands of dollars. You can avoid these costs when selling to cash buyers. The offer will be the amount of money you will actually receive. You won't have to guess what costs will eat away at your sale proceeds.
Can you negotiate a competitive cash offer for your property?
Yes, you can negotiate a competitive cash offer for land. If you received a cash offer in the mail, the buyer may not have evaluated your property in detail. Instead, the buyer sends out many offers, hoping that some people will respond.
The offer that they sent you may only reflect average prices for real estate in your area. The offer may not reflect attractive features of your lot. For example, your property may already have utilities, access to water, or a nice view. These types of features can make it easier to sell. In this case, the cash buyer may be able to raise their offer after reviewing your property in detail.
To negotiate the cash offer, the first step is to have a conversation with the cash buyer. Are they aware of all the property's features? Also, make sure the acreage on the offer matches your property's description. For example, you may own several parcels of land and the offer may have only been for one part of it.
During this conversation you can also make the cash buyer a counteroffer. A counteroffer is the price you're willing to sell the property for. The cash buyer may accept your counteroffer, or you may find a price you can both agree on.
How do you respond to a low offer?
Try not to take it personally if you receive an offer that's below your expectations. A cash buyer may not know what's special about your property or the sentimental value it holds. They may also not know the land's full value. They may have only considered average land values in your area, not the specifics of your property.
To get the most out of the cash offer, consider having a conversation with the land buyer. Make them aware of the property's selling points. They may be able to improve their offer.