Pros and Cons of Selling to a Delaware Land Company

When considering options to sell undeveloped land in Delaware, such as old homestead parcels, acreage used for timber harvests or farming, wetlands and other vacant holdings, one potential sale route lies with specialized land buying companies based locally in the state. With over $28 million worth of agricultural land assets changing hands just over the past 5 years in Delaware according to USDA data, these experienced land investors actively purchase properties to expand their holdings across the region. Selling to established local land companies eliminates the need to piecemeal market listings to individual buyers on your own. Additionally, companies usually pay competitive cash prices and handle all closing costs for added convenience.

However, selling to any single entity reduces the potential buyer pool, which could preclude landing top-tier auction-level prices. Companies may also lowballoffers below full fair market value. Weighing the unique pros and cons of selling to active regional land buyers helps Delaware landowners better evaluate deals as part of developing a customized sale strategy catered to their priorities.

Selling Land in Delaware

For landowners in Delaware, various options exist when considering selling your vacant land. Listing your property with a real estate agent to market to individual buyers is a common approach. However, this can involve paying commissions and waiting an extended period for the right deal. Alternatively, direct sales to residential, commercial, or industrial developers may be possible depending on the land’s location and attributes. 

Lastly, selling to a professional land buying company brings its own set of advantages and disadvantages. As the name implies, these companies specialize in purchasing land across Delaware to then resell, lease, or develop. Let’s take a closer look at the pros and cons involved with this choice.

Pros of Selling to a Delaware Land Company

Speed and Certainty 

Unlike sales through traditional real estate channels, established land buying companies have the resources and expertise to move quickly when acquiring properties that fit their criteria. This enables them to make cash offers, close deals, and pay sellers quickly, often within a few weeks instead of waiting months for a sale to individual buyers. Their familiarity with the local land market combined with experience in land development or resale gives them confidence when valuing and making offers. Once an acceptable deal is reached, reputable land companies can provide more transactional certainty without worries of financing issues jeopardizing the sale.

Cash Payment 

Receiving a cash lump sum payment provides maximum flexibility for the seller rather than being tied to buyer financing over months or years. Land owners can immediately use the funds from the sale for paying off debt, reinvesting in new assets, or funding life expenses. For those facing financial difficulties or inheriting unwanted property, a cash payout from a land buying company may relieve pressing needs.

Avoid Hassles of DIY Sale

Attempting a direct “For Sale by Owner” of land comes with many headaches that most sellers want to avoid. Listing services require upfront fees while the odds of fielding serious and legitimate offers remain low. Handling title paperwork, site visits with potential buyers, contract negotiations, and closing coordination takes considerable time and effort. Instead, dealing with an established land buying company simplifies the sales process with few out-of-pocket upfront costs for assessments, surveys, etc.

Buyers Assume Responsibility 

Following the sale, future liability and oversight of the land transfers completely to the buying entity. For the seller, this reduces potential ongoing tax and maintenance obligations as well as any risks related to the land itself. Land buying companies have the expertise and manpower to manage development, mitigation of issues, lease agreements, or getting permits required for a zoning changes.

Cons of Selling to a Delaware Land Company

Below Market Value Offers 

The primary trade-off when selling land to a professional buying company comes down to purchase price. Their goal is acquiring land at a significant discount to then sell or develop at a higher market value price. Depending on negotiating leverage, sellers may feel offers come in well below recent comparable sales for similar nearby plots. Compromising on sale price translates to "leaving money on the table" compared to more patient routes to selling at full market value.

Perception of Exploiting Sellers 

Some critics feel land buying companies take advantage of sellers who lack experience in real estate transactions or face financial duress. Identifying motivated or desperate land owners can lead to deals favorable to the buyer but not the seller. Tactics like making unsolicited offers on land that isn’t even for sale are seen by some as preying on vulnerable people. Land buying companies counter that they provide a valuable service but educating sellers beforehand is key.

Loss of Long-Term Appreciation

Opting for a quick land sale prevents the seller from realizing gains from long term appreciation over the years. Raw, vacant land will generally accumulate value as surrounding plots get developed along with supporting infrastructure. Land buying companies aim to profit from this eventual increase in valuation after acquiring the property. However, estimating future appreciation contains a lot of uncertainty and holding costs can negate some gains.

Use Caution and Do Your Homework

If considering selling land to a local land buying company, carefully research options just like for any major financial decision. Get references and check for complaints, disputes, or lawsuits regarding their business practices. Be clear on how they estimate property valuations and what methodology is used. Consult an attorney to review title information and closing documents with a focus on contingencies, access rights, mineral rights, easements, royalty interests, or lease restrictions against the land. 

Understand how to ultimately maximize sales proceeds based on timing, development potential, and prevailing real estate conditions. With the right partner plus open and honest dialogue, selling land to a reputable land company can make sense meeting the needs of both buyer and seller.

Final Thoughts

Selling vacant land involves an array of factors to weigh when deciding on the best approach for your situation. For Delaware landowners seeking a swift and straightforward sale, dealing with a reputable local land buying company provides a viable option. The key advantages of speed, transaction certainty, and avoiding headaches from traditional sales may appeal to those simply wanting to unload their property. However, sellers must balance these benefits against the likelihood of accepting a below market value purchase price. Conducting research beforehand plus consulting professionals helps ascertain what works best aligned to your priorities, timing, and risk tolerance. With reasonable expectations set, selling land to an established land acquisition firm can make the process smoother while still satisfying the needs of both buyer and seller.

Frequently Asked Questions (FAQs)

What types of land are Delaware land buying companies interested in purchasing?

These companies generally look for vacant, undeveloped land zoned for residential, industrial, commercial, or agricultural use. Land must be feasible to access with road frontage or deeded easements. Swamplands, protected wetlands, or government-owned properties would not appeal to buyers.

How do Delaware land buying companies estimate the value for my property?

Valuations stem from comps of recent land sales data with adjustments based on location, terrain, zoning, site utilities, road access, boundaries surveys, mineral/water rights, and other attributes. Overall market conditions also factor in. Expect an offer well below full market value, often 35-60% lower.

Does it make more sense to sell to a land buying company or through an agent?

If fast cash and convenience are your priorities, land buying firms offer a quicker, low-hassle sale alternative. However, selling through an agent provides significantly more sales visibility plus leverage to likely command a higher sales price closer to the land’s actual market value.

What closing fees or other costs might I pay selling my land?

Land companies generally cover title search, document filing, and closing coordination costs as part of the transaction. Transfer taxes, past due taxes, or lien clearances would be deducted from your sale proceeds. In rare cases, a partial sale contingency could require you to cover survey costs if issues emerge impacting total acreage.

How quickly will a land buying company pay me for my property after closing?

Standard procedure involves issuing payment within 5-10 business days once the sale officially records and deeds transfer. Reputable buyers will clearly convey timeframes to expect funds as part of the final purchase agreement terms. Be wary of extra-long holdbacks or restrictions dictating future payment disbursement.

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