All About Transitional Land

Transitional land. It’s a new word for a concept that’s been around for ages. Even though many people sell transitional land every day, there is still a stigma surrounding this risky land type. What many people don’t know is that transitional land can turn out to be gold mines. Disney World is one of the most famous examples of a successful transitional land. The land started off as swamp and was transitioned into the happiest place on Earth! Transitional land can be a huge risk, but, if researched and marketed correctly, could turn into a land sale that might change your life or even the world.

Transitional land is a property that is in the process of changing from one form of land use to another. For example, a hunting property might be transitioned into farmland if someone discovered a soil type perfect for their specific crop. Farmland could be transitioned into residential land if it’s located near a big city. Transitional land is often shaped by the needs clients and the current state of the land market.

For transitional land to be successful, you need to determine the best use for your land type. If you are new to land types, here are just a few examples:

  • Agricultural/farm land
  • Commercial Land
  • Ranchland
  • Recreational land
  • Residential land
  • Timberland

Each of these land types of land real estate require different soil types and amenities. For example, if someone is using recreational land for hunting ground, they would need land where animals could feel at home. Someone developing residential land would want the opposite.

Once you have determined what land type is best for your property, it’s time to hit the books. This is where transitional land gets tricky. Selling transitional land requires an in-depth knowledge about the state of the market and different land types. In her Transitional Land: Finding the Highest & Best Use article, RLI’s Marketing Manager Jessa Friedrich explains how selling a transitional land property is a completely different world than traditional properties:

“In traditional real estate brokerage, the agent lists an existing property with a known use and markets that property to the users for that type of property. What makes Transitional Land properties different is the need to determine the market value accurately and then market the property according to its highest and best use, which is different than its current use, in order to increase the property’s value and thus the profit.”

The biggest risk of selling transitional land is thinking it will be exactly like selling other land types. Since transitional land is such a unique type of land sale, you’ll want to be sure to work with a land expert. Land experts will help you determine the best land use for your land type and help you get the best market price.

The first thing you and your land expert will want to do is determine what the best use for the land would be. Here are some questions to help guide your decision making:

  • What soil types do I have on my land?
  • What would be the most cost-effective use for the amenities on my property?
  • What sort of crops do best on my land?
  • Can my land support livestock? If so, what types and how many?
  • What land types are in high demand in my area?
  • Do I want to invest in transitioning the land myself, or should I search for buyers who want to buy my land as it is?

The actual ‘transitioning’ of the land depends on what your client wants. In the Disney World example, Disney bought the land with no modifications on it to keep the price of the land low. If your buyers have a similar mindset, that makes things easier for you. Some buyers want to buy the land that’s already been transitioned. In these cases, you need to be sure there is a significant demand for that land type. You don’t want to spend a lot of money and time if no one will buy the transitioned land.

Many land sellers are still cautious about selling their land as transitional land. There is so little information out there about transitional land that it is understandable to stay in familiar territory. However, transitional land has the potential to be extremely profitable. It requires extensive research and working with a land professional, but if you are willing to put in the hard work, you may make it big on your next land sale.

To learn more, check RLI’s schedule of upcoming courses to see when their next Transitional Land Real Estate course will be offered or check out this RLI Hot Topic Webinar Recording on Diamond In The Rough: Transitioning Land for Development.

Laura Barker is a Marketing Assistant Intern for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.