Question for people who've bought land

I enjoyed this video (https://youtu.be/nV7G9_6hwF8?si=f5ChxPDTg4aFza4I) but it included a claim I fear is too good to be true, that raw land is frequently overpriced by 25%, 50%, even 70%.

Was that your experience? Did you ultimately pay less than the asking price for your land, and if so how much less?

For those who have watched the video, what else did you find resonated with you as true or as especially untrue?

Ned Harr wrote:I enjoyed this video (https://youtu.be/nV7G9_6hwF8?si=f5ChxPDTg4aFza4I) but it included a claim I fear is too good to be true, that raw land is frequently overpriced by 25%, 50%, even 70%.

Was that your experience? Did you ultimately pay less than the asking price for your land, and if so how much less?

For those who have watched the video, what else did you find resonated with you as true or as especially untrue?

I shopped for years, and found that in my region there was very little price movement on the part of sellers, and if something was overpriced relative to demand, most sellers were content to let it sit. Sometimes a property would be listed on and off for several years and then be pulled with no sale occurring. One property near me is listed nearly every spring for the last decade or so, hasn't sold yet..

The property I bought was one of a size and price matched set, all owned by one extremely wealthy man. They all sat on the market for years. He dropped the price by around 10%, and every one of these properties sold within a few months, I think all within 5% of the new asking price. This was the biggest drop I can recall seeing for empty acreages in all my search..

Most other properties I looked at moved quickly, near asking price. I was outbid on some; once I had a signed agreement but walked during the conditions stage.. seller had a backup offer in place already.

This assertion may be true other places, particularly more remote places, but it does not appear to be true here.

When I was purchasing land I offered 20% lower than original price, then was counter-offered with original minus 10% and I accepted it. I could do it, because I was paying cash for full amount. Most raw land sales are owner financed. It's more attractive for the seller to have full cash amount instantly - albeit little bit lower, than get original price money trickling for years with monthly installments from the buyer.

Usually prices of land are expected for folks to make an offer so price is more than they expect to get.

Make an offer.

I've bought and  sold lots of land.

right now it is a toss up between win win and ...

Hi Ned,

Real estate is almost always a negotiation.  I have purchased one house and then the acreage that I now live upon.

I paid less than asking for each.

My first house I offered about 5k lower than asking (asking was about $98k) and it was accepted on the first offer.

My second was more of a negotiation and there were a couple of offers and counter offers before settling on a deal.  I paid less asking, but not a huge amount—the land was at a premium location.

The old rule of thumb was to settle at a final price that was 10% under asking, but I would round that up today.

Maybe a good place to start is offer 10% under and see how the seller responds.  I would guess that they make a counter offer.


But whatever you do, don’t make an offer that so low that it insults them.  At that point they won’t budge and might refuse to sell outright just out of spite.  This almost happened to us when we went to sell our first house.
 

So good luck with your negotiations!!!




Eric

To be clear, I am not currently in negotiations or even actively shopping for land. I am strategizing on how I'm saving for land and trying to see what I might realistically be able to afford.

Mainly I'm trying to get other perspectives on the points made in the video I linked in the OP. It's made by a guy who has a company that (it seems?) helps people buy land. He makes a lot of points in the video I like (about the mindset and behaviors that will help buyers be successful) but he also states some facts that seemed too good to be true, such as that land often sells for 60-70% lower than the asking price.

The research I've done since watching that video has updated that "common discount" number closer to 5%-25%, but I wanted to also get perspectives directly from people who've gone through the process themselves.

From my experience I would say that it's quite unlikely that someone would accept half of asking price, but the other scenario that may result in similar savings is possible.
Imagine two similar lots: one being sold by aggressive real estate agent with a large audience and extensive connections. The other is sold by the owner who only advertises on craigslist/facebook and with a paper poster attached to his fence. The agent's price may be easily twice of what the self selling owner asks. I saw several such cases in the past.

An observation after selling mulitple raw land parcels over the past 5 years, from 1.25ac to 20ac in size: there is a buyer class of predatory underbidders who are looking for distressed sellers. Land is illiquid, and if you have land but need cash fast, there are groups that cater to that need, which might account for the discount numbers referred to.

Holding land speculatively is not for the faint of heart. Buying a place you want to grow old and die on, that is a different (better) way to evaluate.

So, both the video claims and the thread comments can be true, but I think they represent different scenarios.

Best,
Mark

Much depends upon the region and local custom.  As a general rule offering 10% or20% less is normal. But there can be significant variations from that.
In my present county it is common for the asking price to be double what the seller expects to get.  I have encountered property listed for less than what was expected. The listed price was actually the minimum and the seller expected bids.

Mark Mittner wrote:both the video claims and the thread comments can be true, but I think they represent different scenarios.

The guy in the video claims that listing prices are inflated not because sellers are distressed, but because they commonly do not know the value of their land and just throw a hopeful number out there.

I would not expect most Permies users who've sold land to be clueless like that, but it wouldn't surprise me if many land sellers were.