Pros and Cons of Selling Land to a Georgia Land Company

Across Georgia, over 7 million acres currently stand classified as cropland or undeveloped rural acreage based on recent USDA data. And a 2021 IRS report noted 24% of land sales across the state involved transactions selling into or out of corporate ownership. This significant churn rate traces to acquisition entities and development firms playing an outsized role shaping local land markets. With corporate buyers like timber investment groups, developers and even alternative energy companies scouring the state seeking off-market buying opportunities directly from land owners, knowing the trade-offs weighing a potential sale deserves consideration. 

While headlines boast some Georgia land fondly held for generations within families brought multi-million dollar deals when decided income potential no longer aligned with operational objectives, numerous nuances exist exploring all channels before selecting buyers including specialized regional land companies. This guide examines merits and drawbacks Georgians face when entertaining inbound inquiries from niche land buying entities emerging as major players in the state’s property arena.

How Land Companies Operate in Georgia

There are a whole bunch of companies in Georgia that buy and sell land to make money. These land companies come in all shapes and sizes, from small family ops to huge corporations. Their business is simple - they buy land cheap from sellers who want a quick, no-fuss sale. Then the company turns around and sells the land at full value to make a profit.

Let's look at Land Boss. We've been working the Georgia land market for over 5 years now. In that time we've bought and sold well over 100 pieces of land across the state. Like other land companies, Land Boss has in-house experts who know how to spot good land opportunities, make fair value offers, negotiate with sellers, and handle all the legal stuff to close deals. For landowners new to selling real estate, companies like Land Boss pitch themselves as an easy option since they handle everything start to finish.

The bottom line is there are a lot of these land buying/selling companies in Georgia. They can streamline the sale process for sellers, but also buy low and sell high to make money. Landowners need to understand how they work before choosing to sell their land this route.

Potential Advantages of Selling Land to a Company

For those looking to sell land in Georgia, there are some key potential benefits that make working with a local land company appealing:

Speed and Certainty of Sale

One big plus of selling to a land company is how fast and smooth the sale can be. Land companies always have cash on hand and are eager to buy property. So they can finalize a purchase super quick, often in just weeks, compared to waiting months or years for an individual buyer to come along. And since land deals are their specialty, they know how to handle all the paperwork and details smoothly. They also have the money to buy land with cash upfront, meaning you don’t have to worry about an owner-financed sale falling through. With a land company, you can be assured the sale will close quickly and without headaches.

Less Hassle for the Seller

Trying to sell land on your own the traditional way is usually a giant pain. You have to get the property appraised, list it, show it a bunch of times, field offers back and forth, negotiate with buyers, and hope the deal actually closes. If it falls through, you’re back to square one. But working with a land company takes most of those worries and hassles off your plate. They handle getting appraisals, marketing the property, making an offer, drawing up contracts, negotiating terms, and getting to closing. For landowners without the time, patience or experience to sell property themselves, letting a land company handle the messy details makes life so much easier.

Avoidance of Commissions and Agent Fees

When selling through an agent, landowners must pay commission fees, often 5-6% of the total sale price. There are no such commissions or finder's fees when selling directly to a land company. The purchase offer comes directly from the company. While land companies do aim to profit by buying low, their offers can still be competitive since sellers do not pay extra commissions. For some land sellers, avoiding hefty agent fees helps offset the typically below market value offers from land companies.

More Flexible Sale Terms

Depending on the specific property and the seller's needs, a land company may be able to provide more customizable sale terms compared to an individual buyer. For instance, if a seller needs more time living on the property before vacating, the company may be able to build that into the contract. Land companies may also purchase only a portion of the total acreage. Their flexibility gives sellers options that might not be possible when selling through traditional channels.

Potential Drawbacks of Selling Land to a Company

Despite the advantages, using a land company also comes with some key downsides that sellers will want to carefully weigh:

Below Market Value Offers

The main trade-off when selling land to a company is accepting an offer below full market value. Land companies purposefully submit discounted offers because they aim to profit from reselling at a higher price point. For landowners prioritizing maximizing their sale price, the low bids from land companies will often be unsatisfactory. Sellers should not assume a company's first offer represents fair market value. However, real estate agent commissions can offset this gap if selling independently.

Lower Net Profit

Tied to their below market offers, selling through a land company typically generates less net profit for the seller. Patient landowners willing and able to take on the process of selling may reap bigger overall returns by selling at full market rates without a middleman involved. However, successfully selling land independently requires time and real estate expertise few sellers possess. Weighing potential profit against convenience is key.

Additional Fees and Transaction Costs

Avoiding real estate commissions does not mean selling to a land company is free. There are still closing costs, legal fees, and document processing fees. The land company may charge for third-party services like surveys and appraisals as well. While minimal compared to commissions, these costs still eat into the seller's bottom line. Savvy sellers should clarify all fees upfront before finalizing a deal.

Less Control Over the Process

Opting to work with a land company means handing over much of the control during a sale. Sellers cannot pick and choose buyers or set an ideal sale price beyond negotiating with the company. The timing and terms of the sale are also largely out of the seller's hands. For those who value control and independence, this could be a frustrating trade-off.

Key Tips for Selling Land in Georgia

For landowners considering using a Georgia land company, here are some important tips to get the best deal:

• Seek out multiple purchase offers to compare - Smart sellers meet with several land companies and get bids from each before committing. A wider net leads to more bargaining power.
• Research fair market value independently - Work with appraisers and review recent comparable sales. Independent data helps negotiate better with any land company.
• Consult an attorney to review contracts - Legal expertise provides protection and identifies potential risks when reviewing a land company's offer and paperwork.
• Ask for and check client references - Reputable land companies will readily provide references from prior sellers. Check reviews online as well.
• Evaluate timing and market conditions - Current real estate markets impact deals. In seller's markets, independent sales may yield higher prices.
• Negotiate additional terms - Within reason, seek negotiated terms like extended closing timelines that meet your needs.
• Clarify all fees and costs - Understand what transaction fees the company charges and factor them into evaluating offers.

Final Words

Selling land in Georgia presents landowners with a complex decision between the speed and ease of selling to a land company or the independence and potential higher profits of an individual sale. Companies like Land Boss provide expertise and convenience, but at the cost of below market pricing and less control. There is no universally best option. Priority factors like timing, profit goals, and skill level help determine what path makes sense for each unique land seller. With thorough research and comparisons between multiple options, landowners can make an informed decision that meets their situation.

Frequently Asked Questions (FAQs)

How much below market value will a land company offer for my property?

There is no single rule for how far below market value a land company will offer. It depends on factors like current real estate markets, demand in your area, your parcel specifics, and what profit margin the company targets. As a very general guide, offers could range anywhere from 10% to 30% or more under market value. The best way to gauge offers is to get quotes from multiple land companies and compare.

Should I negotiate with a land company on price?

Absolutely. Many sellers assume the company's initial offer is fixed or non-negotiable. However, land companies expect counter-offers and negotiations. Research sales of comparable properties to support requesting a higher price. Detail improvements you've made that impact value. Be prepared to negotiate to arrive at a fair price.

What fees and closing costs will I pay when selling to a land company?

Closing costs vary, but may include title transfer fees, document processing fees, overnight shipping costs, and attorney review fees. The company may charge you for services like appraisals and surveys done on your property too. Read the purchase offer carefully and clarify all costs ahead of time so there are no surprises.

How can I estimate what I would net from an independent sale vs. a land company?

Add up all the costs like commissions and fees you would incur selling independently. Compare that total net amount to the land company's offer amount. Weigh the net profits against factors like convenience and timing needs. If you are unsure of actual market value, getting appraisals can help inform this comparison.

What steps should I take before agreeing to sell my land?

Do your due diligence up front: Get multiple offers to compare, clarify all terms and costs in writing, consult an attorney to review the purchase contract, check client references from other sellers, and research the true market value. Avoid committing to the first offer you receive. Take time to make an informed decision that meets your needs.

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