Land broker

[Michał Kóska]

Hello my Fastlane friends,

I live outside the city and my town is surrounded by huge amount of agricultural land and building plots,

Also the neighboring towns have similar possibilities

There are brokerage companies in the area but surprisingly they don't offer a lot of this land to sell on their webistes and they mostly concentrate on homes.

I thought it would be cool to start a side business that would concentrate only on selling that land.

I will establish a Wordpress website and also will post some ads on local call-boards.

My question to you is if the 1-3% commission from sales is fair for the start?

In this bracket I would include unlimited ad duration on my website, negotiation with possible buyer & help with preparing all the documentation needed.

What are your thoughts? Entrepreneurs start before they are ready

 

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[DeletedUser394]

http://www.landwatch.com/

Do whatever they're doing.

 

[Michał Kóska]

Perfect, thank you @GrumpyCat !! How about the commission/ fee? Is my bracket reasonable being the beginner in the market?

 

[MKHB]

The site @GrumpyCat referenced is an awesome sight, but that might be hard to duplicate, I spend hours on that sight dreaming of ranches I could never afford in like 1000 acres in Montana, next to Ted Turner.

What type of land is around you, are they paper lots (lots that have subdivision plat approval) or are they raw (no survey/no civil only a guess on lot yield?)

If they are platted, you might want to set up some sort of triangulation enterprise model between:
seller potential buyer engineer/survey/lending institution/developer/builder/marketing and sales company (you)

Raw land is hard to sell, unless you are right in the path of development, have utilities, frontage, etc.

But, platted stuff could be easier to move you just have to bring the parties together. I.e., people like to buy new homes but they do not know where to start, they look at a raw piece of dirt and it is overwhelming...plans, permits, approvals, builders, financing.

What if you contacted the owners and offered to play third party "Master Developer" (Master Developer is the person that buys the land and gets it entitled and sells off to merchant builders, this requires an option with a sizable deposit) only in this case you would be a "third party" equivalent. Meaning you would perform the service for a small fee and get a bigger piece off the back end (sales commission) when you move it.

Your market demographics would go up significantly from merchant builders and speculators to actual home buying public. A lot of people don't know they can get a standard 30 year fixed mortgage for a dream home on a lot of their choosing, it's called a construction to perm loan. The MLS is full of blue lots that never sell because people are scared to undertake this process, they look on the listing and see a vacant lot, not very appealing. Get a local illustrator to do a bunch desings on the cheap and put them on the MLS with tag we will build your dream home.[/QUOTE]

 

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[Michał Kóska]

Thank you @MKHB ! This is very useful! I need to analyze it further. This is mostly undeveloped land with water, gas, electricity infrastructure close to it. I will start small as I can't afford buying that land now.

 

[MKHB]

Thank you @MKHB ! This is very useful! I need to analyze it further. This is mostly undeveloped land with water, gas, electricity infrastructure close to it. I will start small as I can't afford buying that land now.

I would not suggest buying the land outright, buying undeveloped land at this point has a lot of downside risk; I suggested you "play Master Developer" for a fee, meaning you perform all the leg work and function as the Master Developer (person that entitles raw land and sells to developers/builders).

Let me analogize this: Right now were in a Real Estate gold rush, buying can be lucrative and also risky. In the scenario I suggest - you are not mining for gold, nor are you selling picks and shovels, you are more helping the owners of idle mines (landowners) get their mines up and going so they can sell to all the eager miners (builders).


Ok...Now on to the situation at hand....

You say generally that there are - no utilities at the site; good, a big need - opportunity knocks.

If they were all platted and utilities in place, they wouldn't need you, they could just stick them on MLS.

But first you must:
Become an expert in utilities/traffic/site feasibility (zoning/enviro/entitlements) for that given area - contact all gov't bodies/utility companies.
Find out who the power players are county supervisor, county commissioner, planning commissioner,department of transportation/Big HOAs
What is the zoning, what is the general plan, when was it last amended, when is it up for review?
Become friends with a good local civil engineer, surveyor, developer, land use attorney, zoning official, and any and all elected official for the area.
What are the utility company plans for the area, any future service areas, what are the costs to owners.
Electric/Cable/phone shouldn't be a problem and you could always go with LP Gas vs. nat gas.
Water and sewer that is critical. Wells and Septic mean lower density.
If there is no water and no sewer and no plans to install -what will the county allow for alternatives (contact local drainfield/septic contractors and well drillers to get costs/info)




3 Options to take advantage of the situation:

• You can "partner" with landowners as a third party helping them determine what their land is worth and getting a fee or % after sale;
• Pay 4 hundred dollars, become an agent and use your new expertise to become "Michal The Landman" the go-to broker for all dirt deals; and
• Develop some kind of 3rd party internet page as @GrumpyCat suggested, e.g., landwatch.com.

Real Estate is generally not Fastlane, but it's one of the best slowlane stepping stones on your way to Fastlane glory.

 

[bizzle]

3 Options to take advantage of the situation:

• You can "partner" with landowners as a third party helping them determine what their land is worth and getting a fee or % after sale;
• Pay 4 hundred dollars, become an agent and use your new expertise to become "Michal The Landman" the go-to broker for all dirt deals; and
• Develop some kind of 3rd party internet page as @GrumpyCat suggested, e.g., landwatch.com.

Real Estate is generally not Fastlane, but it's one of the best slowlane stepping stones on your way to Fastlane glory.

@MKHB what do you mean by pay $400 and become an agent? Real Estate Agent? What is you knowledge on the subject. My wife is about to go into real estate, and is researching the requirements. Do you have any shortcuts/info to share?

Thanks!

 

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[Leo Hendrix]

Your Broker fee/commission depends on your expertise, what value you can offer, whether standard commission rates are better for you or the customer, etc I bet there are many factors that can or could affect and or alter this.

Best to research about going rates in the industry, in your country, in those locations and best to someone experienced in this industry in your country and local area who is familiar with the land and going rates for sale etc.

Someone more experienced with Real Estate or real property should be able to give more clear/better advice.

 

[Leo Hendrix]

Sorry the last line "Someone more experienced with Real Estate or real property should be able to give more clear/better advice."

I meant someone on this forum should be able to help you out with more particular details,technique or strategy to evaluate your commission rate.

 

[MKHB]

Sorry the last line "Someone more experienced with Real Estate or real property should be able to give more clear/better advice."

I meant someone on this forum should be able to help you out with more particular details,technique or strategy to evaluate your commission rate.

Yes @bizzle I can only speak for California and Virginia

Virginia- was $99 for actual school (Got it thru Weichert, 6 weeks of in class school not hard but very boring) no special prerequisites only no felonies. Once you pass the test you apply to the state and take the test that is $166 I think (PSI Testing Centers) and after that you can hang your licensee. I have not hung mine anywhere because I work on commercial deals where I maintain a fractional interest in the deals in exchange for some of the financial due diligence and construction management (mostly value added retail and Class B office) and if I was active would have to disclose "hidden profit" a term used if you the agent of record and you benefit from both collecting a commission and an equity stake in the subject property.

California it was easier but more money, it was a while ago so forgive me if the numbers are incorrect I think all told it was $575 for school, state fees, fingerprinting etc. (someone else from California feel free to jump in and correct me here) the great thing was the school was online. So not much of a school automatic pass I think it was Mosely or Kaplan???

And commissions are as @Leo Hendrix states determined by the market, your client, your service, and your abilities, and the type of assets you are selling, contingent of course upon any statutory limitations, check your state for those.

 

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[Michał Kóska]

Thank you guys for your insights! I will certainly expand my offering, right now I need to put it all together

 

[MTF]

@Michał Kóska, there's a huge red flag with your thinking. Re-read your first post and tell me how much of your focus in on the potential client (buyer) and how much of your focus is on the product. You start a business with a client, NOT the product.

The fact that there's a lot of land for sale means nothing. There's probably a lot of wood in the forest surrounding your town, and it doesn't mean you should get into selling wood.

@MHKB has a much better idea. Become the go-to guy helping people turn their raw land into something more sellable. It would require zero capital on your part, and your clients would be only the owners of the land, not both buyers and owners (I can't think of a more difficult business than such a two-sided market). Still, I would first find out whether there's any interest in purchasing the land around your town. Maybe nobody focuses on selling it because there's no interest in buying it.

 

[Michał Kóska]

Thank you @MTF, customer focus is so natural for me that I forgot to mention it I want to be there to help them. First of all I want to start with a 'campaign' to see if there is real interest. I realize that there may be no interest, but I can also see new developers near my town building homes, so it is worth trying. @MKHB shed a lot of light on this topic and I want to stick to his advice, I'm new fish, not yet experienced

 

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[MKHB]

Thank you @MTF, customer focus is so natural for me that I forgot to mention it I want to be there to help them. First of all I want to start with a 'campaign' to see if there is real interest. I realize that there may be no interest, but I can also see new developers near my town building homes, so it is worth trying. @MKHB shed a lot of light on this topic and I want to stick to his advice, I'm new fish, not yet experienced

Right now in the US, a significant amount undeveloped and semi entitled land that was left uncompleted and without a buyer due to the credit freeze of 2008, is being liquidated at record rates; with housing making a moderate comeback and financial institutions now willing to provide capital for right sized projects in close in urban areas.

And as @MTF stated, you need demand,this has returned to many areas. He also makes a good point on repping both sides of the deal (dual agency),can be tricky-there are inherent conflict of interest considerations. I would focus on one side of the transaction in the beginning, probably the listing (owner).

http://www.bloomberg.com/news/artic...rts-selling-land-to-reap-gains-in-u-s-housing

 

[Michał Kóska]

Uff, finally I've made a first real step.

I had some crisis recently, self doubts, lack of strenght, bullshit, bullshit, etc.

I managed to overcome this and follow this idea.

People in my area own a lot of land and many of them just keep it, I want to approach those people in the coming months and try to sell their land if they wish or turn it into something more sell able. In the beginning I will use 3 ways of advertisement.

I will use the call-boards, direct mail leaflets and wordpress/ 'ebay for real estate' site.

Also, I am looking for an investor (even international one) to invest in building duplex houses. People are in need of housing in Poland, and most of them hate apartments in the cities, they look outside the city. I see the trend of buying 100-150 square meter houses. Building duplex houses means smaller cost of construction and bigger profit for investor and me. The cost of building one duplex + buying a land for it is approx $80,000. You can sell it for $150,000. Of course both cost of building and selling may wary from the area but anyway the profit is good.

The building of duplexes is another project in my mind only if I find an investor, right now I don't have money to start such business. I will surely do have it if I start to sell the land.

 

[mammoth_hunter]

And how is it going after 3 months?

 

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[Michał Kóska]

hey! sorry for late reply, I'm very busy recently. I have my webiste, FB ready. I educated myself a lot in this topic and now I want to focus on local presence. I want to buy a land for my future home, they guy I spoke with has some other plots to sell so I will offer him my service Are you also interested in such a business?

 

[Michał Kóska]

Update:
Right now I have 5 plots to sell and three potential buyers, negotiations are progressing
My questions is: how do you build brand awareness/ good marketing in real estate? It is not as sexy as apps etc. you know what I mean,

Thanks!

 

[MTF]

Way to take action, @Michał Kóska! Could you share the backstory how you got these 5 plots to sell and found potential buyers? Any interesting lessons?

As for brand awareness, Frank McKinney's book Make It Big! might possibly help you. His specialty is luxurious spec homes, but his advice can be applied to all kinds of real estate.

 

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[Michał Kóska]

Thank you @MTF ! I will definitely read this book. I advertised organically and people approached me and wanted to sell their land using my service. I offer free advertising, customer service and on-site visits for the buyers. I take % of the sale price in exchange of my service. Lessons learned were from questions asked by the buyers regarding procedures etc. I also learned how to use different sources of organic advertisement and traffic. Oh, almost forgot- I saw someone selling his land, he only had a sign in his property "for sale, ph#" I called him and offered my service, he has 3 plots in that area.

 

[Michał Kóska]

Almost closed my 1st deal gonna reinvest the commission into advertising.

 

[Michał Kóska]

3 sold I'm happy, my customer is happy, big big wins

 

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[Leo Hendrix]

I've done this before and used Facebook posts in marketplace forums and relevant niches(FB) but you could also check LinkedIn, Twitter,noticeboards,newspapers, real estate websites, follow ups with e-mails, calls, inspections, basically hustle and build organically like you have just done. Good stuff @ Michal.

 

[Michał Kóska]

Thank you Leo! I will also approach local businesses and ask them if I could leave my biz cards there. I can always add them as partners on my Partners tab

 

[Balkins]

Thank you Leo! I will also approach local businesses and ask them if I could leave my biz cards there. I can always add them as partners on my Partners tab

Good work Michal.
QUESTION: Do you need a license in your country to sell REAL ESTATE? If not, then make sure you have a contract to get paid when those properties sell. Otherwise, you could easily be cheated out of a commission.

 

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[Michał Kóska]

I don't need a license here, they introduced the law a couple of years ago. Yeah, I always have a contract on day 1 before I put the ad online.

 

[Michał Kóska]

Small update, dead winter season here I'm not expecting any interest now, really looking forward to Spring. I've learnt a lot and got a couple of sales. During the winter I will increase my local presence, then will focus more on the country-wide one. I got two sales not even seeing a client. We did all of the paperwork online.

 

[Michał Kóska]

Sorry for being quiet for such a long time

It's been a year since I registered the company and starting to operate.

It was one big learing path for me and I loved it. I planned to have more sales but still need to improve on my visibility in the web.

Starting this year, I totally revamped my site and added more ads to the internet. Also I became more active on the facebook page.

Winter is fading away so I expect more interest and activity, will keep you posted

 

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[Michał Kóska]

To the admin- could you please change it into progress thread? Thanks

Update:

Last saturday I drove around the area I live and neighbouring towns. I posted my ads on their call boards and received a couple of calls the day after. The result is one new property for sales and couple others TBD. I went to one plot, took the pics and couple of minutes earlier it was available online. My plan till June is to focus on local presence + cold call people who try to sell on their own and offer my service. I love the action!

EDIT: I had to turn 2 customers down. After a couple of seconds I already knew that all they can bring is trouble.. You have to know when to say no.

 

[Michał Kóska]

The phone keeps ringing everyday and it is nice! Today I almost landed another opportunity- I am waiting for the customer to call me back with the decision. Definitely I see bigger activity than a year ago. My strategy is working, tomorrow my plan is to visit another towns and post the paper ads on the call boards+ put more advertisement on the internet. I will slightly revamp my website, I need to write more on the landing page.