The lowdown on land…

Educate your clients before they buy or sell land

3 places to look for hidden deal breakers

Alisha Alway Braatz | Inman News | Wednesday, January 23, 2013 | link

 

<a href="http://www.shutterstock.com/pic.mhtml?id=32578711" target="_blank">Developer</a> image via Shutterstock.Developer image via Shutterstock.

Acquiring land and building houses, barns and businesses used to be a lot easier. Take the land runs of the 1890s. All a person really needed was a fast horse and hammer.

Nowadays, there are endless hoops to jump through, it takes a lot of money, and there are 12,862 rules. Helping a client buy or sell vacant land isn’t as easy as you might think. And you better think.

Buying land and building on it isn’t straightforward. Neither is selling bare land (simple as it may sound).

Thus, “Buyer beware!” is a phrase lazy Realtors repeat in their minds as they overlook three essential and elemental areas in which to educate their client: covenants, conditions and restrictions (CC&Rs); architectural review committees (ARCs); and development costs.

CC&R deal breakers

If you don’t do it already, start reading the CC&Rs of the neighborhoods in which you sell. You will learn invaluable information.

CC&Rs don’t just cover whether or not a trailer can be parked in a driveway — they can specify just about anything.

A few interesting ones I’ve run into include a ban on wood and wire fencing; no above-ground swimming pools or hot tubs allowed; and a rule against leaving your garage door open ever. Like, ever.

There are also age restrictions in some neighborhoods, leasing and rental guidelines, and a whole litany of fines, should any of the rules be broken. Navigating your clients through the treacherous CC&R deal breakers is a must. Yes, they should be reading all the material themselves — but you are also getting paid a pretty penny to help them finish a successful transaction.

Dramatic ARC

I love and hate ARCs, equally.

I love that a good architectural review committee can protect me from a purple home with neon yellow gutters, but I am irritated at having to turn in notification that I plan on staining my fence.

For the most part, ARCs are good things — unless you are building a new home in a new subdivision. Then, urrrghhh. What a headache. Especially if it is a private gated community.

Even if your job as Realtor officially ends with your clients’ purchase of a lot, it’s simply good form to prepare them for the impending and inevitable drama. But maybe they are the kind of people who like a good community barn-raising!? One can only hope.

Put a house on it

Finally, development costs. I know, I know — this is kindergarten stuff, right? Exactly. It’s the simple stuff that always gets overlooked because “Doesn’t everybody know it?” Hardly.

Assume that your buyers (and sellers) know nothing. Even if they claim to be real estate connoisseurs, write everything down, keeping a log of conversations and having your clients sign off on, well, everything.

But back to those pesky development costs. When dealing with bare land, be super-duper sure of its zoning. Check on the long-range land use plans if it is near the city center or on the edge of town. Is it in a flood plain? What about utilities? And a land survey? Or a soil sample?

I’m not saying you have to become a developer yourself, but you need to sit down with the buyers and discuss access, easements and building envelopes especially if the bare dirt doesn’t have utility access already.

Once they own the land, then they gotta put a house on top of it (usually). Add it all up, and is it really realistic?

I’ve seen too many deals gone bad simply due to the kindergarten stuff. So collect your blunt-tip scissors, Elmer’s Glue and the grape smelling Magic Marker, and get down to business.

Not only will you learn a little bit yourself, but you’ll be reinforcing why you are a professional Realtor and not just a part-time chauffeur.

Author: kimhuntkw

We specialize in Real Estate in the Pleasanton, Dublin and Livermore areas of the East Bay in California

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