Pros and Cons of Selling to a North Carolina Land Company

Land development contributes over $23 billion to North Carolina’s economy as developers transform raw acreage into new residential communities and commercial projects. Demand for entitled property persists in high-growth regions. For landowners exploring liquidation options, one potential route involves selling directly to a pre-vetted North Carolina land company or real estate investment fund possessing ample resources to enhance land value over time through expertise in navigating zoning processes. These private development entities also boast major capital and political connections expediting projects. 

However, selling via private sale necessitates thorough due diligence upfront, given opaque pricing dynamics. Land owners must determine if the certainty of closing a quick cash deal outweighs possibly surrendering some resale value or waiting longer selling through public listings. However, with over 90% of land deals occurring via private transactions, vetting acquisition companies closely becomes imperative to ensure alignment with long-run objectives before any North Carolina land changes hands.

The Possible Benefits of Selling to a Land Company

Selling your North Carolina property directly to a land company rather than listing it on the open market offers some potential advantages that may make the process simpler and faster.

You Can Sell Your Land Faster

One of the biggest perks of selling to a land company is that it can be a much quicker process. These companies have funds on hand specifically to buy properties like yours. This means they can make an offer and close on a purchase faster than an individual buyer would be able to. While selling your vacant land independently could take many months or even over a year to find the right buyer, a land company may be able to complete the purchase within a few weeks. For some landowners, the speed and convenience of a quick sale makes selling to a company an attractive option.

You Avoid the Hassles of Selling Independently

Selling land on your own requires you to handle all the steps yourself - or pay professionals to assist you. This includes valuing the land, creating listings, placing ads, coordinating showings, fielding inquiries, negotiating offers, and reviewing contracts. For many sellers, these tasks are a major drain on their time, energy, and sanity. Selling to a land company means avoiding these frustrations. Once you accept the company's offer, they manage the rest of the process directly and close the sale.

You Get a Cash Offer

Land companies have the capital on hand to buy properties with cash. This gives them flexibility, but it also benefits you as the seller. A cash offer means you get your payout immediately instead of having to wait on a buyer's financing. The cash from the sale can then be reinvested as you wish rather than sitting in escrow.

You Can Sell As-Is

Often, selling land yourself requires investing money upfront to prepare your property for sale. You may need to clear debris, improve access roads, or make other upgrades to maximize your selling price. But land companies are typically willing to buy properties in as-is condition. This saves you the hassle and out-of-pocket costs of fixing up the land before closing.

Important Downsides to Consider

However, there are also some clear drawbacks you need to seriously think about before selling your land to a company.

You'll Likely Get a Below Market Value Offer

The reality is a land company needs to buy properties at a discount so they can turn around and sell at a profit. This means the offer you receive will likely be lower than the land's fair market value. You miss out on the full equity you've built if you accept a below market offer from a company.

You Don't Benefit From Future Appreciation

By accepting a low offer now, you also potentially miss out on benefiting from the land increasing in value after it's sold. Any future appreciation that occurs after the sale goes to the land company's benefit, not yours.

There's No Personal Connection

Some landowners prefer selling directly to a buyer who will live on or develop the land. They value that personal relationship and good stewardship. With a land company, it's merely a financial transaction with no deeper connection.

You May Incur Additional Costs

A land company isn't buying properties as their end goal. They incur holding costs and other expenses until they can resell the land. Some of these costs could get passed back to you in the form of lower offer prices.

You Give Up Control of the Sale Price

You have no control over what price the land company ultimately sells your property for. If they negotiate a sale for a much higher price than what they paid you, that could understandably be upsetting. But once you close the sale to the company, future transactions with your land are out of your hands.

Tips for Weighing Your Options

As you consider the pros and cons of selling to a land company versus selling your North Carolina land independently, keep these tips in mind:

• Consult your financial advisor or accountant to determine the tax implications of each option. There may be ways to maximize your position through a careful sale strategy.
• Shop around with multiple land companies if going this route. Get several offers before committing so you can compare and negotiate the best deal.
• Inspect the purchase contract thoroughly before signing. Make sure you understand any fees, contingencies, or other terms.
• Regardless of your chosen path, work quickly once you have an agreement in place. Whether selling yourself or via a company, closing the sale smoothly and efficiently is key.

Selling your undeveloped North Carolina land can be complicated. But taking the time to fully weigh your options will help ensure you make the right decision for your needs and ultimately walk away satisfied from the sale.

How to Choose the Right Land Company

If you decide that selling your land to a company is the best option, make sure you take the time to carefully vet potential buyers and choose the right partner. Here are some tips:

Research Reputable Local Companies

Look for established land companies that have been operating in your area for several years. Check with the Better Business Bureau for any complaints. Read online reviews to get customer feedback. Reputable local companies are more likely to make fair offers and close smoothly.

Request References

Ask companies for references from past sellers they've worked with. Speaking to other landowners who sold to the company can give you insights into their reputation and sales process. Were past clients satisfied? Did they close on time? Direct feedback is invaluable.

Compare Multiple Offers

Don't go with the first land company offer you receive. Interview several companies and get quotes from each. Comparing offers will help you negotiate the best deal. A wider spread of offers may also reveal an outlier that is undervaluing your property.

Understand the Terms

Scrutinize the details of the purchase contract before accepting an offer. Make sure you are clear on all terms related to price, fees, contingencies, closing timeline, etc. Ask questions if you don't understand something. Don't sign until you feel confident you are getting a fair deal.

Taking your time to vet land buyers thoroughly gives you the best shot at having a smooth, satisfactory land sale.

Final Thoughts

Selling your undeveloped land in North Carolina can be a complex and demanding process. Trying to sell your property independently in order to maximize your profit requires substantial time and effort. Meanwhile, selling your land directly to a local land company provides a faster and simpler route to closing a land sale, though likely at a discounted price. There are clear benefits, like speed and convenience, as well as notable drawbacks, such as below market offers, that come with selling your land to a company. Carefully weighing the pros and cons for your specific situation is crucial. Doing your research, understanding your options, negotiating the best deal possible, and ultimately choosing the right path forward takes diligence. But putting in the hard work upfront will help ensure you walk away from the sale feeling satisfied and confident you made the right decision.

Frequently Asked Questions (FAQs)

What documents do I need to provide when selling my land to a company?

The land company will typically request a copy of your deed to verify ownership, property tax records, plat maps or surveys, the legal description of the property, and any other relevant title documentation. Having these ready ahead of time can help expedite the process.

How quickly will a land company be able to close on a property they want to buy?

Many land companies advertise their ability to close very quickly, sometimes in as little as a few weeks. The exact timeline will depend on factors like needed title work and whether financing is required. But in general, land companies can close faster than selling the land yourself to an individual buyer.

What costs will I be responsible for when selling my land to a company?

As the seller, you will likely need to pay for legal fees to review the purchase contract, any title searches or document filing fees, and potentially a commission for your real estate agent if you have one. The land company covers the cost of their own legal representation.

Can I negotiate the initial offer from a land company?

Yes, definitely try to negotiate the offer if it seems lower than you expected or is under market value. Many buyers start with a low initial offer expecting counteroffers. Push back and be prepared to make your case for a higher sale price.

If I sell to a land company, can I still lease the land back for a period of time?

It is possible to negotiate a lease-back provision if you need to continue using all or a portion of the land for a period of time after closing. For example, farmers sometimes lease back sold land through the remainder of the growing season. Discuss this option with the land company.

‍