Nick MontpetitParticipantJanuary 25, 2019 at 11:28 amPost count: 3
Sorry about the very basic question, especially if I simply missed the answer somewhere in the training program.
In the training package, Steven uses an offer price of $100/acre. Because my target county has different vacant land values, I’m wondering how to set my offer price. My understanding is that a good way to do this is to look at completed sales for comparable properties on LandWatch, which makes total sense to me.
Is it just a matter of applying a multiple (say 25%) to the typical completed sale price to get the offer price. If so, what is a good guideline for setting the offer price?
Thanks for your help! I think the training program is great!Kevin FarrellModeratorJanuary 25, 2019 at 12:04 pmPost count: 900
Hi Nick – In a county were there are a lot of parcels that are all pretty much the same, just find the bottom of the market price by looking at sold or for sale listings. I like to use Landwatch. I toss out the other land dealers since they are “wholesale” prices. Then I use the lowest advertised price as the comp. This works in a county where there are 5,000 5 acre parcels. It is trickier when looking at multiple acreages and where the properties differ in quality throughout the county. In that case you may need to price by zip code or even by subdivision to get relevant prices.
Pricing your offers is part science and part art. If in doubt, offer low. Nothing worse than overpriced offers. That phone won’t stop ringing and you figure out quickly that you can’t buy them at that price and still make a profit. By the way, there are few counties where $100 per acre still works. Be open minded and let the numbers help you set the offer price. Use the data (Use the Force, Luke.)
Remember – your goal is to purchase property at a price that will allow you to put it on the market at about 50% of what is already listed for sale. When you do that, the property sells immediately. That is all there is to it.
Good luck.Nick MontpetitParticipantJanuary 25, 2019 at 3:27 pmPost count: 3
Thanks, Kevin — this is very helpful!
I’m very happy to use the data, since analyzing data is what I do for a living!
So for illustration purposes, if I see the lowest priced comp (not from a wholesaler) at $800/acre, I want to put it on the market at $400/acre. Would an offer of $200/acre make sense in this case? Do I shoot for a specific % margin (such as doubling my my purchase price), or do I go for a set amount of profit per acre (say $200/acre profit)? So my % margin would be lower on more expensive properties with that approach.
I’m sure I’m over-thinking this, but I just want to make sure I’m in the ballpark for my first mailer. Happy to refine from there. It occurred to me that getting some good guidelines in place will get rid of the over-thinking, because I can just apply a formula.
-NickKevin FarrellModeratorJanuary 26, 2019 at 7:18 amPost count: 900
Nick – with lower priced properties go for doubling your money. When you begin to work on higher priced land you can switch to pricing for a specific profit like $5K per deal or $10k per deal etc. You can do this and still make the price extremely attractive to the buyer. It is up to you.MarcusParticipantJanuary 26, 2019 at 5:38 pmPost count: 85
Piggy backing on this thread, my data list is of lots ranging from 1 to 5 acres. Should I try to price each acre range ex 1-1.5 acres, 2-2.5 acres etc, and find the lowest price/acre for each range, or look at all 1-5 acre properties and use the cheapest of them all for pricing?
This is my first county, after scrubbing the list it’s down to 673 from 3000 originally. I’ll ad another county once I’ve got this down, and that’ll be my first mailer.Kevin FarrellModeratorJanuary 26, 2019 at 7:58 pmPost count: 900
Marcus – anytime I am looking at data with a range of parcel sizes, I find comps for each parcels size. If they are approximately the same $/acre then I price them that way. However, 1 acre lots are usually more $/acre than 5 acre lots in the same area. You need to know this before making offers. You can identify the lowest $/acre and just shoot out that offer to all sizes but you may lose a few of the smaller ones as the price may look too low. It is an art and a science to price your mailer. You will get better with practice. You will make some mistakes, but it won’t kill you. It is easier to find a county with 3000 1 acre parcels to price. Then find one with 3000 5 acre parcels, etc. Mixing them just makes it harder for you to price it, but you can do it.
You scrubbed 3000 down to 637?? That doesn’t sound too good. Maybe you should start over in another county. I would. Sometimes you buy the data and end up with nothing much to mail to. That’s OK. Start over and find a better county. This is part of the job. Good luck.MarcusParticipantJanuary 26, 2019 at 8:18 pmPost count: 85
Much appreciated Kevin, I really like the idea of finding a county with 3000 x acre lots instead of a range of acres. I got the list this small because the data had improved values even though I specified 0-0, I deleted data with marina/condo units which I know nothing about, house numbers, the stuff Jack shows in the program, and duplicates. Although I think it was the improved and marina stuff that was the majority. I’m still willing to make this work but I don’t have my heart set on this county, after I pulled the list I discovered the county doesn’t have a GIS system.
In my comps I did notice that the smaller lots are usually more expensive, which is great, now I can focus on larger stuff, which I what I like better anyway.
Another thing while I think of it, when it comes to comps, do you filter by your max retail price? For example if I have $10,000 to use, and that’s 25% of $40,000, do you filter results by the $40,000 price, in addition to the parcel size?Kevin FarrellModeratorJanuary 27, 2019 at 8:19 amPost count: 900
Marcus – I can’t answer your question because it does not make sense to me. If I had $10,000 to invest, I would try to find 10 properties that I could buy for $1000 each and sell for $3K to $4K each. Not just one to buy at $10,000.
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