residential land sales new home construction

The Evolution of Residential Land Sales in the Northeast

Northeast land values and trends in residential land sales: What has happened and can we see the future? I have been a practicing REALTOR® for thirty-eight years. I started selling real estate while in college and never looked back. My primary market is thirty-five miles west of Boston. The state of Massachusetts is really divided into these parts: Route 128 and inside, Route 495, both sides, to Route 128 and Worcester east to 495; and, then, Western Massachusetts. Massachusetts has a myriad of permits and land use regulations which are some of the most restrictive in the country, in my opinion.

As a young REALTOR® starting out, I did all types of land sales. My marketplace was dotted with family farms. Most of these, as a teenager, I would hunt, fish, and drink beer on (of course with land owner approval, or one of their sons / daughters in tow). When asked to write this, I thought of what story would be best to tell. The approach I’m taking will, hopefully, be applicable across into your marketplace.

In the late 1970s and the early 1980s, land could be bought for forty-five dollars per lot as an Approval Not Required Under Subdivision Control (ANR) lot. An “ANR lot” means that the lot complies with the dimensional requirements for public way frontage and the required minimum lot size. For backland, you could buy a forty-acre piece in the “raw” for ten thousand dollars per lot. Once under contract, you could begin the necessary permitting. The rule of thumb in practice at that time was that twenty percent of the land tract had to be given up to regulatory prescription; in this case, eliminating eight acres.

residential land real estateAt that time, my thoughts were that the entire regulatory morass was put on the landowner to the community’s benefit. Alas, to this day, I still feel the same. New homes were being built for fifty dollars per square foot, the lot included. A finished two-thousand square foot colonial was one hundred thousand dollars, or thereabouts. During the early 1980s, we had an escalating economy and prices on homes and land were rising dramatically. The state of Massachusetts started buying the developmental rights to family farms and paying them not to build, but to continue to farm. In Northborough, two of the biggest farms on the highest point in town, overlooking the new 1974 I-290 highway, were bought. Over five-hundred acres were kept from development and, until this day, serve as a reminder of why some regulations are necessary.

In addition, a certain amount of lots were allowed to be kept for family members in the future. Now, the third and fourth generations of farmers have their homes here and a vibrant farm business has grown, and keeps growing. In 1987, Massachusetts had a banner year selling farms at a price of forty-thousand dollars per lot in the raw while an ANR lot ran about seventy-five thousand dollars each. Then, we had a market adjustment and the local economy all across the Northeast was hit with a slowdown. It was during this time of slow, or no, growth that the regulations were revamped and revised to “protect” the environment and the school district. Zoning referendums were created and placed from community to community, as each town had different and more onerous restrictions in place. From aquifer laws, contiguous uplands, and open space as a minimum fifty percent, to revisions of soil standards, increasing sizes of subdivision roads, and increased setbacks. All of these regulations put a severe crimp on land values.

Despite tremendous efforts by landowners, builders, and REALTORS®, these regulations are now a way of life, to this day, in all our urban areas. When the “powers that be” implement new zoning, it has a tremendous effect on land values. In the mid-1990s, another piece was passed known as The Rivers Bill. This bill precluded development within two hundred feet of any listed stream and tributary in the Commonwealth of Massachusetts. Some of those listed were two feet wide at maximum and the only relief was if it dried up for three or more consecutive days so could you film it.

Now, we have arrived in the late 1990s. With ANR lots at $110 per lot and raw land at sixty thousand dollars per lot, finished two thousand square foot homes are sold from $350 to $375 thousand (or around $175 per square foot) all in, inclusive of land. The builders then decided that in order to make money and increase their corporate financing, they would build bigger homes. Starting in late 1999, prices rose and house sizes were 2,800 to 3,200 square feet. Around this time, I did a seventy-lot former gravel pit, where pricing ran from $399 thousand for a 2,700 square foot colonial to $475 thousand for a 3,400 square foot colonial.  Now, twenty years later, those resales sell for $680 to $800 thousand with no new lots in sight. In my primary area, we have reached build out. There are no longer any fifty to one hundred lot subdivisions, only five to ten lot ones are available from the I-495 area eastward to the sea line of Boston.

New home construction residential land salesIn addition, for the last ten years, builders have taken advantage of a law in Massachusetts called Chapter 40B. This law was created in 1969 to increase affordable housing throughout the Commonwealth. However, it did not get any traction until 2005 or so. This law allowed for an increased maximum density for apartments, as long as twenty-five percent of the units were for people who meet the affordable income limits as defined by the State of Massachusetts. Thousands and thousands of apartments have sprinkled the highways and byways, as this law allows you to bypass local planning boards and apply directly to the State.

While many benefits are apparent, the adverse impact comes on the older two to four family units as they have to compete with sleek new more modern apartments offering dry cleaning services, gyms, pools, and all the other upscale benefits. Demographics within these units are primarily young urban singles or couples, with older divorcees, and a transient population waiting for newer homes in the Central Massachusetts market. Many are buying duplex halves and, now, the communities are putting moratoriums in place as more and more of these units are built. These two thousand square foot duplex halves are selling in the mid to high four hundreds.

However, no one realizes, except the REALTORS®, how the marketplace has changed. The millennials prefer new construction. Most don’t want to have to change storm windows or paint their new homes. They just want to live in a new home with little or no exterior maintenance so they may enjoy their free time. Yet these communities who have implemented moratoriums are crimping their ability to buy new, and restricting the value of the land owners’ equity. You can still buy an ANR lot in western Massachusetts under one hundred thousand dollars, but the access to corporate headquarters and city services is a day trip away.

As for the rest of the Northeast, in every major urban area within thirty-five miles of an airport or big city, land prices and residential land sales tell the same story. Land prices are escalating higher and higher to the point of spiraling out of control. Installing new roads are costing a thousand dollars per linear foot. Remember the seventy lots in Northborough neighborhood? Well, I just sold the eighty-one year old owners last remaining four acres for one million dollars and the builder is getting five ANR lots. Homes of three thousand square feet will start at $750 thousand and we expect them to all sell upon release.

What a difference three decades make. When I attend the RLI meetings I hear similar stories from across the country and realize the truth in the phrase that “The Land Is Under All,” and it’s our duty to protect private property rights. By virtue of our profession, the duty falls on all REALTORS® to fight restrictive zoning and ensure that our elders can retire with the equity they expect and deserve. All of us in the business of buying and selling real estate have an obligation to participate in the public process for new zoning. We have an obligation to be cognizant of all underlying land use and we must defend and protect the ability to adapt our land use to meet the new requirements of the marketplace and the next generation.

For more information on land value trends and residential land sales, check out RLI’s annual Land Markets Survey. Read more on the demand for land and the increase in demand for residential land real estate.

This article originally appeared in the 2017 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

About the author: Michael L Durkin, ALC, CBR, has been recognized as one of the Top REALTORS® in the country by many of the major companies: Top 300 Coldwell Banker; Top 10 GMAC Real Estate; and Top 80 RE/MAX.  He has twenty-five years’ experience in his office and is an author and former radio host for WTAG. He has served on the NAR Land Use and Property Rights Committee for a total of ten years.

Turning Your Land Into Multiple Sources of Cash Income

Hey Land Owners, What Have You Been Waiting For? Turning Your Land Into Multiple Sources of Cash Income is Easier Than you Think!

We live in the age of AirBnB and VRBO mania. Residential owners across the globe are taking advantage of the need for residential renting opportunities. They post their properties on listing websites like AirBnB or VRBO, and quickly turn their residential properties into piles of instant cash income. Guess what? Land owners can do this too! There is an enormous demand for private land use of various types, in which users are willing to pay. It’s time for landowners to get in on the money making action too.

The demand for private land use across our great nation is nearly immeasurable. Simply put, an exponentially enormous portion of the population has the desire or need to use private land for various purposes. As an example, in addition to being President and CEO of LandLeaseExchange.com, I am also Vice President of Maury L. Carter & Associates, Inc., a land investment and brokerage firm based in Orlando, FL. Our firm and our investors have owned hundreds of thousands of acres over a 50+/- year time frame. We currently have a portfolio of 12,000 acres.

Every year we get hundreds, if not thousands of unsolicited phone calls and email inquiries on the 12,000 acres in our portfolio. These inquiries are from individuals or companies searching for property to lease or rent. Again, it is important that landowners understand just how much demand there is for the leasing and use of land. We DO NOT market our properties for lease, yet we receive all of these unsolicited inquiries from users who are ready, willing, and able to lease a property.

Most of the land in our portfolio that we lease is conducive for production agricultural farming, cattle leases, citrus leases, timber leases, and hunting leases. These are fairly standard land leasing categories, yet they are just the “tip of the iceberg” when it comes to the possibilities available to landowners and how they can turn their land assets into cash revenue. The land leasing market has been identified as an extremely under-served marketplace. What am I saying? There are tens of millions of people in the U.S. that have a need for land, yet there isn’t even a small fraction of land available to them to do so. Enter the private landowner.

On the LandLeaseExchange.com side of things, I have many landowners say to me “John, all I have is (enter amount of land) acres, and there really isn’t much I can do with it to make money.” Really? I beg to differ. Each parcel of land is different and offers its own uses based upon its characteristics. Landowners don’t really need to get too creative, actually. They simply need to take advantage of the land they already own and provide leasing opportunities to users that are conducive to the characteristics of the land owned.

As land owners, we have to think outside of the box. We have opportunities that we take for granted, available to us RIGHT NOW on the land we own, that others are willing to pay to for to experience.

Here is a list of examples I have compiled. Remember, you can lease your entire property, or just a portion. For one use, or for many uses. No property is too big, or too small to turn into cash income.

Agricultural Opportunities

  • Do you have land that you aren’t currently using that could be leased for agricultural purposes? Whatever agricultural use your land is conducive for, the likelihood of someone wanting to use it for commercial agricultural purposes is high. Our website offers listing categories on anything from citrus to peaches to tomatoes to more traditional commodities like soy beans, corn and cotton.

Recreational Opportunities

  • Birdwatching, camping, equestrian, fishing, hiking, hunting, mountain bike trail riding, RV/Motor Home/Camper, Shooting, Off-Road Trail Riding/ATV/Motorcross, Waterfront properties, and more. Recreational use is one of the most desired uses for land right now.

Special Event/Corporate Retreats/Religious Retreats

  • Do you have an old barn you could clean up, hang some lights and rent for weddings or parties? Brides and grooms and party hosts want to create something different and unique while hosting their parties.
  • Corporate retreats – Does your land have activities available? Skeet shooting, hunting opportunities, adequate lodging amenities, meeting areas, etc.? Turn it into a corporate retreat and charge companies to use your property.
    Cabins, Rural Residences, Estates:
  • People want to have a getaway weekend or an experience on a farm, ranch or property outside of the city. Provide the opportunity to them by leasing out cabins, rural residences or estate properties.

Agri-Tourism Sites

  • Now, more than ever, people want the opportunity to get on land, see where their food is coming from, visit the farm and experience something outdoors and have a good time. What type of agritourism can you provide? U-Picks, corn mazes, pumpkin patches, vineyards, petting zoos, Christmas Tree U-Cut, etc.

Communications and Energy

  • Do you have a site that would be perfect for a cell phone tower?
  • Are you located near high tension power lines and you think your property would be good for a solar panel project?
  • What about a road, and your property would be good to lease to a billboard company?

All of the above are ideas on how to turn your land into cash revenue. As a landowner, what are you waiting for? Additional cash income is only a few clicks away!

 

About the Author: John Evans is a 2008 graduate of the University of Mississippi with a degree in real estate finance. A seventh-generation Floridian, he lives in Winter Park, FL, with wife Ann and son Jack, 1. He is Vice President of Maury L. Carter & Associates, Inc and founder, CEO and President of Land Lease Exchange, LLC. which is an online marketing tool that connects landowners to land users.

 

Land Lease Exchange Logo

Teaming Up To Transform Your Real Estate Business

“If you want to go fast, go alone. If you want to go far, go together.” – unkown

What is the best way to achieve the highest level of success in your land brokerage career? The answer to that question varies greatly depending on your definition of success. Many brokers would like to see an increase in income earned, number of transactions closed, quality agents hired or retained, or any combination of other metrics used to define success. There are many definitions of success that do not have their own column in your firm’s P&L sheet, such as: spending more time with family, creating a steady stream of income, or dominating your local market. Figuring out the best way to achieve those goals is a real challenge for real estate salespeople.

“If you want to succeed, buckle down and work harder. You need to make more calls, set more appointments, and spend more time in front of decision makers.” This is good advice, but at a certain point in your career it becomes unproductive to pour yourself into more of the same. You can reach a plateau where spending more hours at work does not yield the desired results. In economic terms, this concept is called “The Law of Diminishing Returns.”

In 2013, my co-worker, Robert King, ALC, and I candidly discussed our goals for the year and how our numbers were tracking to date. Robert shared how his goal for the coming year was to increase the size of his average transaction to raise his total commissions earned. At the time, Robert was closing forty land transactions per year and was one of the top producers for Southeastern Land Group. The next year, he and Randall Upchurch teamed up and formulated a plan to increase their business and target a market segment that was largely under-served in Alabama. They focused on marketing and selling poultry farms across the state.

Poultry is the leading agricultural product in our state, and both Robert and Randall had previous experience with poultry operations and real estate brokerage. In 2014, they formed PoultrySouth to focus on marketing poultry farms. It took only two years for Robert to not only increase his commissions, but he was also able to more than double them as a result of teaming up with Randall. This is a perfect example of how two REALTORS® Land Institute members can partner to totally transform their business.

Randall is grateful the partnership has worked so well and, as he recounts their success, he does not take it for granted. “By working together the past three years, Robert and I have helped our clients close twenty-five poultry farms for a total of about fifty-five million dollars in sales. We currently have six pending farm deals, and are working on others.” Robert explains the upside of their partnership this way, “The benefit of two minds working through the issues of real estate transactions is a multiplying effect, not merely additive.” King continues, “Having slightly different perspectives focused on the same goal is a win-win for agents and clients. Additionally, we have seen the unexpected benefit of being able to multiply our effective handling of listings. Randall and I could probably only manage twenty-five or thirty listings apiece. Together we are able to handle one-hundred or more listings, while providing good service to our clients.”

The financial success of the partnership at PoultrySouth has opened doors for Robert and Randall to add cattle to their personal herds and each have purchased additional acreage for their family farms. The benefits from their business have overflowed into achieving goals for their families and farms. They are the perfect example of how real estate teams are supposed to function.

How do we achieve the positive outcomes we desire in our careers? One way is to align yourself with like-minded people. The power that comes from working together to achieve a common goal cannot be overstated. Fletcher Majors, an ALC from Alabama, has done a great job fostering an atmosphere of cooperation at Great Southern Land, both internally and with outside agents. In early 2015, Fletcher and three of his agents worked tirelessly to help one of their clients sell 6,477 acres in forty-five different tracts to thirteen different buyers in a single bid sale. Calvin Perryman, an ALC who works with Fletcher, explains why they believe in the team approach, saying “We often use a teamwork approach on special projects as well as everyday listings and appraisals. We believe having multiple opinions and ideas along with additional boots on the ground helps us better serve our clients.”

Each winter, nature demonstrates the power of teamwork when we see the V-shaped formations of geese as they fly south from Canada to warmer climates. The flock is able to survive by travelling great distances with maximum efficiency because of the cooperation of all the individuals. Each member of the flock benefits from the cooperative efforts of the group. This collaborative effort only works because each individual is clear on the objective, their responsibility, and they expend the effort to achieve the desired result.

There are many ingredients to creating a great team, but there are three essential elements that this article seeks to address. In order to form a great partnership, you must ACT like a team.

Agreement- “Can two walk together unless they are in agreement?” This question was posed by Amos, a shepherd turned prophet, that lived about 750 B.C. This question is still relevant millennia later. For a partnership to be effective, the partners must hold a common vision and agree on implementation of their strategy. The objectives must be clear so that everyone knows what they are working toward and how they will achieve the desired result.

Communication- Operation without communication leads to frustration. Sharing frequent updates, addressing problems jointly, and asking accountability questions helps ensure that the partnership stays on track. No member of the team should blindly assume that everyone has the most recent information or is acting on it. There will be hiccups in every partnership, but as a mentor often told me, “Communication covers a multitude of sins.” Receiving information makes people feel important and in the loop, so, be sure to share all that is appropriate with your teammate to increase the chances of mutual success.

Trust- The single most important ingredient to a well-functioning team is trust. Working with people that you know unquestionably have your best interest at heart frees you to focus on the challenge before you, and not on defending yourself from the people around you. Trust is very difficult to manufacture or bestow, and is generally built gradually and methodically through shared experiences. Trust breeds loyalty. Loyalty begets a willingness to work hard and take risks together. Working hard and taking calculated risks together is the formula most successful entrepreneurs use to achieve their goals.

RLI’s 2016 ALC-to-ALC Networking Award was recently presented to three ALCs from Hertz Real Estate Services in Iowa. ALCs Kirk Weih, Troy Louwagle, and Kyle Hansen teamed up to close a $12,263,100 transaction on 998 acres. This size and type of transaction requires that teammates have a lot of trust. Kyle’s advice for creating this type of success is, “Remember why you are working with another broker. It isn’t because they provide the highest referral or pay the best commission; it is because they can provide the best service to you and your client. We are in business to provide the best product and experience possible. To do that, you need to work with the best brokers possible. That’s why I like to work with Accredited Land Consultants and agents that I trust. That is what our clients deserve.”

A quick search in the “Book” category on Amazon.com for “Team” returns about 310,000 entries. With that much written on the topic, the best this article can hope to do is highlight a few essentials to creating positive teamwork for land brokers. There are dozens of free resources on teamwork available at the National Association of REALTORS® website. We face a challenge when we take a competitive vocation and ask individual agents to work together; however, good brokers know this is the formula for long term success.

“Our industry is unique in that it helps to have salespeople that are fiercely competitive, and yet be able to work well as a team. In many land brokerage companies, the agents are independent contractors and not traditional employees. In that type of relationship, you mandate only what is necessary and encourage your group as much as you can,” says Dave Milton, ALC and President of Southeastern Land Group. Dave adds, “For agents to succeed in this business, brokers have to do all you can to create an atmosphere of trust that leads to a strong team. The best way to help new agents launch their career is for them to team up with someone more experienced. Hiring the right kind of people is the best way to ensure buy-in from existing employees and protect the continuity of your team.”

A wise writer of antiquity once observed, “Two are better than one for they get a good return for their labor.” My hope is that by hearing other brokers involved with RLI share stories about the success they have had by teaming up, that you will find new ways to foster teamwork in your land brokerage business. “If you want to go fast, go alone. If you want to go far, go together.” Here’s wishing you all the best as you “Go together!”

This article originally appeared in the 2017 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Jonathan Goode, ALCAbout the author: Jonathan Goode, ALC, is an active member of the REALTORS® Land Institute. He is a Co-owner of Southeastern Land Group, LLC (SELG) and is the Responsible Broker for the company in Mississippi. He is passionate about helping people buy and sell land.

Washington D.C. land real estate

The Four New Realities of Washington, D.C.

Usually I give a brief update on land real estate public policy issues of interest to REALTORS® Land Institute (RLI) land professionals and the landowners they serve.

However, the election of Donald Trump to the highest elected political office in the land has scrambled the usual political dynamics of Washington, D.C. – the rule-book has been thrown out and we are in uncharted waters.

Given the unusual political environment we find ourselves in today, I thought it might be helpful to identify some of the factors that now make up the new reality of Washington, D.C., and how these factors might impact land real estate public policy issues that land agents and landowners care about. So here they are, the four new realities of Washington, D.C.:

  1. New Administration. The Trump Administration was elected to achieve several big priorities: immigration reform; comprehensive tax reform; construct a wall on the southern border; and repeal and replace Obamacare. Smaller items on the agenda include reforming existing trade agreements and repealing Dodd-Frank. The Trump Administration is still finding its way on how to achieve its policy priorities, but eventually, they will find their footing. When they do, tax reform could be the issue they turn to for a legislative win.  Of all of these issues, tax reform could pose a threat to RLI’s most important legislative land real estate public policy issue: preserving the 1031 Like-Kind Tax Exchange for landowners and investors.
  2. New Congress. While the Republicans have captured both the House and Senate, they did so with small majorities and increased ideological polarization. Practically speaking, this is a recipe for legislative gridlock as congressional leaders discover it is difficult, if not impossible, to cobble together enough members to pass legislation. However, this could work in RLI’s favor.  While legislative stagnation means that some bills RLI members might support don’t get passed, it also means that other bills, such as tax reform that harm 1031s, might never see the light of day.
  3. Executive Order (EO) Governance. A recent trend for presidents is to issue Executive Orders when they are unable to achieve their policy agenda in Congress. This occurred quite often during both the Clinton and Bush Presidencies, then, accelerated quickly during Obama’s presidency. Trump has used them even more frequently to achieve early momentum on some of his key policy goals. While EOs are limited in scope because they only impact activities of the federal government and not broader corporate or social institutions, they can be used in a targeted way to achieve a specific result.  One recent EO directed the EPA to begin the process to rescind and replace the controversial and damaging Waters of the U.S. (WOTUS) regulation. If Trump does nothing else as President, rescinding WOTUS will help land owners and real estate agents more than anything else.
  4. De-regulatory Environment. President Trump has made it clear to all the federal regulatory agencies that they need to establish a process for reviewing and rescinding unnecessary or antiquated regulations. This has also been the subject of several EOs as well. While deregulation of the private sector is an important goal, this strategy has limitations as well.  First, the process for repealing a regulation is cumbersome and time-consuming.  Second, these only apply to regulations that originated in the federal agencies.  For example, the WOTUS and the Clean Power Plan regulations were initiated by the Environmental Protection Agency (EPA), without any statutory direction from Congress, so they can only be repealed by the EPA.  Regulations implemented under the direction of Dodd-Frank or the Affordable Care Act were initiated under the congressional authority, so they can only be repealed or modified by Congress.  Deregulation will unburden land real estate agents and their clients as well as help spur innovation and economic development.

This article originally appeared in the 2017 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Riggs, Russell - NAR Government AffairsAbout the author: In his position with the National Association of REALTORS®, Russell Riggs serves as the RLI’s Government Affairs Liaison in Washington, D.C., conducting advocacy on a variety of federal issues related to land.

Forget the Capital Gains Tax, Full Speed Ahead!

One of my favorite old westerns is “El Dorado”. Yes, it stars John Wayne and Robert Mitchum. Yes it has James Caan and Arthur Honeycutt. And, more importantly, it has Charlotte Holt and the cutest Cary Michelle and, of course, the golden tunes of George Alexander singing the theme song…

In the movie, the bad guy, Ed Asner tries to steal a ranch owned by the McDonald family. In the end, Wayne, Mitchum, Caan and Honeycutt come to the rescue and the ranch is saved. Maybe the best part is when Ed Asner gets shot about a gazillion times at the end. Considering how he treated Mary Tyler Moore about 80 years later, he got what he deserved. The moral of the story is, when the McDonalds thought that they would lose their ranch, the gang came to the rescue and that is what we are going to discuss.

Like the McDonalds, landowners are under attack and now it’s from Congress. Congress is actually considering making changes or even revoking 1031 exchanges. What are these people thinking? Real estate associations, qualified intermediaries, and all kinds of people and groups associated with real estate have been lobbying; however, their efforts may be falling on deaf ears. Maybe Congress should be spending more of its time on spending reform and leave 1031 exchanges alone.

So the million dollar question (before taxes!) is what can a landowner do if 1031 exchanges are no longer part of the tax code to defer taxes. Well, there is good news! If there wasn’t, would I be writing this blog?

There is a great opportunity today for RLI members to assist their clients to defer taxes when the sale of a great property creates a large tax liability. That can be any type of property including a primary residence. Not only is there a way to defer taxes with a 20-year track record of success, but it may also be more flexible than a 1031.

I am fortunate to be one of the few advisors nationwide with access to a proprietary trust that was created by some of the smartest tax attorneys in the country to defer taxes when the sale of a highly appreciated asset creates a large tax liability. The IRS conducted a two-year examination of the proprietary trust and that examination was concluded in Washington DC. Other regulatory agencies have also conducted examinations and had not had any concerns.

Our proprietary trust has a 20-year track record with over 2,000 trusts being successfully created with our largest transaction being over $100 million with a tax deferral of $50 million. The proprietary trust has also successfully passed all 13 IRS audits with no changes recommended by the IRS. Our proprietary trust is on solid legal and tax ground but it is always important for your clients to do their due diligence as well. Because of the flexibility of our trust, almost any situation where there is a tax liability can be an opportunity for RLI members to sell more real estate by deferring taxes. Here are a few of the opportunities where our strategies may be useful.

Imagine for a moment if you could defer your sellers’ capital gains tax, state tax, depreciation recapture, and the Obamacare tax on their hard earned sales proceeds and you can defer them indefinitely. Imagine being able to defer those taxes without 45 or 180 day periods, no loan to value ratios, and your seller can buy any type of property at any time in the future. If it takes a year to find another property, that’s fine.

Imagine that you have a farmer or rancher client that has worked his property for decades and would like to sell and retire. You can sell that property and defer those taxes on his hard earned sales proceeds and give the seller a larger retirement income than if he had to pay taxes first.

Imagine all the times in the past that either your seller’s 1031 exchange couldn’t be completed or 1031 exchanges aren’t appropriate. Being able to defer those taxes today, and without an exchange, provides a great opportunity for your sellers. If you can’t identify a property in 45 days, no problem. If it takes six months, we can still defer taxes. You identify a property and if a problem of some kind occurs and the exchange falls apart, we can still defer taxes.

Has this scenario ever happened: You are selling a great property for your seller but he refuses to accept any offer until he finds a replacement property, and six to eight months later he is still looking for one. What if instead, you sell the property now, defer taxes now, get paid now, and, if it takes a year to find that replacement property, everyone is happy.

Say you found a great buyer for your seller. There is a slight problem. The seller is going to have a large tax liability and would like to defer taxes using a 1031. Unfortunately, the buyer has to pay for the property over four years. A 1031 exchange to defer the capital gains tax probably won’t work but our strategies will.

Say you have three owners of a great property that want you to sell the property for them. One owner wants to take the proceeds and run. The other two owners want to defer taxes. A 1031 probably won’t work but our strategies will.

You have a great client who is thinking about selling his high end residential property. He is going to have to pay millions in taxes. You can defer his capital gains tax, state tax, and the Obamacare tax on the sales proceeds. In gratitude, maybe he will buy a ranch or farm from you.

As a long-time partner of the RLI, I have worked with brokers all over the country. We have deferred millions in taxes and we are now also working with large institutional buyers of rural properties. Our Section 453 tax deferral strategies have been utilized successfully over 2,000 times with our largest transaction being over $100 million with a tax deferral of $50 million.

The bottom line is… relax. If Congress is smart, they will leave 1031 exchanges alone and our strategies can be a great Plan B. If Congress ends 1031 exchanges, we may have a better option to defer taxes, and in more situations. If there is a potential tax liability, let’s chat and see if there is an opportunity to defer that tax liability. Your sellers will love you.

Every time I watch a John Wayne movie except maybe The Quiet Man, Wayne comes to the rescue and I always wish that was me. Now is my time to come to the rescue and help your property owners sell a great property and keep more of their hard earned sales proceeds in their pockets while sending less to Washington and their local state capital.

Happy Selling!

About the Author: David is a Partner at Creative Real Estate Strategies, a 2015 Silver Partner of the Institute, and has been in the industry since the late 70s. His years of experience help him to assist land brokers in helping their clients defer capital gains tax, state tax and depreciation recapture taxes on their client’s sales proceeds when either their clients are unable to complete their 1031 or the client would like to sell and retire but still defer taxes. By understanding these tax deferral strategies, brokers have been able to sell more real estate. David can be reached at 713-702-6401 or at David@cresknowsrealestate.com

Public Relations: The Land Real Estate Professional’s Ultimate Weapon

Public Relations has become the most fundamental tool for shaping public opinion, investment markets, company reputations and business outcomes. As a land professional, your career is tied to a commodity with many stakeholders and many opinions on how land is to be managed and regulated. Far from being a “nice to have,” PR defines success—and failure—in today’s world.

Land professionals and Accredited Land Consultants (ALCs) have a right-down-to-the-soil impact on the physical and economic well-being of America. In a high-risk world, land—particularly commodity-producing acreage—offers roots of stability and a solid base for expansion. Land professionals, including brokers, agents, appraisers and auctioneers, together comprise the infrastructure upon which land is profitably conserved, exchanged and utilized.

Public Relations Gets You Known

But who really knows these things about land professionals?

By survey, one of the biggest hurdles a land professional faces is trying to explain what they do, what their knowledge and skills are, and how to care for the land and livestock on that land—free range, antibiotics vs. organic, and so forth. Ninety-eight percent of the general public has no knowledge of agriculture. This is a strong indication that effective public relations is not in play. The objective of PR is to make your business well-known and highly regarded so that you don’t have to repeatedly explain yourself.

If what you do, your purpose and the benefits you provide as a land professional are not clear to your public, some other perception will take its place—one that usually favors a competing interest.

Public Relations is About Reaching Minds: It Manages Emotions and Directs Attention

Public opinion regarding land management, its resources and the concept of stakeholder (the general public) over shareholder (the owners) is being shaped today by social media. And that social media, uncontrolled, has the liability of amplifying emotions over logic, presenting inaccurate data as fact, and omitting balanced points of view. It is a runaway horse, and only the art and science of public relations can manage.

Strong new community realities, such as sustainability; natural resources stake holding; environmental impact management; the control of interrelated natural systems such as navigable waters (Waters of the U.S. or WOTUS) and wildlife habitats—along with many other concerns—have created tension with private ownership. All of these factors influence legislation and can negatively affect land prices. Look carefully at any new legislation that affects land profits or limits sales—or any successful repeal of legislation—and you will usually find a publicity campaign that preceded it.

PR is often confused with activities that are more properly parts of branding, promotion and marketing, or it is thought to be only a plan to put out press releases now and then. While it has high synergy with these activities—even making them more effective—PR has its own precise scope.

It takes only a quick look at the news today to see that we live in highly opinionated times. People with strongly held beliefs and agendas often seek out only the news and information that support their viewpoints, and will disregard conflicting reports. Imagine, for example, trying to sell a fervent Republican on a Democratic candidate—the facts would be flying back and forth, but neither side would be listening to the other. Impasse! PR would need to step in, find the real issues people care about, and either makes a bipartisan solution well known, push a workable compromise, or show one side (or the other) to be the best solution.

PR—not money—is how the world turns today. It’s PR first that determines how the money will be spent.

As simple as it should be, the buying and selling of land will face increasingly complex challenges in the immediate future as more organized groups and government agencies seek to exert influence on how land is managed, transferred and used. Each will be passionate about their position.

Public Relations Creates Agreement

PR is the art and science of creating agreement and cooperation. It achieves this by framing the real issues involved in such a way that both sides might better work together.

Take, for example, the Clean Water Rule. Its stated purpose is to ensure that waters protected under the Clean Water Act are more precisely defined, more predictably determined, and easier for businesses and industry to understand. A visit to the EPA website shows the scope of the rule. But the comments on the regulations.gov website range from fear that individual farms will be decimated to fears that a government conspiracy aims to take over control of farming.

PR exposes the real issues in a strategic fashion in order to gain agreement, and in so doing, a solution often appears that everyone can get behind. Sometimes it’s simply a matter of reframing an issue to eliminate unproductive bias or false data. We want a clean flow of water. We also want viable farms and sustainable lands. Workable resolutions bring about mutual understanding and progress.

Public Relations is Proactive

A recent seminar by Hertz Farm Management, Inc., revealed that most farmers are over sixty-five years of age, and that forty-two percent of them plan to retire within the next five years. Many of them have yet to identify a successor. The number of farmers under the age of thirty-five is dwindling. These factors could change the characteristic of the farm market within this decade—more farms for sale by auction. A land professional who proactively prepares to take on a leadership position will be able to take advantage of shifts in the marketplace—but to do so, requires a PR strategy. Many prospective buyers are investors. They may run their own numbers and valuations, but they look for brokers with strong local savvy—someone who can connect the dots for them and has easily referenced credibility. Keeping yourself in the news, leading thought with insightful articles, and making public your good works are invaluable.

PR releases are written specifically to change perceptions, create strong affinities, forward strategies and form profitable perceptions. They are not fluff pieces full of bragging. Some common errors that show up too often, wasting valuable time and money, include:

  • Written by a committee. You’ve heard that a camel is actually a horse designed by a committee. Don’t let anything you publish sound like it came from a group. No one will read it, and no media will pick it up. Writing has to connect on a one-to-one basis. PR releases with strong points of view and a persuasive story/argument directed at the right public are pure gold.
  • Deliver a relevant message. It is the whole point, really. However, incredibly, it is often missing or overshadowed by less important details. Every PR campaign has, as its purpose, to deliver a specific message and make it stick in the minds of the public. A message is really what the reader comes away thinking, once he or she has read the release.
  • Keep it lean. Factually, you have about 1/125th of a second to grab attention, and from there, every word has to count. Short and sweet communications get read. They stand out from the ocean of verbosity online.
  • It’s not about you. Bad releases often come off as too self-serving and are rarely newsworthy. How great you are is not news, how you can serve your public is.
  • Not written for humans. Releases and web content cranked out to attract the eyes of keyword searchers with sentences built for search engine optimization don’t engage anyone, and make the reader think the writer doesn’t know what he or she is talking about.

Public Relations is Causative—It Gets Results

As a land professional, public relations technology really is your ultimate weapon. You are dealing with the most basic commodity on earth—Earth—and you are living in a time of unprecedented attention on how we manage our natural resources. Your efficient use of PR can help you get out ahead of non-optimum legislation before it happens; influence those who might otherwise oppose you; secure your business leadership; and create a stable future. These benefit everyone.

This article originally appeared in the 2016 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Karla Jo Helms, Public RelationsAbout the author: Karla Jo Helms, is the CEO and visionary behind JoTo PR. She has patterned her agency on a combination of her hard-won Public Relations experience, uncompromising high standards and exacting nationwide market research. Karla hosted two breakout sessions and a round table discussion at the 2016 National Land Conference.

real estate auction

Real Estate Auctions Just Don’t Work In My Area

Real estate auctions just don’t work in my area! Oh, how many times I have heard that over the years. I always find that statement amazing as our company has completed over 1,200 auctions in just the last five years and, as near as I can figure, in my 35-year career I have been involved in somewhere around 2,500 land auctions. Auctions have been around for more than 2,000 years. Records handed down from the ancient Greeks document auctions occurring as far back as 500 B.C. At that time, women were auctioned off as wives. Now, those of us that have been doing this a while know of landowners who might be willing to auction their wives or husbands for a well drained 160 acres of land even today.  All joking aside, if you’re trying to enhance your image as a full service real estate professional, real estate auctions should definitely be a part of your business.

What is a Real Estate Auction?

A real estate auction is an intense and accelerated real estate marketing process that involves the public sale of property through competitive bidding. The word ‘auction’ derives from the Latin word “auctus,” which means increasing. Well run, successful real estate auctions can create momentum for future business for you; increasing your income and enhancing your image as the person that can get things sold.

Is every property a good auction prospect? No and not every seller is a good auction prospect. As a real estate professional, it is your job to understand what makes a good auction property and if your seller will be a good auction prospect. I’ll talk more in detail about qualifying the seller and the property a little later in the article but, for now, let’s look at some types of real estate auctions that I have successfully used in my business and their advantages and disadvantages.

Absolute Real Estate Auctions

In an absolute auction there is no minimum bid. The property is sold to the highest bidder, regardless of price. The advantage of an absolute auction is that it attracts more buyers because they know the property is going to sell. The disadvantage is that it provides no safety net for the seller, which makes it difficult to recommend to seller client’s in some situations.

Minimum-Bid Real Estate Auctions

Sometimes called a minimum published bid auction. In this type of auction the lowest acceptable price is pre-determined by the seller and the auction firm. The minimum price is then stated on all the marketing materials. When the bidding reaches the minimum amount, the property will sell.  This is a good type of auction to use when you have a property that might have been on the market for some time and is market weary. The advantages of this auction is that it lets buyers know what the minimum price the seller is willing to take for the property, and it still creates a safety net for the seller; unlike an absolute auction. The disadvantage is that sometimes the inexperienced agent and a demanding seller may set the minimum bid too high and buyers will not be willing to bid.

Reserve Real Estate Auctions

In a reserve auction, the seller reserves the right to accept or reject the highest bid. The owner, with the advice of his agent, determines the price at which he would be willing to sell the property. This pre-determined price is not published or disclosed to the public. Sellers are not obligated to accept any other price than the pre-determined reserve price or above. The advantage to this type of auction is that it provides a safety net for the seller while still giving the real estate professional the knowledge at what price the seller is willing to let the property be sold. The disadvantage is that many prospective buyers do not want to take the time or go to the expense of investigating the property when there is no guarantee that they will receive the property even if their bid is the high bid. Over the years I have had many buyers tell me that “We don’t come to auctions to bid, we come to buy, and so, until I know that the reserve has been met, I am not going to bid.” This can be a problem with this type of auction, so, it is very important that the seller and agent establish a very realistic reserve price.

Sealed Bid Real Estate Auctions

All bids are confidential. Usually, they are submitted to the agent and then opened at a predetermined time and place. This type of auction can also be used in conjunction with the three listed above. The advantage is that if you have a buyer with a very strong personality or presence in an area and other buyers don’t want to publicly compete with him they can do so. The disadvantage is that by doing everything confidentially, some buyers may question whether there really were other competing bids. You also lose the excitement created at a public out-cry auction that often times will cause competing bidders to pay more than they thought they would for a property.

Multi-par Real Estate Auctions

This type of auction works well for large parcels that need to be offered in smaller parcels to attract the most buyers. It allows the bidder to bid on one parcel or any combination of parcels. The advantage is that it allows bidders who want only one parcel and bidders who may want several or the whole thing to compete. The disadvantage is that the buyer who wants to buy the whole parcel does not need to compete until the end. It also requires a very knowledgeable staff to keep track of bids and help potential buyers submit bids that keep them in the winning position.

There are other types of auctions that can be used, but these are the ones that work best for me. As technology has advanced, online auctions and online bidding is becoming more common. However, since I often hold auctions in areas that I don’t have even good cell phone service let alone internet connections, this type of bidding has been a problem for me. These auctions are being used very successfully in the selling of livestock and personal property, and I do see them becoming more common in the land business in the future.

What Makes a Seller a Good Candidate?

Now, let’s talk about what makes a seller a good candidate for a real estate auction. Here is what I consider the top five questions you need to ask as the real estate professional:

  1. Is there adequate equity in the property?
  2. Is the property being sold to settle an estate or divorce?
  3. Has the property ever been listed?
  4. Does the seller have realistic expectations?
  5. Is the seller familiar with the auction process?

A “yes” answer to these questions would be positive towards an auction. A “no” answer would lead to the need for additional questions to be asked before deciding on encouraging the use of an auction.

What makes a good property to auction?

As a general rule, a property that is in good condition and in a desirable location will sell successfully at an auction. Am I saying that only good, well located properties should be auctioned? Of course not! The auction method can successfully be used in the marketing of just about any type of property. It is very important though that you analyze the seller, the property and the market to see if there would be positive demand for the property.

An auction should be a well prepared and carefully planned event. It definitely is not a one man show.

If you do not plan to become an auctioneer yourself, it is very important that you choose an auction company wisely. There is a saying, “There are three types of lies used in the marketing material of a lot of companies, lies, damn lies, and statistics.” Don’t just rely on the statistics presented to you in their marketing material. It is important that you attend a few of their real estate auctions, and don’t be afraid to ask for references from past clients. The entire auction team needs to be competent and professional in both their dress and their actions. Many times you will have people attend your auctions who are considering an auction on their property in the future. A well conducted auction is a great selling tool, but if the auction is disorganized and poorly ran it will be a reflection on you and you won’t get their future business.

Auctions can be a win-win situation for all. The sellers get their property sold at an acceptable price. The buyers purchase the property at fair market value, knowing the price was determined by open, competitive bidding and you as the agent have a happy client and a successful transaction.

I can’t possibly tell you all the things you need to know about auctions in this article. If you would like to know more about auctions and the auction method of selling real estate I would encourage you to take the Real Estate Auctions course offered by the REALTORS® Land Institute. This course will give you a very good background in auctions and how to use them to market real property.

I can tell you from experience that auctions do work and that the auction tool is one you, as a real estate professional, need to have in your tool box.

This article originally appeared in the 2017 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Sam Kain, ALC, Real Estate Auctions LANDU InstructorAbout the author: Sam Kain, ALC, is the Assistant Vice President – Real Estate / National Sales Manager for Farmers National Company in Des Moines, IA. Kain served as the 2005 National President of RLI and continues to be active in the organization as a LANDU Instructor for the Real Estate Auctions course.

The Value And Uses Of Pore Space As A Property Right

The Emergence of Pore Space as a Property Right

Pore space, although rarely thought about, should be viewed as just another private property right. Pore space is generally thought of as a subsurface property right. Although it can be defined in a number of different ways, pore space, by its simplest definition, is the empty space between grains of rock, fractures, and voids.

Until very recently, pore space was hardly considered a property right at all. However, the surge of interest in carbon capture and sequestration (CCS), as well as the need to store salt water produced by the oil and gas industry—as a waste product arising from oil and gas production and from hydraulic fracturing—has made pore space ownership an increasingly popular, yet extremely underdeveloped area of the law.

pore spaceLike most property rights, pore space ownership has evolved out of common law property rights, which are traceable to the old common law maxim known as the “ad coelum doctrine.” The ad coelum doctrine states “cujus est solum, ejus est usque ad coelum et ad inferos,” meaning “to whomever the soil belongs, he owns also to the sky and to the depths.”  Taken literally, the owner of the surface holds title to the entire tract from the heavens to the depths of the earth.  This form of ownership, although no longer as broad as it was originally, is the simplest and broadest property interest allowed by law, which is known as a fee simple interest.  Determining ownership of pore space is very straightforward when a fee simple interest is involved because the fee owner holds title to both the surface estate and the mineral estate.  However, once the fee simple interest is severed into differing estates and burdened with a variety of other property interests, determining pore space ownership can become a confusing and complicated issue.

There are two common ownership structures once the mineral estate has been severed from the surface estate: (1) the non-ownership theory, known as the “English Rule”; and (2) the ownership in place theory, known as the “American Rule.”

Application of the English Rule vests pore space ownership with the mineral estate—which is clearly the current minority rule within the United States.

The American Rule, on the other hand, “involves the severance of a mineral right from the interest in the whole geological formation.”  When applying the American Rule, the mineral estate owns the minerals beneath the land, but the geological formation, is owned by the surface estate.  The American Rule is currently the majority rule in the United States.

In addition, although the American Rule vests pore space ownership with surface estate, the mineral estate still has the right to explore and remove minerals from the land, which allows a mineral estate the right of reasonable use of pore space for mineral exploration. As a result, in states applying the American Rule, it cannot simply be said that pore space belongs solely to the surface estate. It must also be determined if the reservoir has been depleted of minerals because until depletion occurs, the mineral estate still has a right to use the pore space.

We researched pore space law in Arkansas, Colorado, Kansas, Kentucky, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, Wyoming, Michigan, Louisiana, New York, and West Virginia to determine if there is a trend towards vesting ownership of pore space with the surface or mineral estate. Six of the states were undecided, four states have a clear statute vesting ownership with the surface estate, four other states have case law supporting surface estate ownership, and one state had a case arguing pore space could be owned by the mineral estate.

As such, landowners should be mindful of the following legal and practical considerations associated with their pore space rights. Landowners, and those representing them, must be cognizant of how title to pore space can be modified through various contracts, easements, litigation, releases, and other agreements landowners routinely enter into.

Legal and Practical Considerations of Pore Space Rights

Valuation of Pore Space

As surface owners become more educated about pore space ownership and as technology advances, it is highly likely that operators will need to acquire rights to the pore space in order to engage in directional drilling or inject wastewater in areas outside of the drilling units. Yet, placing a monetary value on pore space can be just as complicated as determining ownership. For instance, valuation of pore space will likely be difficult to determine as it will depend on the particular use and what the user is willing to pay as opposed to the actual value of occupation.

CO2 Sequestration

As previously mentioned, pore space can be used for carbon capture and sequestration (CCS). CCS can potentially remove eighty to ninety-five percent of the CO2 emitted from power plants.  Studies have also indicated that global sequestration capacity in depleted oil and gas fields is substantial, with the capacity to store 125 years of current worldwide CO2 emissions from fossil fuel fired power plants.  Although CO2 is routinely injected into subsurface pore space in an effort to aid in the recovery of oil and gas, and though large-scale sequestration sites have been identified within the United States, there are currently no large-scale, commercial sequestration projects underway in the United States.  Still, pore space owners should be mindful of the opportunity and their right to use depleted oil and gas reservoirs for CO2 sequestration.

Underground Natural Gas Storage

In addition to CO2 sequestration, pore space also has the potential to be used for underground natural gas storage. Natural gas, unlike oil, is more easily stored by re-injection into underground rock pore spaces, which are typically geological formations or common sources of supply whose pore spaces formerly held producible hydrocarbons that are now substantially depleted.  In some states, surface owners retain the right to depleted geological formations and; therefore, should request compensation for storage of natural gas in depleted geological formations, and for injection of wastewater produced from out of section wells.

Subsurface Trespass

In additional to potential uses for pore space, pore space owners should be aware of the high potential of a subsurface trespass.

Traditional Oil and Gas Subsurface Trespass

The most obvious example of an actionable trespass in this context is a directional well that bottoms out under neighboring property.  This situation gives rise to an actionable trespass due to the well-established principle of property law that prevents the use of the surface to support mineral extraction activities on other lands.  However, operators can avoid a trespass situation by seeking an appropriate release from the pore space owner.

Hydraulic Fracturing

A subsurface trespass can also occur during hydraulic fracturing. However, courts tend to rule that an injury must occur in connection with the subsurface trespass as hydraulic fracturing prevents underground waste of hydrocarbons by allowing its recovery from tight reservoirs that would not otherwise be productive and thus, meets an important social need.  Although this reasoning wisely protects the well-established and necessary practice of hydraulic fracturing, it also gives an inference that courts may be reluctant to find a subsurface trespass of pore space as a result of hydraulic fracturing.

Secondary and Enhanced Recovery Operations

Secondary or enhanced recovery operations are used to maintain or increase production of a well once the reservoir’s natural production decreases.  Although states often recognize secondary or enhanced recovery as a valid public interest, trespass issues can arise in instances when an operator injects a substance, such as salt water, carbon dioxide, chemicals, or natural gas, into the subsurface of its own property in order to increase production and the injected substance invades the subsurface of the neighboring property.

Generally, when secondary recovery is involved, it appears that most courts are unwilling to find the migration of wastewater onto neighboring properties to be a trespass. This is likely because secondary recovery is in the best interest of the public and industry. With that said, there appears to be no clear case law challenging this logic specifically in the realm of pore space.

Wastewater Injection Wells

Wastewater injection wells can be associated with subsurface trespasses. In this situation, a subsurface trespass occurs when fluids from a wastewater injection well migrate beyond the legal surface boundaries of operator’s rights. It is likely that the operation of many wastewater injection wells result in the subsurface trespass of pore space to some extent, as common sense says that when a commercial wastewater disposal operator only owns one acre yet injects hundreds of thousands of barrels of wastewater into a wellbore on that one acre, the wastewater is migrating to an area outside of that one acre. However, that being said, it would be difficult to prove. Nevertheless, pore space owners should always be mindful of wastewater injection wells near their property and the potential for that wastewater to migrate onto their property. As the law on pore space develops, surface owners may seek compensation from these commercial wastewater disposal operators or may even try to prohibit the injection.

Conclusion

Evaluating pore space as an underground property right should be considered in every land deal. The development of pore space as a valuable property right is an increasing area of consideration for REALTORS®, title examiners, landmen, policymakers, attorneys, and judges. As such, it will be increasingly important to consider the implications every deal may have on this emerging area of the law.

For a more in-depth analysis of pore space, you can download a copy of the 2015 thesis and other writings on the topic by visiting www.LandownerFirm.com.

This article originally appeared in the 2017 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

About the author: Trae Gray is a Mediator, Entrepreneur, Lawyer, Speaker, and Expert Witness with specialized expertise in ethics and natural resources. With a nationwide practice he is listed by Super Lawyers and The Top Trial Lawyers in America as a Lifetime Member of the Multi-Million Dollar Advocates Forum – something that is achieved by less than 1% of U.S. lawyers. More can be found online at TraeGray.com.

 

About the author: Ryan Ellis, a partner with LandownerFirm, is a legal research and writing specialist with specialized expertise in Class Action, Environmental, Energy, and Natural Resource legal matters. She graduated with honors from the University of Tulsa College of Law where she completed the Sustainable Energy and Resources Law Program, which offers one of the most advanced energy, environmental, and natural resource legal educations in the nation. More can be found online at LandownerFirm.com.

Top Four Considerations When Finding a Real Estate Mentor

I listened to Zig Ziglar say once “The fastest way to get what you want is to help other people get what they want.” I didn’t understand this until I had a real estate mentor for a couple years and realized what Zig said was true. Whether you are the mentor or mentee there are great benefits to the relationship that can be established.

When I was looking for a real estate mentor, four things came to mind when I started my search that I felt were important.

The first thing that was important to me was finding an individual who was successful. The success that I was after was not just in the finical category but rather a list that I constructed when planning who I wanted to surround myself with. Successful to me was an individual who worked with integrity, spent time away from work with friends and family, was healthy, financially very well off, and had a process and system to their business. I have learned you can make more money than you can count. However, if you do not have a passion or dreams to go after with that money, more is actually less.

The second thing I looked for was someone who was not going to be a “card holder,” which also meant that this individual I was after probably was not going to be a direct competitor. When someone is a direct competitor, or sees you as a threat to their business or their current way of life, they most likely will not show all the cards and truly want to help you along your road to success. My mentor choice was a couple hours away and almost never worked in my area which also made it easy when it came to referral opportunities on both sides.

The third thing I looked for was time. How much time am I willing to give to my real estate mentor and how much time is he or she going to give to me. I have a very tight structure to mentor meetings. I want this person’s knowledge and friendship, and know I need to appreciate their attention like it is gold when they offer it to me. First, I list out all my sales numbers, transaction types, goals, and executions. Second, I listen to what they have to say or ask about whatever I have documented. I usually try to keep the time with them to one hour or less and write down three to four action items that I am going to do between the meeting and the next time we meet.

The fourth thing I found important was knowledge outside of my typical “sell more farms intentions.” Once I find the money, what can I do with it so I don’t have to go find it again? How do I make it find me? The mentor I was looking for needed to be an investor with lots of tax knowledge. If you are going to make money to waste it, you can skip the making step and save yourself lots of time. I was looking for someone that had answers to investment and savings questions as well.

If I was going to find another real estate mentor, I would use a simple set of questions for myself. What do I want? When do I want it by? Who do I know or can I meet that will help me to best help myself get it? and when am I going to set up and appointment with that person? In my experience, with the right mentor for you and documented goals, there is nothing the land business cannot provide.

About the Author: Jacob Hart, ALC, is a licensed real estate broker and auctioneer in Minnesota, Iowa, and Wisconsin. His firm, High Point Realty & Auction, specializes in land sales and management of agricultural row crop and recreational ground.  He attended SDSU in Brookings, SD, then studied at the World Wide College of Auctioneering.