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:
- 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.