What’s All The Buzz About Bees and Land Real Estate?

Bees in America have been dropping like flies. Since the late 1990s, beekeepers, farmers, and scientists have noticed a steady decline in the bee population across the country. Before 2006, the usual number of bees that beekeepers lost due to frost or disease was 5-10 percent. After 2006, beekeepers saw that number rise to between a 30 to 36 percent decline in their hives. Panic really set in when a US report stated that American beekeepers lost 44.1 percent of their hives between March 2015 and April 2016.

So, what does this have to do with the land real estate market? Losing bees could have devastating effects on our farms, economy, and day-to-day life. As food pollinators, bees play a huge part in almost everything we eat and everything that our food (cows, pigs, turkeys, etc.) eats. Without them, landowners would lose the most efficient and cost-effective pollinators on Earth, driving the cost of farming and food way up. Farmers would have to invest in expensive pollination technology. If they couldn’t afford the technology, farmers would be severely limited in what crops they could grow since bees pollinate thirty percent of the world’s crops.

The loss of bees could also be disastrous for land values. Crops, livestock, and wildlife will drop in numbers and value without the bees around to pollinate the plants and food sources of the land. Since the value of land real estate relies heavily on the profitability of the land and its natural resources, a drop in bee population could mean a huge drop in land values.

No one knows the main reason bee populations are dropping, but there are several factors scientists believe are hurting our winged friends. A growing number of varroa mites, tiny crab-like parasites, have been feeding off of drone bees and can kill off entire hives. These mites are tiny and hard to spot, which lets them destroy hives from the inside out without anyone noticing until it is too late. Another possible reason is neonicotinoids, a powerful insecticide that slowly weakens bees.

People have been scrambling to find ways to help the honeybees. Almond growers in California are trying to breed more blue orchard bees (B.O.B.s). The blue orchard bees are known for being excellent pollinators. They are more efficient than regular honey bees; a few hundred female blue orchard bees can do the same amount of work as 10,000 regular honey bees.

Although introducing a new breed of bee sounds like a great idea, there are a few drawbacks to the blue orchard bee. For one, they do not produce honey. Another is that they have sluggish reproduction rates (bee keepers have only been able to increase their B.O.B.s a factor of three to eight every year, a tiny fraction of how quickly honey bees can be increased), so getting enough for the current American demand for bees might be tough. The cost of raising B.O.B.s is also still uncertain.

Technology also offers hope for the bees. Robo-bees may sound like something from a sci-fi moive, but in Japan, they are already a reality. Japanese scientists have created a remote-controlled drone the size of a dragonfly. These robo-bees are able to pollinate lilies and are currently being retooled to pollinate other crops. U.S. scientists say a similar product in is the works right here in our own country.

These robo-bees also have their drawbacks. They would be significantly more expensive than raising honeybees, and the risk of malfunctioning could leave fields without pollination for days or even weeks on end.

While the rest of the world is trying to figure out a cure for this epidemic, there are things you can do to help the bees:

Grow flowers that attract bees.  Lavender, white clover, and thyme can all help attract bees to your farm.

-Build a hive or sponsor one. Vice President Mike Pence had a beehive in his backyard and encourages others to do the same. Don’t like the idea of bees buzzing around where you go barefoot? You can also support a hive through websites like the Honeybee Conservancy  to help give bees a safe place to thrive.

-Make your land real estate bee-friendly. Besides planting bee-friendly flowers, you can also invest in pesticides that don’t harm bees.

The decline in bee population is a serious threat to everyone. However, with a raised awareness, people are starting to understand how important bees are to our food and land real estate. Because of this, there is hope that the bee population across America will be able to grow again.

About the author: Laura Barker is Marketing Assistant for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and had been with RLI since October 2017.

land tech accelerator program NLC18

Top New Technologies in the Land Real Estate Industry Announced by RLI

February 14, 2018 (Chicago) – The Realtors® Land Institute (RLI) is excited to announce the industry’s top new land real estate technologies as part of the new Land Technology Accelerator Program. The top companies, as approved by land real estate agents who are members of RLI’s Future Leaders Committee, include LandHub.com, REALSTACK, and Terva.

“We are very proud to not only be selected as a Land Tech Accelerator winner but to also have the opportunity to present and exhibit at the National Land Conference in Nashville next month. RLI has been a great resource as we grow our company and we’ve not only learned a lot but also made some amazing connections along the way,” said Kevin May, President of LandHub.com.

“We are delighted to be just one of three companies selected to RLI’s Land Tech Accelerator Program. We look forward to bringing REALSTACK to RLI members in a big way. Our land brokerage clients love having one system for their land brokerage website, listing and photo management, feeds to advertising sites, lead management, reporting, and tons more. This is a unified solution never before available to the land industry,” said Chad Polk, Founder and President at REALSTACK.

“Terva is making the world’s farmland information accessible. With the click of a button, users will have access to every upcoming auction, active listing, and individual sale results across the country. We’re excited for the opportunity to share our story as part of RLI’s Land Tech Accelerator Program,” stated Steven Brockshus, Founder of Terva.

The Land Technology Accelerator Program is a new addition this year to the annual National Land Conference. The program aims to introduce the latest top technologies in the industry to attendees of the event and beyond that to the industry as a whole. This year’s conference will be held March 12-14 in Nashville, TN, where the Land Tech Accelerator Program companies will be showcasing their technologies in an exclusive session. To learn more, visit rliland.com

Watch a recording of the webinar featuring the Land Technology Accelerator Program Companies:

 About the Realtors® Land Institute
The Realtors® Land Institute, “The Voice of Land,” continually strives to maintain its status as the acknowledged leader for all matters pertaining to the land real estate profession. RLI endeavors to remain the essential membership organization for the extraordinary real estate professionals who broker, lease, sell, develop, and manage our most precious resource: the land. The Realtors® Land Institute, provides the expertise, camaraderie, and valuable resources that are the foundation for all land real estate professionals to become the best in the business. For more information, visit rliland.com or call 800.441.5263. It’s the best time to join the best!

Ready. Aim. Fire! Strategic Planning for Your Land Real Estate Business

Last January, I hosted a group of clients for a duck hunt on the Texas coast. Huge groups of redheads flock together during the late season, and when they commit to the decoys, the hunter who takes careful aim can fill his bag with drakes in a hurry! One of my companions, however, was not having a productive hunt. Opportunities were abundant, and he was shooting aggressively, but his shots rarely connected. When he did hit a duck, he was just as surprised as we were! But, more often we heard the words, “%$#@, I should have aimed better!” He failed to follow the proven “ready, aim, fire” model.

Unfortunately, this sounds too much like how many real estate agents approach the land business. Abundant opportunities, lucrative commissions, and time spent outdoors tend to attract these folks to the land business. But many operate their businesses in a reactive fashion, simply taking what the market gives them. While they may feel busy, their business is unpredictable and it leads to the high percentage of agents who fail to make it past five years in this business. Strategic planning for your land sales business boils down to a few simple steps: set clear, written goals (ready), identify the specific activities to get you there (aim), then execute the plan (fire). Top agents who do take time to strategically plan have a more predictable business and, consequently, they operate with more clarity. Core business and operational decisions become much easier with a predictable business. Hiring, debt, expansion, marketing, and scheduling are much easier if you can confidently predict the results you will likely achieve.

As you plan your business empire, you should start by considering where your leads will come from. Use a simple spreadsheet or one of the many software programs available online to track your lead sources by percentage and volume. By identifying your core sources of business, you can confidently plan your activities, make better marketing decisions and bring in the proper leverage to maximize the potential of these lead sources. Additionally, this will force you to calculate the cost of these leads, which will come in handy when doing your pro forma. Knowing the sources of your business is the first step to clear planning.

Now, let’s look at three basic components of a productive and clear business plan. Remember, this is a plan for you to follow, not a 50-page textbook that requires a Ph.D. to interpret! The idea of a business plan is to clearly lay out the specific steps and activities required to reach your goals, and to project profitability once you reach them. The three basic components we will look at are: the Financial Model, or pro forma, the Organizational Model (who does what), and a one-page plan with written goals and the clear steps to accomplish them.

Top business people know their numbers and track them closely. The Financial Model or pro forma is where you write down how much income you would like to net, and calculate all the costs associated with getting to that number. According to the Millionaire Real Estate Agent model, start with your desired net income, then back into the total sales required to support this goal.

For example, if I want to net $300,000 in annual income (before taxes), I would write down $300,000 + $87,600 (29.2% cost of sales) + $87,600 (29.2% operating expenses) to get my total required gross commission income (GCI) = $475,200. Now I know how much revenue I will need to bring in to support my income goal and I can calculate how I will get there. To do this, divide $475,200 (GCI) by your average commission rate to get the necessary total sales volume. In this example, I would need to close $15,840,000 in sales volume to reach my goal. Next, I will need to know my average sales price to calculate the number of transactions needed to reach my goal. My average sale has been tracking around $2,000,000. $15,840,000 divided by $2,000,000 tells me I need to close 7.9, or 8 transactions at my average commission rate to reach my goal. Now, I simply plug in the percentage of listings I expect to close (65%) from the appointments I expect to win (70%) to get the number of listing appointments I will need to set. In this example, I would need to go on 18 listing appointments in order to predictably win 12 so that I could expect to close 8 property transactions. If they average $2,000,000 and I earn my average commission rate that will determine my GCI. After expenses and cost of sales, I will reach my income goal of $300,000. *see chart on page 4 of the Millionaire Real Estate Agent Business Plan

The success of any sales business boils down to the right amount of quality leads. The Financial Model showed me how many leads I need to generate to reach my financial goal; now I can build a plan to get there. We have found a simple, single-page business plan to be the most effective way to do this. The COB and CEO of the largest real estate company in the world can fit theirs on a single page, so we can too! The single-page business plan requires extreme clarity on the goal and the specific things that must happen in order to accomplish the goal. In his book The ONE Thing, Gary Keller asks the question, “What’s the ONE thing I can do such that by doing it everything else will be easier or unnecessary?” This clarity allows you to line up your dominoes and start with the most important task first. Focus on the big rocks, the things that only you can do, and break them down into action items.

We start with a written five-year goal, a written one-year goal, three top priorities that absolutely must happen to ensure the one-year goal is met, and five strategies to accomplish each priority. We creatively refer to this exercise as the 1-3-5 goals sheet. Going back to my example from the Financial Model, I would write my one year goal of $300,000 net income and roughly $16,000,000 in sales volume. My five-year goal is a stretch goal, but for the purposes of this exercise it won’t matter unless I hit my one-year goal. Next, I need clarity on what the three things are that must happen to support my goal. These are my top three priorities, and I write them down as well. First, I know I will need $24,600,000 in listing inventory (12 listing agreements at a $2,000,000 average) to predictably close $16,000,000 (65%). Then I break down my five strategies to get there. Secondly, I know I will have to nail lead generation, and third, I will need a solid marketing plan. Each of these gets the same five detailed strategies. If I have clarity on these big rocks, I can dig into each of them and hold the activity (and the person attached to it) accountable for producing the results.

Now that I have completed my Financial Model and I have clarity on the core things that must happen to support it, my final step is the Organizational Model. This is where I bring in leverage and assign who does what in the business. I cannot do everything, and in fact I shouldn’t. There are things I do poorly, like administrative work and bookkeeping. There are others who do those very well, and by delegating to them, I am released to do the things I do well – like lead generation and interacting with clients. Leverage is freedom for business owners. It allows you to scale by staying in your strength zone and working on the business, rather than in the business. Leverage could be defined as strategically removing yourself from every aspect of your business based on your skill set and the value of your time. For most real estate agents and business owners, the logical first hire is an executive assistant, followed by a buyer agent and maybe a second assistant. Draw a simple org chart with clarity on who does what and who they report to. As your business grows, you add future hires under them and build a job description or “missing person’s report” for these future hires. Hiring for the future with a big goal in mind changes the way you hire and lead people. Success through people is one of the hardest things for most entrepreneurs to master, but for most, it is the single largest factor in their ceiling of achievement.

If you own or operate multiple businesses like I do, then simply do these steps for each business and combine the results. With multiple businesses, you would also consider shared resources, shared employees, and weigh any direct ancillary benefits of one business to another. For example, a farm management company and a land sales company might complement each other quite well by maximizing the client opportunity and sharing administrative expenses.

Lastly, you will likely not nail this on the first or even the hundredth try! So inspect what you expect, monitor your progress regularly with good accountability, and make adjustments as you go. What you focus on expands. Have a predictable written plan and focus on the detailed activities that will produce the results you desire.

Go get ‘em!

This article originally appeared in the 2018 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

 About the Author: Kasey Mock is the Director of KW LAND division at Keller Williams Realty International. Mock is a member of the REALTORS® Land Institute now serving his second year on their Future Leaders Committee. Make sure to check out his break out session diving further into this topic at the 2018 National Land Conference in Nashville, TN, in March.

The Intersection of Environmental Factors and the Valuation of Rural Properties

The value of rural properties can be affected by an interplay of forces, which are continually changing, often in a cyclical pattern. These forces include social trends (population); economic circumstances (supply-side economic indicators); and environmental forces (potential contaminants).

There is a growing need for potential consideration of hazardous substances and their impact on property value. The consideration of environmental conditions is fundamental to the appraisal of rural real property.

Environmental Factors

Some situations where contaminants and hazardous substances may be involved in the appraisal of rural properties include soil contamination due to an abandoned industrial plant, groundwater contamination due to a leaking underground storage tank and pesticide runoff from farmland to rivers and streams. According to The Appraisal of Real Estate, 14th Edition, potential contaminants and hazardous substances may include asbestos, polychlorinated biphenyl (PCB), dioxin, trichloroethylene (TCE), radon, petroleum hydrocarbons, and lead.

Environmental liabilities associated with industrial plants are well known, but many other liabilities may be present in rural properties. Farmers once commonly used long trenches filled with DDT-treated fuel oil, called “cattle vats,” to rid cattle of mites and other insects. Once this practice fell out of use, the trenches were simply filled in. Farms often have aging underground storage tanks that held gasoline for farm machinery, and farmland also may be contaminated from an accumulation of fertilizers and pesticides.

In most cases, all environmental forces that effect land value must be considered. These issues can be specific to a property or considered external to a property. Appraisers should determine the type of detrimental factors present on the property. These include potential hazardous wastes.

Specialized Methods And Techniques

Over the past 25 years, the valuation profession has developed a set of recognized and generally accepted specialization techniques for estimating the effect of possible contamination and environmental risks on prices, markets, and values. These specialized methods are based on the three traditional approaches to value which include the sales comparison approach; the income capitalization approach; and the cost approach. These methods involve one or more of the following:

Paired Data Analysis Of Impacted and Potentially Impacted Areas

In paired data analysis, prices paid for properties that sold in an impacted area are compared to prices paid for otherwise similar properties that sold outside the impacted area to estimate the effect of the location on the sale price. More than one pairing is typically necessary to understand the effect of the location in the impacted area on the prices paid.

Analysis Of Environmental Case Studies

Environmental case studies are typically useful when a source site is being appraised or in a situation involving an impacted neighborhood or area where there are insufficient sales to understand the effect of the environmental issue on prices and values.

Multiple Regression Analysis Of Property Sales In Potentially Impacted Area

When property is specified and developed, a multiple regression model can be used to determine if the environmental issue is affecting the sales prices. The model can be designed to interpret the effect of issues such as remediation status, location in a contaminated area, distance from the site source, and other factors.

 The Role Of The Appraiser

Engaging the most competent appraiser is key in achieving a reliable, credible opinion of value for rural properties. Effort should be made to find a valuation professional with experience in rural valuations, particularly if there is a possibility of contamination. Appraisers are not required or expected to have the knowledge or experience required to detect the presence of hazardous substances or to measure the quantities of such substances. Like buyers and sellers on the open market, appraisers typically rely on the advice of others in matters that require special expertise.

Appraisers must be, at a minimum, licensed or certified for Federally-Related Transactions. If the client is a federally-regulated institution and the intended use of the appraisal report qualifies as a FRT, the appraiser will have to conform to the Uniform Standards of Professional Appraisal Practice and the Federal Institutions Reform and Recovery Enforcement Act.

For complex assignments, it may be prudent to engage a more experienced or credentialed appraiser. At the Appraisal Institute, for example, Designated Members have demonstrated a higher level of education and experience and received designations that include MAI and SRA.

 Key Steps

There are five key steps in an appraisal assignment involving possible contamination.

 Step 1: Determine the location of the possible contamination.

In determining the source of the potential contamination, appraisers identify whether it is from:

· A source site: A site on which the contamination is, or has been generated;

· A non-source site: A site onto which the contamination, generated from the source site, has migrated;

· An adjacent site: A site that is not contaminated but shares a common property line with a source site; or

· A proximate site: A site not contaminated and not adjacent to the source site, but that is near the source site.

The distinction is especially important in determining who is responsible for investigation and remediation costs, and whether that responsibility accompanies ownership of the property being appraised.

 Step 2: Determine the type of contaminant and the regulatory requirements.

The appraiser considers the type of contaminant and applicable regulatory requirements (permitted or accidental discharge, level of required cleanup); migration (soil contamination confined to the source site, groundwater contamination spreading off site); and remediation (soil removal, installation of a cap, groundwater pumping, vapor removal) characteristics.

Step 3: Determine the status of the property in the remediation lifecycle.

A remediation lifecycle consists of three stages of clean up: before remediation or cleanup; during remediation; and after remediation. The appraiser determines the status of the property in the remediation lifecycle. A contaminated property’s remediation lifecycle stage is an important determinant of the risk associated with environmental contamination.

The effect of contamination and environmental risk on property prices and values changes over time, typically decreasing as a site works its way through discovery and investigation, remediation and post-remediation stages.

 Step 4. Consider cost, use and risk effects as of relevant date and point in the remediation cycle.

Appraisers consider the cost, use and risk effects as of the relevant date and point in the remediation cycle as they relate to the type of property (source, non-source, adjacent or proximate).

Step 5. Estimate the “as is” value.

Finally, appraisers estimate the impaired, or “as is,” value. In most assignments, appraisers also are asked to compare the impaired value to the unimpaired value under hypothetical condition that the contaminant was not present.

Standards of Professional Practice

Reaching a credible and reliable opinion of value when dealing with potential contamination of rural properties can be a complicated procedure. Among the tools available to valuation professionals are two Appraisal Institute guide notes that may be particularly useful in the valuation of potentially contaminated properties including Guide Note 6: Consideration of Hazardous Substances in the Appraisal Process and Guide Note 15: Assumptions and Hypothetical Conditions.

Guide Note 6: Consideration of Hazardous Substances in the Appraisal Process

The purpose of Guide Note 6 is to provide guidance in the application of USPAP in the appraisal assignment. It is not to provide technical instructions or explanations concerning the detection or measurement of the effect of hazardous substances.

An extraordinary assumption presumes as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property, or about conditions external to the property, such as market conditions or trends, or about the integrity of data used in an analysis. An example of an extraordinary assumption could be suspected but not confirmed that there may be underground storage tank contamination. An environmental assessment by a qualified environmental professional would be required for such conclusions or determinations.

Guide Note 15: Assumptions and Hypothetical Conditions

In an example of a hypothetical condition, the subject property is the former site of heavy industrial use and the appraiser is aware that it might be contaminated, but this isn’t known for certain. The value opinion reflects the property as though the subject site is not contaminated on the date of value, which is the current date. This value is premised on the special/extraordinary assumption that the site is not contaminated.

The appraisal report would need to include a clear disclosure of this special/extraordinary assumption, and state that its use might have affected the opinions and conclusions.

Conclusion

Rural properties can be impacted by environmental contamination resulting in the release of hazardous substances into the air, surface water, ground water, or soil. These factors may complicate real estate financing decisions. The ability for appraisers to accurately identify environmental issues, and factor them into property valuation can, benefit consumers buying and selling land, lenders, and the valuation profession.

This article originally appeared in the 2018 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

About the Author: James L. Murrett, MAI, SRA, is the 2018 president of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. Based in Chicago, the Appraisal Institute has nearly 19,000 professionals in almost 60 countries. Murrett will be hosting a break out session diving further into this topic at the 2018 National Land Conference in Nashville, TN, in March.

When a Deal Goes Bad: Sink or Swim?

Your first reaction to bad news related to a real estate deal that you are brokering could mean the difference between the deal being saved or lost forever. If you have been a real estate agent or broker for more than a week, you have probably received bad news about a deal falling apart. You know the rush of emotions that comes when you read the email or get the dreaded phone call with “the problem”. How you respond from there makes all the difference in the likelihood of the deal coming together.

In Chapter Six of J. Paul Getty’s book “How to Be Rich”, “The Force of Habit”, he relays some advice he received early in his career as an oilman. “Always think of yourself as a man that has just fallen overboard in the middle of a lake.” This advice really resonated with me, probably because I have been thrown from a boat or had one capsize several times in my life.

In a boating incident, the first thing you must do upon entering the water is come to the surface for air, otherwise you die. That’s a given. The next thing to ensure your survival is remaining calm and orienting yourself to the boat or the nearest land. I experienced this firsthand one summer while whitewater rafting on the Ocoee River in Tennessee. We were shooting the section of rapids used in the Atlanta Summer Olympics, and there were some serious class 4 and 5 holes. It was our young guide’s first time to lead a raft through the course. Right in the middle of the most treacherous water, our raft hit a boulder and plunged all of the passengers into immediate peril. The rushing torrent grabbed us all. I had the good fortune of coming out of the raft and being able to cross my feet on the surface and point downstream, and as a result was picked up almost immediately by a nearby boat. My raftmates were not nearly as fortunate. All the rest of them waged a long battle with the cold, raging water. One of my friends had one of those experiences so close to death that you’ll never forget it. Casey rode the worst part of the Olympic course of the Ocoee River in nothing but his life vest.

Mr. Getty’s analogy is one we can all relate to. There will be times when we feel like a deal is sailing along marvelously, and suddenly we find ourselves plunged into the cold, wet reality of “the problem.” A decade as a land broker has taught me (often through hard knocks) the following suggestions for surviving and salvaging a land deal when trouble hits.

1. Compose yourself- Just as flailing and thrashing about when falling into the water exerts unnecessary energy and decreases your chances of survival, so does pitching a fit or “giving someone a piece of your mind.” You are a professional. Take a deep breath, a walk, a run, a drive, whatever you need to do to get in the right frame of mind to address the situation.

2. Orient yourself- You must identify with as much clarity as possible the answers to the following questions.

  1. What exactly is the problem?
  2. Whatisthesolution?
  3. Who can solve the problem?
  4. How long will it take and how much will it cost?

When learning of a problem, I almost never contact the parties to a transaction until I have a clear understanding of what the problem is and identifying the path to a resolution. Our job is not to cause undue alarm, but to help our clients and customers achieve the desired outcome of the deal.

3. Identify who and what can be salvaged- Is it going to be possible to save the deal? It may or may not be. There are a million mitigating factors that could come into play. The priority, if at all possible, is to save the relationships. Things happen beyond your control. What you do and how you do it will determine if you will have a working relationship with your client, customer, or vendors in the future. Try to rescue as much of the deal and relationships as possible, and at the end of the day be glad you got out alive.

4. “Embrace the Suck”- This expression, used by Special Forces operators, is very helpful in reminding them to “consciously accept an extremely unpleasant circumstance that cannot be avoided.” If you are going to be a good land broker, you will face extremely unpleasant circumstances. Fortunately most of our stressful situations, unlike our military friends, are not life-threatening. Make peace with the fact that you are going to have to navigate some rough water, point your bow in the right direction, and make every effort to reach a positive outcome.

5. Ask for Help- If you are in over your head or in unfamiliar waters, reach out to someone more experienced than you to weigh in on your situation. I have two of the best land brokers in Alabama, Dave Milton, ALC, and Fletcher Majors, ALC, on speed dial so that I can contact them when I encounter a scenario I am not familiar with. I answer calls almost every week from brokers and agents inside and outside my company asking for advice on different scenarios. Do not be afraid to ask for help. You have a responsibility to your clients to provide the best service and solutions possible, and none of us can know everything.

Two of my favorite maritime clichés are “Smooth seas do not make Seasoned Sailors” and “Lose your head, wind up dead”. I believe these maxims are equally applicable to the situations we face in brokering land deals. Any business that requires you to deal with people, property, and significant amounts of money lends itself to problems. The problems are unavoidable, they will come. Following the steps listed above has allowed me to survive and salvage many land deals and kept them from sinking into the dark abyss where dead deals go. Godspeed, my friends.

Jonathan Goode is an Accredited Land Consultant (ALC) and a partner with Southeastern Land Group. He is a licensed broker in Alabama and Mississippi, and is the co-host of the weekly radio program and podcast “The Land Show.”

The Land Market: Current Conditions & Outlook

The latest economic activity shows clear signs of improvement ahead. Consequently, the demand for land, especially for construction of commercial and residential properties, will be solid and rising throughout 2018 and into 2019. The demand for agricultural land is more difficult to predict.

First, let’s take a look at the economic backdrop. Gross Domestic Product (GDP) grew at a three percent annualized rate in the third quarter. That is quite remarkable in light of the temporary standstill in activity in hurricane-impacted regions. The big contributors were the solid rise in business spending on equipment, which burst higher by 8.6 percent, and improvements in net exports (exports rose 2.3 percent and imports fell 0.8 percent). Software spending rose spectacularly by 24 percent. Such demand is undoubtedly being driven by the new world of digital information. Land in the middle of nowhere could soon be sought after as more data centers need to be built. Information from every Uber ride and Amazon sale are being stored digitally. Every piece of information from GPS units and the future self-driving mapping of automobiles will also need to be stored.

Consumer spending is the biggest share of the nation’s economy and grew in the latest quarter at a decent pace of 2.4 percent. This is a tad short of the near three percent growth in consumer purchases in the past three years but still implies enough power to avoid any recession.

Third quarter GDP growth was also partly boosted by inventory accumulation of goods. Sometimes this is a good thing, as companies are ramping up production in anticipation of stronger demand ahead. However, it also hints at a potential economic slowdown if the large inventory buildup requires cutting back on future production.

Government spending has been neutral, neither adding nor subtracting to GDP growth. Federal government spending rose one percent while state and local government spending fell one percent during the latest quarter.

The missing piston to the engine of economic growth is currently real estate construction. Private commercial building construction spending fell by 5.2 percent and residential real estate spending from new home construction and home sales activity declined by six percent. Commercial building vacancy rates have been steadily falling across all property types over the past several years, and that will continue to be the case as new construction is just not coming around. As to the residential market, it is undergoing some of the tightest inventory conditions ever seen, with the quickening pace of homes selling right after coming onto the market and with multiple bids not uncommon in the lower price brackets. Home prices have been moving consistently above workers’ wage growth for the past five years. However, unlike the housing bubble days of 2005 with easy subprime credit, today’s market conditions reflect tight mortgage availability. The market has the feel of a “bubble” because of insufficient housing inventory. For the past decade, the construction of new single-family homes has been far below the 50-year historical average. Soft construction activity assures continuing tight inventory conditions, and there is certainly no oversupply in either the commercial or residential real estate industry.

I am forecasting that housing starts will rise from 1.18 million housing starts in 2017 to 1.30 million in 2018. This growth will still be insufficient to fully satisfy rising housing demand. The long-term historical average has been for 1.5 million new homes constructed each year in the U.S. The low inventory conditions of near four months’ supply implies continuing rising in home values in most parts of the country. Homebuilders have indicated that, on average, it takes only 2.9 months to find a buyer of their spec-homes. It is a fast moving market, considering that just five years ago it took over an average of eight months.

Homebuilders need to ramp up construction. However, they have been hampered by skilled worker shortages in the industry and from the difficulty of obtaining construction loans by smaller builders. As to the latter, there could be more loans coming down the pike, as some of the financial regulations that arose from the Dodd-Frank legislation are likely to be loosened somewhat for small-sized community banks. In regards to construction workers, it is going to take some time to recruit to fully meet the requirements. Trade schools are just not seeing enough interested people entering the industry, especially among the younger cohorts. Moreover, the hurricanes that devastated the Houston region and Florida will require a large number of construction workers just to replace the damaged and demolished homes. An estimated 50,000 homes were damaged in Houston alone and around 70,000 in Florida. This work is not adding to the housing stock, but an attempt to maintain current levels. That means that demand for land development in other parts of the country will see delays because of the acute worker shortage.

Last year’s Land Markets Survey conducted by the REALTORS® Land Institute and the NAR Research Department indicated that half of the members were involved in recreational and residential land transactions, and the average increase in value of those sales was two percent. Given that home prices have risen five percent in 2016 and another five percent in 2017, the prospect for land price increases should have seen an increase of that magnitude. For those involved in timberland sales, the rising lumber prices (partly attributed to global economic expansion and from wildfires in the Western U.S. states and in Canada) will permit a higher price sale in the upcoming year. Those specializing in agricultural land will face tougher conditions. The crop prices that farmers have been receiving over the past three years have been in a rut with prices now more than 20 percent lower compared to the boom times in 2012. Therefore, the yield from agricultural land will be lower.

Risks to the Economy

There is very little risk of an impending economic recession. Job openings are at a multi-year high and the number of people filing for unemployment insurance claims remains at historic lows. Such conditions imply that job growth of around two million is nearly assured in 2018. However, one area of concern relates to international trade war. Experience shows that job cutting occurs when both imports and exports decline measurably, as happened during the recent Great Recession and at the turn of the century. Also of course, many economists blame the 1930s Great Depression for tariff hikes across most countries around the globe at that time. President Donald Trump’s rhetoric on trade has been “tough,” including the idea of ending NAFTA and a trade war with China. Protection of intellectual property rights must be assured, and fairness in trade needs to be constantly examined. However, a unilateral increase in U.S. tariffs will certainly invite retaliation. Such actions, depending upon the magnitude of the tariffs, could easily wreak havoc on global supply-chain production and send the economies of the world on a downward path. Agricultural exports would be particularly hard hit, thereby hurting agricultural land prices. This development, therefore, requires alert watchfulness.

A second risk is related to the tax reform without proper safeguards for real estate. If the mortgage interest deduction is no longer attractive and/or property tax deductions are no longer permitted, then the demand in home purchases and residential developable land will decline measurably. Changes to, or even a removal of, the all-important 1031 like-kind exchanges could also greatly hurt land values.

However, assuming there are no shocks to the system from international trade and that tax reform is pursued properly without hurting real estate, then investments in land will be on the rise making now a good time to be in the land sales business.

This article originally appeared in the 2018 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

 About the Author: Dr. Lawrence Yun is chief economist and senior vice president of Research at the National Association of REALTORS®. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1.1 million REALTOR® members.

Repeal & Replace WOTUS: Two Steps Forward, One Step Back

Efforts to repeal and replace the Waters of the US (WOTUS) rule are now complicated by a recent supreme court decision. In a 9-0 unanimous opinion on January 22, “the Supreme Court found that while it may not be the most efficient use of judicial resources, there was no question in the law about where challenges to the Clean Water Rule belong,” reads an article on the subject by E&E News.  The federal government, who argues that the rule should not be interpreted literally but figuratively, is seeing this as setback to their hopes of repealing and replacing the rule at a national level.

The article continues to explain that “The choice of court — district or appeals — is significant because it affects the resources needed to litigate the merits of challenges, sets the statute of limitations for filing lawsuits and helps determine whether actions can be challenged in subsequent civil or criminal proceedings. District courts are also more tilted toward overturning government actions.”

“Congress has made clear that rules like the WOTUS Rule must be reviewed first in federal district courts,” Justice Sonia Sotomayor wrote in the opinion.

The REALTORS® Land Institute and National Association of REALTORS® support the review of the WOTUS rule as laid out by President Trump’s Executive Order last year to ensure that both private property rights and clean waterways are protected.

Read more on this topic here.

How To Have a Great Hunt in February

 

By the end of January, most people have put away their guns and declared the hunting season over. February is one of the slower months for hunting. However, if you still have an itch to hunt, there are plenty of hunting opportunities for you in February. Here are some tips to help you have a great hunting season even after January is over.

1: Don’t Count Out Small Game

Deer season might be over, but there are still plenty of clever critters that will make for an exciting hunt. In many states, hunting small animals like rabbits and squirrels is legal throughout February. If you haven’t hunted squirrels before, it might not sound as exciting as hunting an elk or a wild boar. However, since the winter and the earlier hunting season have already claimed some of the weaker ones, the remaining squirrels will be cunning and make for a rewarding hunt. Rabbits are also a challenging hunt. They are one of the more popular small games to hunt, and it’s easy to see why. They have an excellent sense of smell and long-distance vision that only the most skilled hunters can know how to trick. If you are looking for a hunt that will challenge your brain as well as your hunting skills, small game could be your new favorite prey.

2: Some Animals Can Be Hunted Year-Round

While this does vary state by state, most states allow year-round hunting of animals that are considered pests or could harm the ecosystem of the land. Wild pigs and coyotes are some of the more popular animals to hunt year-round. Coyotes are highly intelligent and adaptable animals that have gotten a passionate following over the years in the hunting community.

Also, wild pigs can be hunted year-round in twelve states (California, Florida, Georgia, Louisiana, Michigan, New Mexico, North Carolina, Ohio, South Carolina, Texas, Virginia, Wisconsin). These husky creatures have an unpredictable temper, so only go after them if you are an experienced and thrill-seeking hunter.

3: Check Your Calendar

Depending on where you live, you might have more time to hunt big game than you think. Alabama allows deer hunting until February 10th, thanks to the varying rutting seasons around the state. Hunting seasons can shrink or grow based off population, rutting season, and the needs of the land.

4: Hunt Smarter, Not Harder

Every hunting season has its ups and downs. Hunting in February is no different. Fewer hunters means less competition for you. The barren land and fallen leaves mean you will have an excellent view of your prey. The catch? They can see you just as clearly. This is the time of year to break out your best camo.

Another drawback for hunting in February is that most of the prime hunt has already been harvested. January hunters have taken out the biggest game, and Mother Nature has taken the animals not fit enough to survive the harsh winter season. You might have missed the biggest animals of the season, but there are still lots of animals out there ready to give you a memorable day in the great outdoors.

Hunting in February is for hunters who like a challenge. Even though you might not catch the buck of your dreams, there is still plenty of great hunting to be had.

About the author: Laura Barker is Marketing Assistant for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and had been with RLI since October 2017.

RLI Lands Five Legislative Victories in 2017: Inside The Beltway

As the New Year begins, I wanted to use this edition of “Inside the Beltway” to share some successes that RLI had in 2017.

Of, course these victories would not have been possible without the hard work and active engagement of RLI Members with their members of Congress through phone calls, emails, or in-district meetings. These activities make a difference and these five victories are a testament to their civic participation and perseverance.

Greater Awareness on the Value of 1031 

As the battle for tax reform and the possible reform or elimination of 1031s heated up in 2017, RLI members became the trusted source of information for Members of Congress and their staff for data on how 1031s add value to the economy. Turnover in Congress among Members and staff is constant and RLI members did an outstanding job communicating with Congressional offices about how 1031s add value to real estate in their district. While 1031s for real estate are safe as I write this column in November, 2017, it is critical that RLI members continue to reach out to Members of Congress and staff to make sure their voices are heard and 1031s are preserved.

The WOTUS Rule is Rolled Back

The Obama Administration finalized the Clean Water Rule (AKA the Waters of the U.S. Rule) in 2015.  Although the WOTUS rule was never implemented, due to a judicial stay, the damage of this rule would have been far-reaching. This vastly overreaching rule would have hindered economic development in rural and urban areas, tied up farmers, ranchers, and others who work the land in rolls and rolls of red tape and bureaucracy, and would have done unfathomable harm to property rights across the country. RLI and a broad coalition of regulated stakeholders were instrumental in raising alarms about the damage this rule could do to the country’s economy. As a result, one of the first Executive Orders President Trump signed began the process for withdrawing this rule and developing a common-sense and workable definition of “Waters of the U.S.”, one that will provide the clarity needed to encourage economic development and protect our critical water resources.

Drones Take to the Sky

The first call I ever received about using drones for real estate was in 2010 from Florida RLI Member Dean Saunders, ALC, who asked me the seemingly innocent question: “Can I use a drone to take pictures of some land I am selling?” At that time, after doing a little digging on the FAA website, I determined the answer was, unfortunately for Dean, “No.” The drone landscape has changed dramatically since then. Because of consumer desire and market need for innovative technology, RLI Members pushed the FAA to allow the use of drones for commercial purposes. FAA regulations, which were finalized in late 2016, were then implemented and enforced in 2017, unleashing a torrent of market creativity. Now, drones are a regular part of the American “airscape” partly because of RLI Members insistence that this technology can be used safely and can be an important part of selling land, thereby adding value to the real estate economy.

Reforms of the ESA Continue

There was good news on Sage Grouse as well as broader reform of the Endangered Species Act (ESA). While the Obama Administration decided to not list the Sage Grouse as endangered, they did withdraw 10 million acres of public land from being used for any economic activity such as mining or timbering, claiming this land was critical habitat for the Sage Grouse. In July, President Trump reversed this withdrawal through executive order.

On the broader issue of ESA reform, Congress has — for the first time in several years — moved forward with several bills that would enhance transparency, accountability of the ESA and improve the cost/benefit analysis during the listing process. More “rifle shot” legislative reforms are on the way.

The Deregulatory Steamroller Continues 

According to the Chamber of Commerce, President Trump has issued 29 executive actions to reduce regulatory requirements. In response, executive-branch agencies have issued 100 additional directives that either knock down regulations or begin a process to eliminate or shrink them.

The chamber’s count also lists almost 50 pieces of legislation that have been introduced or begun moving through Congress. And that count doesn’t include perhaps the most aggressive step the Republican Congress has taken: It has pioneered the use of a little-known 1996 law, the Congressional Review Act, which allows lawmakers to repeal executive-branch regulations within 60 days after they are finalized. Using that law, Congress has passed, and Mr. Trump has signed, legislation overturning 14 regulations promulgated by President Obama’s administration in its final days.

While unwinding regulations takes time, these are very consequential actions with huge benefits for the private sector and private development, and I expect these actions to continue.

This article originally appeared in the 2018 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

 

About 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.

How to Improve Your Social Media Presence as a Land Agent

In the age where Americans spend an average of 10 hours a day on the internet, a strong social media presence can help a land agent’s business grow tremendously. With social media, agents can better market themselves and reach their target audience more effectively.

So, if you’re a land professional who is lacking a little engagement on your platforms or you’re just ready to take it to the next level, here are three ways you can improve your social media presence to stand out among the competition.

  1. Be yourself.

Always post about things you care about – anything that feels “you.” If you’ve been out fishing and make a great catch, share a picture and tell the story. Post funny pictures of your dog or your kids, things that make you happy and you feel comfortable sharing. It will show your personality and your audience will appreciate your genuineness. You can also share your listings links, but it should never be your entire feed. If people follow you on a social platform it’s because they want to see more of who you are, not just that you are a land agent. So, try to mix it up a bit.

  1. Choose quality over quantity.

One well thought out, meaningful post a week is much better than junk content just to post once a day. How many times you post on each particular platform depends on which one you’re using. For Facebook, you’ll want to post around once a day. No more than once a day on Instagram, and up to 10 tweets a day on Twitter. Each platform is different, and you don’t want to be cannibalizing earlier posts. Remember, quality over quantity.

  1. Be strategic.

Each platform also has a different audience. Therefore, you should post where your audience is most active. If you are trying to reach a large age range of buyers, Facebook is your best bet. A younger buyer may be reached best on Instagram or Twitter. And if you’re selling land that includes a home with amazing architecture, Pinterest could be a great spot to share those pictures.

Having a scheduling tool can also make posting on social media a lot easier. Free tools like Buffer and Hootsuite allow you to write your posts ahead of time and share them when it is best for your audience. Try setting aside one hour to plan a few posts across platforms for the upcoming month. This way you can make sure you don’t forget a post and you’ll have consistent content throughout all of your platforms.

 

National Land Realty is a full-service real estate brokerage company specializing in farm, ranch, plantation, timber and recreational land across the country. NLR currently represents land buyers and sellers in 20 states. To learn more, visit www.nationalland.com.