The old adage that cash is king in real estate transactions has probably been more true over the last few years than ever before due to tight credit markets. If a buyer can put down the cash and close in less than 30 days then a seller is usually willing to make some concessions if they are serious about selling and the concession is almost always in price.
However, I think when it comes to land that maybe the royal marriage of Cash and Land is not the match made in heaven that we think it is as so many of the royal matrimonial unions have shown us over the years.
Why would land sellers care less about cash offers? Who doesn’t want a cash offer? A few recurring factors seem to be at the core of the issue.
#1 Land Sellers want to sell but do not have to sell.
Really? Yes, really. Over half and probably more like 75% of all of our sellers own their land free and clear. It has typically been in the family for quite some time and usually one or more of the owners uses the land on a regular basis or enjoys income from it. I think the longer days on the market history of land that we see is a reflection of this thought process.
#2 Land Sellers are more emotionally attached than home sellers.
Again, yes really. Jonathan Goode recently posted an article here on LandThink about naming places on your land and his article illustrates that point perfectly. Land sellers will share stories of their grandchild’s first hunt or first caught fish or where their Dad taught them to drive the tractor. We all feel a connection to the earth and land sellers are particularly devoted to land that they grew up on. They will get insulted by lowball offers just as much as a homeowner does and maybe even more so at times.
#3 Land Sellers usually receive some type of income from their property.
More often than not the land seller has some type of income generation on the property whether it is farmland, hunting leases, pasture grazing rental or even billboard sign income. This income also typically completely offsets their holding costs so in essence they have no pressing need to sell.
Ok so at this point you may be wondering why they are even selling. The news media has blasted farmland as the best thing since sliced bread lately and sellers are probably trying to time the market just right. Others have had a death in the family and the heirs are ready to move on but they will not give it away. Some even just try to test the market. But in the end the thing I hear most often from land sellers is that they want the real estate transaction to be good for both them and the buyer. They believe the right person at the right time will gain as much enjoyment, benefit or income from the property as they did and so they just hold out for that buyer.
My Granddad always told me that things work out for a reason and I believe that. So if you are offering cash lowball offers and getting nowhere then maybe there is a good reason. Contemplate it and figure out what your goals are regarding owning land and try again because the right seller is out there for you.
Written by Marisa Morgan Dallman who has written 6 posts on LandThink.