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Selling Land in a Down Market

Selling rural land in a good market is fun. Lots of fun. Buyers are throwing money at you, sellers are happy with how quickly you sold their property, and you have some extra money in your pocket. You hope these days will never stop. But in the back of your mind you know that “all good things must come to an end.” Sales can be the best job in the world when it is good, and a very difficult career path when “no one is buying.”

I started my real estate career in January of 2008. Do you remember what was happening in real estate in 2008 and the years that followed? It was “the worst real estate market in 50 years.” I had the luxury of not knowing what a good market was. It was slow going for me to build a business from scratch, but I didn’t have to fight through the emotions of having a few great years, and then going into a deep slump.

Every year I was in business was my best year ever, up until 2016. In 2016, I made about 1/3 of what I earned in 2015. It was my first down year in my career. That year we welcomed a son into our family, and that involved a lot of time at home and kept me from being out in the field. I had some demands on my time because I served on several boards and was the president of the RLI Alabama Chapter. And it didn’t help that we had one of the most contentious presidential elections in recent history that year. My personal circumstances and the local market climate all added up to a big bust for me that year. But I learned a lot, and this article contains some of the lessons that were impressed upon me by my circumstances.

Here are some practical lessons that helped me get through some tough times, and I hope they are helpful for newer agents in the industry.

  1. Trim Debt- I don’t mean to sound like Dave Ramsey here, but there is a lot of freedom that comes from not being under the huge burden of large monthly payments. This isn’t always possible, especially for the business owner, but trim the debts where you can.
  2. Spend Money on the Things that Generate the MOST ROI. When you are flush, you will throw marketing dollars at anything that moves. When times get tough, it makes sense to invest those dollars in the places that will make you the most money. Revisit your online advertising plans, magazine ads, infrastructure, and business systems to see where you can squeeze more out of what you’re putting in.
  3. Be Diligent- When you get discouraged it is easy to slough off on work and go hunting or to the movies. Make the calls, send the emails, put in the face time that will generate the business you need. Down markets are not the time to take it easy.
  4. Be Active- The success of your business hinges, to a large degree, on how active you are. This principle is amplified when fewer people are buying. The activity also helps buoy your spirits, and makes you more productive and positive. Be proactive and do things that engage you spiritually, physically, socially, and mentally. I had to constantly fight the urge to withdraw and sit at home and mope. So much of the battle for making sales is fought between your ears. I am a fan of the concept of “What you think is what you become.” To a large degree, your thoughts shape your actions, and actions often shape outcomes.
  5. Be Generous- “It is more blessed to give than to receive.” is a famous quote from Jesus in the scriptures. Whether you are religious or not, this principle is true. Giving of your time, talents, or resources to others takes your mind off you and focuses on the needs of someone else. Trust me, it just works.
  6. Have Something Positive to Say- “How is the land business?” You will get asked this question 20 times a day. How you answer it will determine how much new business and what opportunities come your way. Don’t lie, and don’t manufacture stories to impress, but have something positive to say. Talk about a recent listing, showing, or offer if you don’t have recent sales to discuss. People want to do business with positive people.
  7. Always have 1 Property that is a DEAL. When someone asks you if have any deals, you need to have something to say. This is the chance to make a sale on something that is a really good buy or has some upside. Be ready to present a prospect with something that could make them some money.

I know this list is pretty elementary, but the lessons here helped me get through some difficult times. So much of selling is based on the vibes that people get from you. Find ways to be positive and better yourself. You need all the extra encouragement you can get to get it done. I have found Zig Ziglar to offer some helpful, time-tested perspective on sales topics like this.

There will be down markets ahead. No one knows exactly when, but markets are cyclical. I hope this article provides some ammunition to help you prepare and fight the war you’ll fight within.

Jonathan Goode, ALCJonathan Goode, ALC, is an Accredited Land Consultant (ALC) and broker with Southeastern Land Group. He is licensed in Alabama and Mississippi and was the 2018 Alabama Land Realtor of the Year. You can hear him on his weekly radio show and podcast, The Land Show.

Is Pine Timberland Still a Good Investment? Thoughts on the WSJ Timberland Article

The Wall Street Journal published an article last week that has caught the attention of many landowners or those who are considering making a timberland investment. This week I have been tagged by friends and followers in posts and comments on Facebook to ask my thoughts about it. The article is entitled “Thousands of Southerners Planted Trees for Retirement. It Didn’t Work.”

Ryan Dezember, the author of the article, makes some very insightful observations and reports on broad trends in the Southeastern pine timberland markets. I tend to agree with many of his statements in a broad sense, and am glad to know he has ties to Alabama when he was previously a writer for the Mobile Press Register. You should read his article in full before going any farther in this post. Also from the outset let me disclose that I am not a forester, economist, accountant, or attorney.  Everything below is solely my opinion based on years of observation as a broker of Alabama timberland, and is not legal, forestry, accounting, or other professional advice.

Mr. Dezember makes three points that are virtually indisputable on a large scale across the Southeast.

  • In many places in the Southeast the supply of standing pine timber far exceeds the demand or capacity of the local mills.
  • This “glut of timber” has caused the price for timber to go down in many parts of the Southeast.
  • Some institutional investors and individual landowners have lost money, significant money, in their timberland investments in recent years.

That all sounds like bad news. However, what if someone told you “Go invest your money in the stock market.” That is a broad and daunting task for the novice investor. Are there still any stocks that are winners in a declining market? Sure there are. You just have to know what to look for. The same is true for investing in timberland. Here are some elementary things you can do to increase your chances of making a good pine timberland investment.

  • Find land with quality soils. The better the soils, the better and faster that you will generally be able to grow timber. Look for soils with a high site index for loblolly pines. Soils that will grow genetically superior loblolly to 90′ to 100′ in 25 years are highly desirable.
  • Locate close to several mills. Loggers generally tell me that you cannot haul timber more than 75 miles and the landowner or loggers make any money. Locating land close to one or more mills, along good roads, increases your potential to make a good investment. The closer you are to the mill, the less money the loggers spend on hauling, and the more money goes into the landowners pocket. The money paid to the landowner for their cut timber is called“stumpage”. Locating close to more than one mill means that you have several mills competing for your wood, and you are likely to be able to get a higher price when it is time to sell your land
  • Find sites that can be logged in wet weather. Locating an upland property that can be logged during the winter months is a great way to increase your chances of making a good timber investment. Timber harvesting equipment is heavy and will bog down in the mud during the wet season. Having well-drained soils that can be navigated during rainy weather is a real plus. Mills tend to pay the most during the wet season because that is when they have the most difficult time getting wood to their yards. Look for tracts that are loggable (suitable for logging) during winter and have access to good dirt roads or paved roads.
  • Invest for the Long Haul. Pine trees have been genetically enhanced to grow to maturity faster than ever before. You can now reach a full growing cycle in 25-30 years. But trees still take a long time to reach maturity compared to a stock or mutual fund. Allowing yourself some flexibility on the length of the investment can pay big dividends if you can time the harvest of your timber sale to correspond with higher market prices. Some institutional investors have a fixed window of time in which they must generate a given rate of return. If your fund length is 10-12 years, but your timber needs 15 years to reach maturity, then your fund is likely to suffer. Give yourself plenty of time to take full advantage of the biological growth of the trees and the corresponding higher prices in the timber markets. Giving a tree another year or two of growth may allow the tree to move up into another age class, meaning it can be sold at a higher price because it can be used for a product that requires a larger tree.

The good news for small to medium-sized investors is that you can avoid some of the problems that have plagued institutional buyers. Timberland Investment Management Organizations (TIMO’s) are given the difficult task of going and Finding a large package of timberland to Purchase on behalf of their client, Manage the fund for 10-15 years, and then Sell with guaranteed returns. Often these packages are 10,000 acres up to 100,000 acres. It is difficult to pick the very best pieces of land when you take that approach. To some degree you have to take what is available on the market at the time. Smaller landowners can be much more surgical in their selection of prime pine timberland.

In my opinion, pine timberland can still be a good investment. Like every other investment, you need to educate yourself on the topic, research the options, and enlist the help of a team to help with your purchase. Southeastern Land Group has a Timber Sales Division with registered foresters that can assist you in making a sound timberland investment. Our team of brokers and agents helps people buy and sell thousands of acres of timberland around the Southeast every year. We will be happy to assist you in your search for a good timberland investment. Please let us know how we can be helpful to you with your land investment needs.

This article was originally posted on the Southeastern Land Group website.

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.”

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.”

Ten Lessons for Land Agents from a Decade in the Dirt

This January marks 10 years that I have been in the land brokerage business. Most of the lessons for land agents I have learned came by trial and error, and some have been impressed upon me deeply. That is what happens when you are clueless about what you are getting into, as I was when jumping into this business.

After closing nearly 200 separate land transactions, you see a lot of different scenarios in our line of work. I have had some deals that were whoppers: clients dying, fraud, exhuming a deceased person to prove paternity, a murder on a listing, vandalism to a house, equipment stolen, FBI involved, lawsuits, you name it, I have seen a bunch. That is what makes this business so fun. Below are 10 of the nuggets pertaining to our business that I have plucked from the dirt and carry with me daily.

The land business is about people. About 20% of what we do is about land, and the other 80% is dealing with people. To succeed in the long term as a land broker, you need to be good at the land part, and exceptional at the people part.

The time to do business is when people are ready to do business.

Don’t let your lows be too low or your highs be too high. The land business, as with all sales and service industries, has natural cycles and potentially sharp peaks and deep valleys. Understanding these trends helps you develop an even keel emotionally, and allows you to weather storms and take success with a measure of humility.

“Want to” is the glue that holds deals together. When I am evaluating the likelihood that a deal will come together, I try to measure the motivation. If there is a strong “want to” by both parties, the better the odds that the deal will happen. No “want to” almost always equals “no deal”.

Marketing does not equal selling. No amount of marketing a property to the general public can replace your being able to hand deliver a packet of information directly to the person most likely to buy it. Having those contacts and the strong relationships to make that happen takes time to cultivate. Be intentional about building relationships.

They don’t give out big commission checks as participation trophies.

Always be honest.

You always reap more than you sow. Everything you do in this business has the potential to come back to you in spades; good and bad. Momentum breeds momentum, and inactivity breeds inactivity.

Your reputation gets to the room before you do. How you treat people, how you conduct business, and how hard you work will be talked about in a room before you ever come through the door. One of my favorite principles for this come from ancient King Solomon, “A good name is to be chosen rather than great riches, and favor is better than silver or gold.”-Proverbs 22:1

The team you work with will make or break your business.

The land brokerage business has opened many doors for me that I never anticipated. I am grateful for the opportunities and income it has afforded my family. Joining the REALTORS® Land Institute (RLI) has been one of the best parts of the journey so far. I value the relationships and knowledge that have been a part of being associated with this great group of land professionals. Earning the Accredited Land Consultant (ALC) Designation has been a source of pride, and has made me better at what we do. I would encourage everyone that wants to make a career out of being a land broker to join RLI and work toward the elite ALC Designation. The benefits are well worth the time and money invested in the process.

Many of you reading this article have been at this far longer than I, and have many more insights into what it means to be a true land professional. I look forward to learning more and getting better if the good Lord gives me more time. Thanks to all of you who have invested in and helped us “youngsters” get started in the land brokerage business. We are standing on the shoulders of good men and women that gave us an example and an opportunity.

Jonathan Goode, ALCJonathan Good, ALC, is a licensed land broker and partner with Southeastern Land Group serving Alabama and Mississippi. He co-hosts the weekly radio program and podcast “The Land Show” to share his love of the land with people across the country.

Is New Technology Replacing Land Brokers?

Are real estate land brokerages going the way of the dinosaur?

With the advent of drone videos, Google Earth, digitized County GIS records, and property advertising websites, are the traditional services of rural land brokers still needed? This article is my attempt to address that question.

If you are a part-time or mediocre land agent who only does an occasional land deal, you should be worried about how necessary you are going to be to consumers going forward. Your services will probably not continue to be as relevant in the near future. Brokers that continue to get better at their jobs and excel in professionalism have a bright future ahead.

My conclusion comes from observing craftsmen in their trades. A mediocre cabinet maker with access to fine tools, will continue to make substandard cabinets. A master with ordinary tools can accomplish surpassing quality because they pour their heart and mind into their work. It isn’t the tools that do the work, it is the expertise and discipline of the craftsman.

Websites, videos, mapping systems, UTV’s, and internet access to information are all tools of the land brokerage trade. There have been immense advancements in technology in my short 8 years in this business. Mapping technology is infinitely easier to use than when I entered the field. Now every buyer has access to Google tools that allow them to zoom in and out, draw boundaries, measure distances and area, and determine distances to their home. This is no longer proprietary information that consumers rely on brokers to obtain. There have been similar developments in finding property listings and also about obtaining county tax assessor information on parcels.

A conversation like this begs the question,  “What do land brokers really do?” If you are a broker and your answer to that is that you put properties online and in the newspaper, then your days in this business are likely numbered. I answer it this way, “I help people buy and sell land.” The emphasis in that sentence is on, “I help people.”

Consumers like to work with people they trust.

Our job as brokers is to give people all the information they need to make the best decision possible. For our clients, we also provide advice as to the proper course of action for their situation. In order for a broker to be able to provide expert advice, one must continue to learn and develop professionally. It takes a deep level of commitment to follow current trends, join professional organizations, network with others in the business, and constantly reflect on issues and trends that affect our industry.

My feeling is that brokers that are in this career for the long haul should join an organization like the REALTORS® Land Institute (RLI), and work toward earning their Accredited Land Consultant (ALC) designation. The Institute was founded by and for land brokers to promote the level of professionalism and increase the level of service to our customers and clients. Our members take an oath to conduct business in the most ethical manner, and agree to be held to a higher standard in their daily practices. The ALC designation is earned by those who demonstrate a commitment to obtaining the education and exercising proficiency in serving people who buy or sell land.

A consumer may be thinking, “But brokers are not necessary because I can use the internet to do what you do.” A portion of that statement is true, the internet is helping to educate consumers. There is an ample amount of good information from Toyota on how to change the timing belt on my truck. Is that something that I would personally try? Probably not. My feeling is to leave that to the experts, because messing up such an important task could cost me more than it would save me. WebMD is filled with information on diagnosing many important health conditions. Is it a good idea to diagnose and treat yourself based merely on the range of symptoms contained in the two paragraphs you read?  No. You should seek out the person with the training and knowledge to help you diagnose and treat the actual condition.

We should work hard to offer our clients the best possible service that leads to the best possible outcomes for them. Those brokers who take the time to get the proper instruction, master the tools of the trade, and do their work with expert skill will have a successful career. There will be changes in our industry, and some among our ranks will be weeded out. Make a commitment to do the things necessary to help you excel in our profession and elevate the reputation of our industry. There will never be a replacement for a passionate person, driven to excellence who excels in serving people. Those are the brokers consumers will line up to work with.

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