I’M THINKING OF LISTING MY PROPERTY—BUT I HAVE A BUYER!
By Gary Hubbell, Accredited Land Consultant
United Country Colorado Brokers & Auctioneers
May 21, 2021
How to deal with buyers who already know about your property when you list it for sale
Last week a fellow called me and told me he wanted to list his cabin property for sale. He and his sister, a middle school teacher, own two 40-acre parcels bordered by public lands in an area that is well known for terrific elk and mule deer hunting. “We have the perfect platform to market your property,” I said, and began to explain United Country’s corporate partnership with Realtree and how no other platform can begin to bring as much attention to a mountain hunting property like the UC Realtree platform. We worked up a listing presentation to send to him and I called him back to set up a time to meet. He texted me back. “My sister has a buyer for the property,” he said. “We’ll hold off listing it for now.”
Timing is everything—don’t miss the ideal time to expose your property to the market
It was hard to hold back and resist telling the seller what a dumb idea they had. On some of our other listings, we’ve been waiting six months for the snow to melt and the landscape to green up so we can photograph them in better conditions. This particular property is accessible only by snowmobile during the winter and the snow had finally melted. The cottonwoods, aspen, and oak brush are turning brilliant shades of green, and the selling season is about to turn on full force. The market is red-hot and we’re getting inquiries practically every day for properties just like this one. There’s a short window to show the property—from late May through mid-November. But they have a buyer, so they don’t want to list it so they can save on the commission. That seems like an ill-advised decision to me.
What are the buyer’s goals? Does he want to compete with other buyers and pay full price?
It’s tempting to take the buyer’s stated interest in the property straight to the bank. People think it will be a quick and simple process to close a private-party deal, but our experience is quite different. In our experience, those buyers are notorious tire-kickers who take forever to close a deal and often want outrageous terms. Think about the buyer’s goals. He obviously doesn’t want the seller to list the property. He has an inside track on the property. Here’s what he wants to do:
· Pay the lowest price possible
· Avoid competing with other buyers
· Negotiate the most favorable terms possible
· Take his time and control the deal
· Avoid negotiating against a competent real estate professional
· Take ample time to arrange the most advantageous financing and terms
· Negate the seller’s ability to receive accurate advice on pricing the property
· Keep the property under wraps and keep it from being exposed to the market
The seller is at a disadvantage in a private party transaction
There is only one advantage to a seller not listing a property and pursuing a private party transaction: not paying a commission. The disadvantages far outweigh the one advantage:
· Losing multiple buyers competing for a well-marketed property
· A high risk of misunderstanding the market value of the property and pricing it too low
· Missing significant seasonal changes to photograph and present the property
· Not receiving any professional advice in pricing the property
· Not receiving any professional negotiation on the seller’s behalf
· Losing the power of a professional marketing platform to attract buyers from all over the world
· A significant chance of striking a poorly negotiated deal
We are professional negotiators and advocates for our clients
I’m not going to pretend that I can walk into a middle school classroom and teach the curriculum, tabulate all the grades, and deal with all the things a middle school teacher has to know. By the same token, I am an Accredited Land Consultant, which is quite possibly the most difficult designation to achieve in all of real estate. I'm pretty confident that there aren't many schoolteachers who are better real estate contract negotiators than we are. We negotiate complex contracts on a daily basis. We are skilled in 1031 exchanges, conservation easements, mineral rights, water rights, owner-carry contracts, tax strategies, survey and title issues, hunting landowner vouchers, and land valuation. Why wouldn’t you want us on your team? To save a commission? You could end up losing far more than the commission would cost with a poorly negotiated deal.
Let’s strike a compromise—you name the excluded buyer and list the property
There is a way around this dilemma, and we do it quite frequently. You have two or three people who say they’d like to buy your property if you ever decide to sell. Great! Let’s sell it to them! We will do our job as we always do it. We will:
· Research the market and establish an appropriate listing price
· Professionally photograph and drone video the property
· Prepare a powerhouse marketing platform for the property
· Describe it accurately and research any outstanding issues, such as water rights, prescriptive easements, mineral rights, etc.
· Enter the property on our extensive marketing platforms and expose it to social media, MLS platforms, and print marketing platforms
In the meanwhile, we will give any excluded buyers a limited time period to close a sale on the property—say, 60 or 90 days. We will help conduct negotiations, write sale contracts, and walk the deal through the sale process until closing. In exchange, we will offer you a reduced commission to honor that buyer. If the buyer doesn’t close the sale within the limited time window in the listing contract, then they will be treated as any other buyer. As a seller, you get the advantage of a lower commission, competition from other buyers, professional consultation on pricing and negotiations, taking advantage of market timing, and a powerhouse marketing platform in the event that the buyer wasn’t serious after all.
Sound like a win-win? I think so! Don’t let a tire-kicker keep you from exposing your property to the marketplace and getting it sold quickly for top dollar.
Gary Hubbell, ALC, is the managing broker and lead auctioneer at United Country Colorado Brokers & Auctioneers, based in Hotchkiss, Colorado. Gary has sold orchards, vineyards, wineries, farms, ranches, outfitting businesses, development land, commercial property, hunting land, and luxury homes all across Colorado and Utah. He can be reached through his website, www.uccoloradobrokers.com .