Make More Money Off Of Your Timberland

Timber prices are at a record high. The tragic wildfires of last summer and trade disputes as well as an increase in demand for new residential housing have all caused the price of timber to skyrocket. With low supply and high demand, timberland owners are sitting on a potential gold mine. To make the most off of the high prices, you’ll need to tread carefully. Here’s how to make the most out of the booming market.

Check The Timber Mills

Is your local log mill looking for a particular kind of log? Many mills are willing to pay extra for logs that meet their specific standards and may dock your pay if they do not. Some mills even pay less for logs that are larger than usual. This means you are getting less money for more timber! Scope out the pricing of your local mills to find out where your tress will make the most money.

Long-Term Gain

Patience is the name of the game when it comes to timberland. Prepare to lose money for the first few years because you will need to spend money planting and taking care of the trees. Since timber doesn’t provide immediate returns, many people might be hesitant to invest.

However, timber has historically produced strong long-term returns. Many financial websites, such as CNN Money and Investopedia, recommend investing in timber as a way to diversify your portfolio. The returns tend to move countercyclically to other markets, providing your portfolio with a safety net. Not only is investing in timber a smart financial move, it is a good investment in your land. Timber is a hearty, relatively low maintenance tree that will produce steady returns for years.

To Cut Or Not To Cut?

When you cut your trees doesn’t only impact your current crop, it will also determine the growth and health of the next generation of trees. With prices at a record high, it can be tempting to cut down your trees as soon as they mature. Try to plan harvests around times that would benefit the saplings as well as when your timber is at its highest value.

Best Practices

Taking care of your timber now will result in high-value trees down the road. Regular thinnings, regeneration harvests, and timber stand improvements (the culling of undesirable trees and saplings) are all practices that result in healthier (a.k.a. more valuable) trees. Healthy trees mean healthy saplings and a whole new generation of high-value trees. It’s a never-ending cycle of profit!

Sky-high prices and an increasing demand have created a modern day gold rush. Although it can be tempting to chop down all your trees and cash in on the craze, long-term planning is the best option for you to make the most money off of your timber.
To learn more about timber, be sure to check out the newly updated LANDU course Timberland Real Estate on August 1st being hosted by the RLI Alabama Chapter.

This article was originally posted to the National Land Realty blog.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

The Great Grazing Debate

What’s the first thing that pops into your head when you hear the word ‘holistic’? Daily meditation? An all-kale diet? Yoga retreats that cost more than most houses? For some people, it’s holistic planned grazing (also called HPG), a system that supposedly increases the health of your land. Like anything that has a lot of supporters, it also has doubters. So, is this method going to save our lands? Today, let’s explore holistic planned grazing and if it is right for your land.

Holistic planned grazing caught the attention of the land community after a 2013 Ted Talk by Allan Savory, a Zimbabwean ecologist and farmer. He claimed that, contrary to popular opinion, reducing the number of animals on the land actually made the land condition worse. He concluded that the natural grazing patterns of animals is actually better for land.

Savory’s TedTalk, which currently has over four million views, sparked a debate in the land community. Some blogs, such as GrainNews, are singing the praises of HPG. Others, like the Sierra Club, are more suspicious of this new method.

So, what exactly is this practice that is causing so much controversy? Simply put, holistic planned grazing is a pattern of grazing that mimics how wild herds would have grazed on the land before it was cultivated. In theory, this practice will help the land return to a more natural state. HPG will be different for every landowner based off of their amount of livestock, type of land, soil type, and your overarching goals for improving the land.

Holistic planned grazing isn’t just letting your cattle out into the fields and hoping for the best. In fact, it requires quite a bit of planning and tracking. Timing is key when it comes to holistic planned grazing. Have your livestock stay in a pasture for too long and you run the risk of overgrazing. Too short a stay and the land will not reap the full benefits.

Many farmers who have tried this method have reported positive results. In one study, organic dairy farmer Dharma Lee tracked the health of their land over three years. Here is what they noticed:

  • A 120% increase in the number of grazing days per year, from 76 days to 167 days per year, which translated into an annual savings of $27,300 for them.
  •  A drop in feed cost from 60% to 48% of the total cost of production.
  • Improved profitability, with a gross margin of 41%.
  •  Increased carrying capacity of the land, with a 68% increase in grass harvested by cattle on the pasture.
  • A significant improvement in livestock health, with a key indicator – mastitis – dropping from 73% to 3% within the herd.

You can read the full study here. Other landowners have reported similar results in their land.

“Holistic management is a method of managing livestock in rapid rotation to increase greater production, sustainably, and profitably,” says Jennifer Sandy, a cattle rancher.

As we mentioned earlier though, not everyone is a fan of holistic planned grazing. American ecologist Dr. John Carter believes that HPG relies too heavily on personal anecdotes and not enough on science. He also points out that the study ignores the negative effects of intense trampling on a land’s water storage and plant productivity.

So, is Holistic planned grazing right for your land? That depends on a number of factors:

  • Are you trying to improve the health of your land?
  • Do you have the time/resources to plan and carry out moving your cattle?
  • Can your land recover if your livestock occasionally over or under graze an area?
  • Do you want your landscape to mimic its original growing patterns?
  • Do you have enough livestock to cover the land? And if not, does it make financial sense to invest in more livestock?

If you answered yes to all of these questions, HPG might be great for your land. Be sure to watch the original TedTalk, see what other landowners have to say, and work with a land expert in your area before making your final choice. Since it is a newer method, only time will tell if holistic planned grazing is the future of land or just a passing trend.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Top Crops for 2018 and How To Make More Profit On Them

Crops can be profitable for a variety of reasons. Some are staples of day-to-day life, some flourish in specific climates, and some are popular because they are trendy (think superfoods like kale and avocados). Today, we’re going to take a look at what makes these five top crops so successful and how you can make even more money off of them.

When choosing our top crops, we’ve factored in three key things:

  1. Profitability (of course!)
  2. Demand (both historic and recent)
  3.  Value (current and predicted)

Of course, some of these crops might not be right for your specific land and the current tariff war has temporarily lowered the value of some of the crops on this list. But we think these five crops are excellent investments in the long term.

Corn

What Makes It A Top Crop: Corn is in everything! It’s used in animal feed, plastic, penicillin, sugar substitutes, whisky, ethanol, and so much more! While the demand may fluctuate, there will always be a need for corn.

How To Make More Money: At the Illinois Soybean Association event, successful corn farmer Randy Dowdy shared his secrets to success, saying “The difference between a good farmer and a great farmer is timing and attention to detail.” Dowdy kept a close eye on his expenses to see what his return for investment was, and was able to determine from that what he could cut back on.

Dowdy is also a huge fan of minerals. “You want 300-bushel-per-acre corn? If it takes a certain amount of nitrogen, a certain amount of phosphorous, and a certain amount of potash to make a bushel of corn, my question is, how much magnesium, molybdenum, copper, iron, sulfur, calcium, manganese, phosphorous, potash, boron and zinc does it take to make a bushel of corn? Yields are based on limiting factors,” Dowdy said. If all this sounds close to a foreign language to you, it’s a perfect example of why it is so important to find a qualified expert to help with your land transaction. You’ll need to consider everything from ROI to soil type when determining if this is the right crop for your prop.

Pork

What Makes It A Top Crop: Technically, pigs aren’t exactly crops, but they are still in high demand. A strong demand and high prices make pork a great “crop”.

How To Make More Money: Make your own feed. Feeding pigs can be a huge money drain.  Here is a great recipe for making your own pig feed.

Raising the most in-demand pigs ensures you can get higher prices for the same amount of meat. Some popular ones are the American Yorkshire Pig, Berkshire pigs, and Durco pigs. We have lots of other helpful tips in our recent article on how the Pork Industry Brings Home the Bacon.

Sorghum

What Makes It A Top Crop: The USDA predicts that sorghum will return $74 per acre for the 2018-2019 year. While this is a lower return than some of the other plants on this list, in many high-altitude areas, hearty sorghum can be more profitable than corn. Other countries like China buy tons of sorghum as a cheap feed source or to make alcohol.

How To Make More Money: Don’t invest all your money in sorghum just yet. Recently, China imposed a 179% tariff on sorghum. Previously, sorghum was the number one import from China. While this crop has hit a rough spot internationally, it still has a ton of potential. We suggest waiting until the tariff war dies down though before growing this crop.

Soybeans

What Makes It A Top Crop: Even in the face of a tariff war, America is the leading soybean producer and exporter in the whole world. Similar to corn, soybean has a lot of uses, such as animal feed, cooking oil, biodiesel fuel, and more. Plus, as consumers become more health conscious, it is also often a great way to get plant-based protein.

How to Make More Money: Similar to sorghum, we wouldn’t recommend buying soybeans right now. In the future, check out the tips from Dan Arkels, winner of the 2014 Illinois Soybean Association yield contest, from his article on agriculture.com:

  1. Get the right soil. Arkles recommends soil that holds water well and has excellent drainage. “My soils are black, tight, and deep Muscatine-Sable type of soils,” said Arkles.
  2. Plant early. Early planting allows soybeans have an increased flowering period. “A soybean plant is light-sensitive, and it will flower as late as the season allows,” he says.
  3. Weed management. Did you know that around fifty percent of waterhemp seeds are viable nine days after flowering? Removing waterhemp plants before the harvest prevents future waterhemp.

Marijuana

What Makes It A Top Crop: While still illegal in some states, marijuana is medically legal in 30 states and recreationally in nine. Its new legality makes it an incredibly trendy crop.  It’s currently the fastest growing crop in America. Hemp, marijuana’s non-psychoactive cousin, is still illegal, but there is a huge push to legalize it in Congress.

How To Make More Money: This one is tricky. Since legal marijuana is not federally legal, you want to make sure to work within the law. One way to make more money is knowing all the products that can come from this plant. It has uses in medicine, helping veterans suffering from PTSD, beauty products, and many other uses.

Even the best crops can have slumps. However, we hope this list got you thinking about ways to make more money off of your crops or even new ways that you can make sure you’re getting the highest and best use out of your property. If you’re thinking of purchasing land to grow one of these Top Crops, make sure to Find A Land Consultant near you. Purchasing and managing land real estate requires specialized expertise!

 

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Land Lingo

For those just starting out in the land industry, all the lingo might sound like a foreign language. Here’s a quick guide for those new to land real estate (or those who just want a refresher!) on some of the most common terms in land real estate.

1031 Exchange: When you sell land, you have to pay taxes on your gains. This can cause a problem for sellers, since taxes on selling land can be massive. A 1031 exchange allows you to delay paying capital gains taxes if you reinvest the proceeds from the sale in a like-kind type of property.

Agritourism: This is any type of activity which brings visitors to your land. This can include:

  • Fishing
  • U-Pick
  • Wine Tasting
  • Guided tours
  • Horseback riding
  • On-sight sales

ALC: This is an acronym for the elite Accredited Land Consultant Designation, a prestigious designation through REALTORS® Land Institute. To get the ALC, land experts need to complete RLI’s rigorous education program, have a proven track record of transaction performance, and pass the summary exam. It’s not easy, but nothing worth getting ever is!

Conservation Easement: This is a legally binding agreement that prevents certain developments or land uses on a property in order to protect the land’s natural resources. You’ll see these a lot in areas with endangered wildlife.

Google Earth/Google Maps: Google Earth and Google Maps are two free online programs that allow you to measure a lot’s dimensions, create online tours, and download all the data you need on land from around the world. Seth Williams from REtipster has an excellent video series of Google Earth hacks. Check them out here.

Land Values: In the simplest terms, land values determine how much a plot of land is worth. There are dozens of factors that impact land values, ranging from land use to the state of the market to current land laws.

Mineral Rights: If you own the mineral rights of a property, you have ownership over the property’s underground resources, such as oil, natural gas, iron, and even gold! Having mineral rights gives you the right to mine for and profit from these minerals.

Perc/Perk Test: This is shorthand for a percolation test. A percolation test evaluates the rate that water drains through soil. These tests are incredibly important when it comes to determining the highest and best use for a property. The rate that water drains through soil impacts what crops can grow on the land and what structures the land can hold.

RLI: This is the abbreviation for REALTORS® Land Institute, the industry’s leading land real estate organization. RLI provides the education, networking, and resources to help land real estate professionals become the best in the business.

Tax-Assessed Value (TAV):. This is the amount that seller’s property taxes are calculated on. These numbers are available at your county’s courthouse and are updated every few years.

Title: A title is a bundle of rights tied to a property. These rights can be divided up and held by different parties. For example, someone could own the mineral rights to a property without owning the property itself.

Topography Map: These maps are very similar to your run-of-the-mill maps. The only difference is that topography maps details the physical features of the land (the topography). This can help land experts get a sense of what they could best use the land for, based off an area’s elevation and physical make-up.

Transitional Land: This is a land type that is transitioned from one use to another to increase profitability and land value. For example, if a plot of land is perfect for ranching, but is currently just vacant land, someone could purchase it and invest enough money to transition the land into ranch land. This person can therefore then sell the land at a much higher price.

This is just a sample of the varied vocabulary of land experts. The longer you are in the land industry, the more you’ll learn! Interested in becoming ana land real estate expert? Check out our LANDU Education Program Upcoming Courses.

 

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Investing in Land 101

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” — Andrew Carnegie, billionaire industrialist

When it comes to investing, land has always been a solid choice. Many finance experts agree that investing in land is an excellent way to diversify your portfolio. There are also plenty of famous billionaires who have made their fortune in land. Today, we’re going to break down the basics of investing in land real estate.

Investing in Land vs Investing in Stocks

Before we look into investing in land, it’s important to know how it is different than investing in stocks. When you buy a stock, you own a tiny piece of that company. When the company profits, you profit. When you buy land, you choose exactly what you want to do with that land. You can transition it to another land type, lease it out, or just hold onto it and wait for the value to increase (we’ll get more into these investing methods later in the article). You have a lot more control when investing in land.

Investing In Land

There are many different ways to invest in land real estate, but today we’re going to look at the top three most popular with land experts.

1: You can hold onto the land until the market is great and you can sell it for a profit (also called the buy and hold method). Since it relies heavily on the market, this is usually the slowest way to make a profit. However, if you buy a quality piece of land during a market dip, you can sell it at a profit when the market is strong. Buy low, sell high!

2: You can invest to transition the land to its highest and best use. Transitional land is a booming market. This method will cost more, but if you find the perfect use for your land, you can make serious money off of your transitional land.

3: You can lease the land out to farmers or hunters. This requires more work but can get you a steadier profit. You’ll definitely want to work with a land expert like an Accredited Land Consultant (ALC) on the contracts to make sure you are getting maximum profits on each lease.

Benefits of Investing in Land

There are many benefits to investing in land real estate. Here are just a few.

  • Diversify Your Portfolio. Land is an excellent way to give your other investments a safety net. If you invested all your money in stocks, and the stock market drops, you run the risk of losing most of your savings. Investing in land gives you safety even when other markets are down. Over the last twenty-five years, farmland has produced 5 percent annual return on average. Cha-ching!
  • Limited resource. Ever wonder why people pay thousands of dollars for tiny apartments in San Francisco and New York? It’s because land is a limited resource, and desirable land will always be in demand. As Mark Twain once famously said, “Buy land, they’re not making it anymore.”
  • Low effort. One thing many people love about investing in land is that it usually requires minimal effort, especially if you are using the buy and hold method. This is a huge benefit for farmers and land real estate agents who have very little free time.

Drawbacks

Even though there are a ton of benefits to investing in land real estate, there are some factors you need to be aware of. Even though we think investing in land is an excellent idea, our goal is for you to make the best educated choice for you and your land.

  • Taxes can be tricky. States and counties have different laws for taxing investment land. Here’s a great guide to understanding exactly how much you should be paying in taxes for different types of land.
  • Previous uses. Previous land uses can impact the land’s value and what you can use the land for. For example, some land uses can result in environmental hazards that will cause the land value to plummet. Sometimes, it can be difficult to track down the previous land uses, especially if the land has had many owners. Luckily, if you are having trouble finding the previous uses, you can always use this Google Earth hack to see the land’s history!
  • Patience. Depending on your method of investing, you won’t see returns for anywhere from six months to many years. You should only invest money into land that you won’t need in the next few years. No one likes the waiting game, but good things take time!

Investing in land is a great way to build wealth and save up for retirement. Be sure to consult with a professional and know the hottest land markets to invest in before making any big decisions with your savings.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Lessons from Land Legends

To quote the legendary John D. Rockefeller: “The major fortunes in America have been made in land.” The people on this list have made their fortunes in different parts of the land industry, ranging from oil to transitional land to ranches. Let’s look into the secrets to success from America’s greatest land legends.

John D. Rockefeller

John D. Rockefeller

John D. Rockefeller might be the biggest land legend of all time. Even though some of his business practices were considered less than ethical, you still have to admit this oil tycoon’s thinking was revolutionary for the time. Rockefeller was the king of cutting costs. He bought his own tracts of white oak timber to build with, knowing the long-term value of owning timberland would be worth the short-term cost. Rockefeller was notoriously stingy, except when it came to investing in land that he knew would bring him profit for decades.

Rockefeller also believed in waste not, want not. He found ways to make a profit on the byproducts of oil, such as using the tar for paving or selling Vaseline to candle makers. He was thrifty in a time when other refiners were dumping their gasoline and other byproducts in the river. His planning for long-term value made him one of the richest men in American history.

What can we learn?

Think long term for gaining profit. Rockefeller knew buying timberland property might not be cheap in the moment but would pay for itself over time. Thinking about the big picture can lead to big profits.

John D. Rockefeller, Jr.

John D. Rockefeller, Jr.

Most people only know of the original John D. Rockefeller, but his son is just as fascinating. While his money was made primarily through his father’s business, the younger Rockefeller had a passion for land. He donated land for multiple national parks, including Grand Teton, Acadia, and Yosemite. He used the shell company Snake River Land Company to buy up land for the Grand Teton National Park. When he reached a stalemate, he wrote a letter to Franklin D. Roosevelt saying “it will be my thought to make some other disposition of it or to sell it in the market to any satisfactory buyers.” He eventually won the land. For his dedication to land, both the John D. Rockefeller Jr. Memorial Highway and Rockefeller Memorial were named after him.

What can we learn?

The land industry is not for the meek. Rockefeller, Jr. was not afraid of opposition and fought for what he thought was right. He may not have made money in these deals, but he cemented his reputation as a land legend, which is more valuable than any paycheck. He is also a perfect example of having the kind of passion for land that it takes to make it in the industry.

Ted Turner

Ted Turner

You might know him as the founder of CNN, but did you know he also owns two million acres in ten states? The “Mouth of the South” uses much of the land to raise bison for his restaurant chain. His other ranches rake in a profit from hunting, fishing, and ecotourism.

What can we learn?

Turner uses his land to earn multiple sources of income. He also has a good sense of land use and a knack for finding a property’s highest and best use to ensure he is using certain plots of land for whatever use is most profitable. How else can you make money off your land?

J. Paul Getty

J Paul Getty

When he was just ten years old, J. Paul Getty’s father, George Getty, bought the mineral rights for 1,100 acres of land. Smart move. The land was soon producing 100,000 barrels of oil a month.

When he was twenty-one, J. Paul Getty’s father gave him ten thousand dollars to expand the Getty family’s Oklahoma oil field holdings. After careful deliberation, he bought the Nancy Taylor N. 1 Oil Well. Site. He struck oil. The 40% commission he got made him a millionaire!

What can we learn?

Mineral rights are just as valuable today. Before buying land, make sure any mineral rights you could be entitled to are included in the sale. Imagine what would have happened if George Getty had bought the land without the mineral rights?

Walt Disney

Walt Disney

The story of how was bought is crazier than Space Mountain! Disney secretly bought up 27,000 acres of land dirt cheap under shell corporations with names such as M.T. Lott. When locals found out who was buying all their land, prices shot up, in some cases to $80,000 an acre!

Even though it got expensive towards the end, the Orange County Appraisers officer estimates that the land value of all Disney World is now worth over $1.3 billion.

What can we learn?

The sky is the limit when it comes to transitional land. Figure out the highest and best use for your transitional land and profits will follow.

And One To Watch: Jeff Bezos

Jeff Bezoz

According to Forbes Magazine, he’s currently the richest man on earth, with a net worth of 140.8 billion USD. So far, his money has come from his business, Amazon, but many land experts are curious about what he’ll do when it comes to the second headquarters for Amazon. He might pull a Disney and transition low-value land into some of the most expensive land real estate in America. We’ll just have to wait and see!

These land legends come from different places and periods in time, but they do have a few things in common. All these men are out-of-the-box thinkers, hard workers, and take advantage of everything land has to offer to them. We hope these stories will inspire you to become the next land legend. Interested in buying or selling land real estate? Make sure to Find A Land Consultant that is qualified to handle your transaction.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Gaining Community Support for Land Use Projects

Working on large land use projects can have many upsides. You get to work with big name clients and, many times, the job comes with a bigger paycheck. However, working on large land use projects can also have its drawbacks. These projects tend to attract controversy and resentment from the surrounding community; and community resistance can slow down construction, and in some extreme cases, can even shutdown projects entirely. If you want to gain community support for your land use project, good communication and planning will be your secret weapons.

Communities have rallied against land use projects since real estate agents, developers, companies, and governments started proposing them. Knowing how to handle opposition is becoming increasingly important, especially in areas where land is both highly valued and extremely limited such as New York or California. Small towns have also had to struggle with choosing between new land projects and historical or well-loved buildings. No matter where you are in America, you can use these tips to gain community support for your land use project.

Create A Website

When people Google your project, the first thing they should see is your website not an angry blog post about your project. For this reason, it is important to start building SEO as early as possible. Lay out the need-to-know facts about the project and be sure to include some positive things the community will get from your project. Will the project bring more jobs to the area? Will it increase foot traffic, bringing more customers to local stores and restaurants? Brainstorm ways the community will benefit and lay them out on the website.

Listen To The Community

Organizing a small meeting where members of the community can voice their concerns allows you to understand where the opposition stems from. In many cases, most of the anger from locals comes from feeling like their voices are not being heard. Seeing you make an effort to understand their concerns can do wonders for your project’s public image. The other benefit is that the community will be able to hear the facts directly from you. You’ll be able to correct any misinformation or rumors.

Some public affairs firms, such as GCA Strategies, warn against huge town-hall style meetings. According to their article, the company believes that “large audiences usually have too many issues to address in depth, and time is typically so constrained that people become frustrated because they cannot fully express their fears or concerns.” Consider having limited-seating, smaller meetings to make sure everyone feels their voice is heard. Think focus group instead of free-for-all.

Another option is making an appearance on local podcasts, radio shows, or news programs to talk about your land project.  This way, you can still get your message out to locals while having total control of the situation.

Keep A Cool Head

Staying calm in the face of conflict is the single most important factor in gaining community support. With social media at our fingertips at all times, it’s easier than ever to share your thoughts with the whole world. In times of stress, it can be tempting to vent your frustrations on Facebook, but this can have huge drawbacks if the wrong person sees it. Remember, anything you say reflects not only on you as a professional, but also on the land use project you are trying to get approved.

Social media slips happen to the best of us. A good way to prevent them is to follow SPACE guidelines:

S – Stop: Type it, but don’t post.
P – Pause: Wait an hour before posting. Ideally, sleep on it.
A – Assess: Ask yourself about your intentions behind the post.
C – Confirm: Ask a close friend who isn’t involved with the project their thoughts on the post and if they think it might cause trouble.
E – Execute: Send the post only if it passed the other steps.

Gaining community support for land use projects isn’t always easy. Social media and misinformation can spread like wildfire and be difficult to contain. However, if you approach the situation with a cool head and make it clear upfront the ways the community can benefit from your project, you can overcome even the greatest of hurtles.

This article was originally posted on Landthink.com. 

Praising the Appraisal Process

Trying to understand the appraisal process can feel like trying to find the Loch Ness Monster – impossible! An appraisal is an educated opinion based on dozens of different factors that are always changing. Since there is very little data available about most plots of land, most appraisals rely heavily on educated guesses and predictions of the market. This uncertainty makes some people uncomfortable. However, as a land professional, it’s important to know what goes into the appraisal process and what impacts value. Let’s take a look into the ever-changing and often infuriating world of appraising land real estate.

What exactly is an appraisal? According to the Appraisal Institute, an appraisal is a professional opinion on the value of a property. The word ‘opinion’ here is very important. Since land values, market condition, and demand for land types and uses is always changing, it is hard to find solid data to base an appraisal on.

Not only are the factors of an appraisal difficult to track, there are also so many of them! Here are just a few that impact land value:

  • Current market conditions
  • Income potential
  • Current land use
  • Soil type
  • Structures
  • Environmental hazards
  • Climate
  • Surrounding area/neighborhood
  • Local and national land laws
  • Location
  • Water/lack of water on a property
  • Access to mineral rights

We need a nap just after typing that list!

With all this in mind, what is the best way to go about getting an appraisal? There are dozens of methods out there, ranging from the income approach to the sales comparison approach. There are many blogs that suggest ‘do-it-yourself’ equations to figure out your land’s worth. We STRONGLY recommend against this. As you’ve seen in this article, appraisals are extremely complex and require the help of a professional (such as an ALC). While it is impossible to find an exact value, here are three tried-and-true ways you and a land professional can use to get the most accurate value of your land possible.

Get The Tax-Assessed Value of Your Property

You can access these in the public tax records. Tax-Assessed Values (or TAVs) are determined so that counties can figure out how much to tax different plots of land. They are done every few years. Since these numbers are used for taxes, TAVs are a great resource for appraisals. Remember that the TAV is used for tax reasons, so you still need to factor in current market conditions.

Best For: All land.

Land Survey

Done by a professional, this will help you know what parts of the land you own. This is great for lands where the boarders are unclear or deeds have gotten blurred over time. A land survey will also show you the buildable land and topography of a plot. Knowing what land uses are possible, and what the land’s highest and best use is, are key for determining value.

Best For: Large parcels of land and land with unclear boundaries

Land Value Estimation

Raw land is the hardest land type to value. It’s a blank canvas. The value will change based on what the buyer/owner does with the land. The land use and structures built on the land can wildly change the value. For example, imagine a plot of land that has the perfect location, soil type, and structures to be a vineyard. If the buyer uses it as a vineyard, the value of the land could be much higher than if the buyer decides to use the land for a completely different use, such as hunting. This method can give you a base price of the land.

Best For: Vacant Land/Transitional Land

There’s a reason appraisals should be left to the professionals. It takes years of experience and a solid understanding of market trends to even begin to understand land value. While we don’t recommend you trying to appraise your own land without the help of a professional, we hope this glance into appraisals makes you appreciate all the work that goes into it. Make sure to to help with your next land transaction.

All About Auctions

Real estate auctions add a jolt of excitement to selling land. The energy! The adrenaline! The thrill of watching the clock tick down! Not only are auctions fun, it’s a great way to sell lots of land in a short amount of time.

If you are new to auctions, all the different types of them might be overwhelming. Here’s a quick breakdown of the different types of auctions.

  • Absolute: No minimum bids. The land is sold to the highest bigger, regardless of price. This type of auction is better for less expensive land where the owner is more relaxed on the price. Keep in mind though that since there is no safety net for the seller, you do run the risk of losing money.
  • Minimum-Bid: The lowest acceptable price for properties are pre-determined by the seller. This gives the seller a safety net that they don’t have in absolute auctions.
  • Multi-Par: Multiple parcels of land are combined in each lot. This type of auction is perfect for sellers who want to move vast quantities of land. Since it is more complicated, you will need knowledgeable staff.
  • One of the benefits of online auctions is that it can be done from home. An increasing number of auctions are moving online for the convenience (bid from your living room or on the road!) and cost-savings (don’t need to rent out a room for the event).
  • Reserve: In this auction type, the seller has the unique right to reject the highest bid. If you or your client is selling high-value land, this could be perfect. Some buyers don’t like these auctions because they don’t like the uncertainty of potentially being rejected for the property, even if they have the winning bid.
  • Sealed Bid: Sealed bid means all bids are confidential. This definitely takes some of the adrenaline out of the room but protects people’s financial security.

Now that we’ve covered the different types of auctions, here are some ways to have a great auction.

As A Buyer

Strong Wi-Fi

If your auction is online, a strong connection to Wi-Fi is key. Spotty Wi-Fi has lost people their bids on incredible lots. For example, if two people submit bids at the very last second of an online auction, the person with the faster internet wins. If Wi-Fi in your area is spotty, see if any cafes, restaurants, or libraries nearby offer free Wi-Fi.  

Set Limits Beforehand

In the heat of the moment, it is easy to bid more than you should have. A good way to prevent that is to plan out in advance how much land you need and how much you can afford to spend — and stick to it! Plan on a more conservative budget, but if there is a truly amazing plot of land that you know you can turn a profit on, don’t shy away from it. Skip out on a few other bids if that can secure you getting the lot of your dreams.

Do Your Homework

Of course, you’ve already looked up the price and acreage of the plots you are interested in, but did you do a title search? A title search is the best way to know the regulations and rules that come with a certain property.

If you can, drive by the property to get a closer look. Sometimes, you’ll be able to spot obvious problems that were glossed over in the description. If the property is states away, there is always Google Earth!

As A Seller

Get A Great Auctioneer

Auctioneers are the life and energy of any auction. Who doesn’t love their mind-bogglingly fast chants? If you’ve never been to a live auction before, watch some of our favorite chants to see what all the fuss is about. Find someone with great energy who can keep up!

Know What Makes A Property Good To Auction

Property that is in good condition in a desirable location is likely to get lots of bids. Keep a close eye on the market to see what land types are selling well in your area. Some people think that auctions can be a good place to get rid of properties that they haven’t sold in ages. This isn’t true. Buyers want to be excited about a property and feel like they are finding something new so they are less likely to bid on a property that they’ve seen before.

Work With An ALC

They aren’t called the best in the business for nothing! Not only do ALCs have extensive knowledge of multiple land types, there are many ALCs who specialize in land auctions. When using the Find A Land Consultant tool, be sure to go to the ‘Advanced Search’ feature and click ‘Auctions’ under ‘Service Specialties’.

Real estate auctions are amazing places to sell land and network with other professionals in the land business. Get your bidding paddles ready and have a great auction!

 

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

Leveraging Google Maps and Google Earth

It is mind-boggling that Google Earth and Google Maps are free. These programs allow you to get 3D views of properties anywhere in the world, download extensive files with all the information you could ever want about land, monitor natural disasters in real time, and you don’t need to spend a penny to use them. Land experts need to have a wide range of expertise with Google Maps and Google Earth. Whether you’re a Google Earth pro or new to virtual mapping, we’ve got you covered with tips for how to take your Google Mapping skills to the next level so you can better market your properties and more confidently serve your clients.

Before we dive into these two technologies, you might be asking yourself Wait… aren’t Google Maps and Google Earth the same thing? They have a few important differences. Google Maps is a mapping website used more for locating places and getting directions. The graphics aren’t as good, but the traffic and navigation options are up-to-the-second accurate. Google Earth, on the other hand, is used more for virtually visiting properties, with stunning high-def graphics. Both are extremely useful to land experts, Google Maps for navigation and Google Earth for information.

Beginner

Explore The World Without Leaving Your Couch

When you use Google Earth, you can explore 3D versions of various properties and the surrounding area. If you want to explore a property that is way out of driving range, using Google Earth lets you get an in-depth look into the land.

Turn Back The Clock

Want to know the history of a property, but can’t find information on it anywhere? Whether it’s difficult owners or confusing paperwork, being stuck without any information about your property’s history can be beyond frustrating. Google Earth lets you view the exact same property at different points in time. Not only can this help you get a sense of a property’s history, it also gives you a sense about the area’s future land values. As you flip through the years, keep an eye on the properties around yours. Is there a lot of development? That’s a good indicator that land values are on the rise and the land is in the path of growth. Notice little to no improvements made to the land? Is the land looking worse over time? Chances are values could soon fall.

Intermediate

Measure Lot Dimensions

Google Earth’s measuring tool lets land experts measure out everything from lot sizes to how many feet of lake frontage a property might have.

To use this feature, go to the ‘Measurements’ tab in the upper left-hand corner. First, pick your unit of measurement (miles, feet, inches). Then, simply click and drag your mouse around the area you want to measure. The tool in the corner will immediately let you know the area’s measurements. It’s that easy!

Longitude and Latitude

Many rural land properties (especially vacant land), don’t have registered street addresses. This can make it difficult for clients to visit the property. Google Earth allows you to get the longitude and latitude of any location on Earth. Just zoom in on the area, click on the location, and it’ll give you the coordinates. You can use the ‘share’ tool to send the URL to clients or put it on your website.

Advanced

Import KMZ And KML

KML (Keyhole Markup Language) and KMZ (KML-Zipped) are file formats that store important information (parcel information, buildings, power grids) about land via Google Earth. You’ll want these if you want in-depth information about the land.

Before you can access this great tool, you’ll need to download an application like Parlay. This application provides the parcel data layers and files to use in Google Maps. Once you’ve downloaded Parlay, you will see layers of data in your ‘My Places’ tab.

Make A Tour

Why send clients a link to a property when you can give them a tour of it? The tours, called KML tours, can also be narrated by you! Click the ‘Add Tour’ button in the main screen, and when you are ready, press the ‘Record’ button. Create the tour by zooming in and out, rotating the globe, and flying to different locations. Your microphone will record whatever you say (stumble in the middle of your planned speech? Never fear! You can edit the audio once you’ve finished the tour). Click the ‘Record’ button again when you are done.

After writing this article, we still can’t wrap our heads around the fact that this program is free. Google Maps and Google Earth can be some of the most powerful tools a land expert has. We hope these tips will help you make the most of it.

Seth Williams from RETipster has lots of excellent step-by-step videos on Google Maps and Earth. He even shares tricks such as drawing parcel lines with the polygon tool and how to find the elevation of any point on Earth. Check them out!

Want to learn more about Google Mapping? If you are in Texas, you’re in luck! RLI’s Texas Chapter is hosting a Google Earth Mapping for Real Estate course on June 25.

About the Author: Laura Barker is the Membership and Communications Specialist for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.