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Author name: Alex Reese

State Land Guides

How To Sell Inherited Land in North Carolina

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Inheriting land in North Carolina can be a bittersweet experience. While it may hold sentimental value and represent a connection to loved ones, it can also bring a wave of unexpected responsibilities and decisions. If you’re wondering, “How do I sell my North Carolina land that I’ve inherited?” you’re not alone. This guide will walk you through the process, offering insights and resources to help you navigate this often complex journey. Understanding Your Inheritance Before you can sell inherited land in North Carolina, it’s crucial to understand your rights and responsibilities. If the deceased had a will, it should outline how their assets, including land, are to be distributed. However, if there’s no will (intestacy), North Carolina intestacy laws will determine how the property is divided among heirs. This process can become complicated, especially if multiple heirs are involved, ownership is unclear, or there are disputes among family members. It’s essential to work with an experienced estate attorney to confirm your ownership rights and ensure a smooth transfer of the property title. Steps to Sell Inherited Land in North Carolina Selling inherited land involves several key steps: 1. Confirm Ownership and Legal Rights: Obtain a copy of the will (if one exists) and the property deed. Consult with an estate attorney to verify ownership and address any potential legal issues. Ensure the title is clear and free of any liens or encumbrances. 2. Assess the Property: Conduct a thorough assessment of the land, including surveys, appraisals, and environmental inspections. Identify any potential problems that could affect the sale, such as boundary disputes, zoning restrictions, or environmental concerns. 3. Address Financial Obligations: Determine the property tax implications for inherited land in North Carolina. Settle any outstanding debts or liens associated with the property. 4. Prepare for Sale: If necessary, clear the land, perform basic maintenance, and consider any improvements that could enhance its marketability. Consult with a real estate agent to get advice on pricing and marketing strategies. 5. Explore Selling Options: Real Estate Agent: Working with a real estate agent offers advantages like market knowledge, professional marketing, and negotiation expertise. However, it also involves paying a commission. Selling by Owner (FSBO): Selling the land yourself can save you money on commissions, but it requires more time and effort. Land Buying Companies: Companies like Acrewell Land Company offer a fast and convenient way to sell inherited land. They provide all-cash offers, quick closings, and purchase properties as-is, eliminating the need for repairs or renovations. Navigating Probate in North Carolina Probate is a legal process that oversees the distribution of a deceased person’s assets, including land. In North Carolina, probate is typically required if the deceased had a will or if their estate exceeds a certain value. The probate process involves: Appointing an executor (if there’s a will) or an administrator (if there’s no will). Identifying and valuing assets. Paying debts and taxes. Distributing the remaining assets to heirs. Probate can be time-consuming, often taking several months or even years to complete. Working with an attorney can help you navigate the process efficiently and ensure compliance with North Carolina laws. Affidavits of Heirship In some cases, an affidavit of heirship can be used as an alternative to probate in North Carolina. This legal document is typically used for small estates or when there’s no will. It allows heirs to claim ownership of the property without going through the full probate process and is typically allowed when the decedent / property owner died more than two years in the past. As long as all the heirs are accounted for, affidavits of heirship can often be completed without significant legal cost or additional time commitment, but not all inheritance scenarios will qualify for affidavits of heirship. Heir Property: A Growing Concern Heir property refers to land that has been passed down through generations without a will or clear title, often resulting in fractional ownership among multiple heirs. This type of ownership can create significant challenges for those who inherit the land, making it difficult to sell, manage, or use the property effectively.    Prevalence in North Carolina Significant portion of land: A 2023 study by Wake Forest Law found that approximately 4% of all property in North Carolina is heir property. This translates to roughly 88,000 properties, encompassing over 537,000 acres.    Concentrated in underserved communities: Heir property is disproportionately prevalent in low-income and minority communities, particularly in rural areas. This can perpetuate cycles of poverty and limit economic opportunities for these communities.    Dollar Value Billions of dollars in value: Estimates from the Conservation Trust for North Carolina and Wake Forest Law place the total value of heir property in North Carolina between $1.86 billion and $2 billion. This represents a significant amount of wealth tied up in land that is often difficult to access or utilize due to unclear ownership.    Lost economic potential: The inability to effectively manage or sell heir property can hinder economic development and limit wealth-building opportunities for individuals and communities.   The prevalence and challenges associated with heir property underscore the critical importance of managing estate matters proactively. Tax Implications of Selling Inherited Land When you sell inherited land in North Carolina, you might have to pay capital gains tax on the profit. Essentially, this is a tax on the increase in the property’s value from the time you inherited it to the time you sell it.    How Capital Gains Tax Works: Cost Basis: Your cost basis is usually the fair market value of the land on the date the previous owner passed away (this is called a “stepped-up basis”). This is important because it often significantly reduces your potential capital gains.    Sale Price: This is the price you sell the land for. Capital Gain: The difference between your sale price and your cost basis is your capital gain. If you sell for more than the stepped-up basis, you have a capital gain. If you sell for less, you have a capital loss.    Tax

Buying Land

What You Need to Know Before Buying Land

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  Purchasing land can be quite thrilling; however pitfalls do exist in this endeavor that one must be cautious of, before diving in headfirst!  Numerous potential buyers approach the buying process with misunderstandings that could result in errors down the line – a fact often overlooked in discussions, about land transactions. In this blog posts exploration of buying land essentials that are frequently glossed over or ignored entirely will be discussed at length; from grasping the importance of soil quality to navigating the intricacies of market dynamics. All you need to equip yourself with to enable making informed decisions. Real-Life Example: A Hard Lesson Learned I want to share a story that serves as a warning, about an encounter I had with a man who purchased a plot of land measuring one and a half acres together with his spouse, for $25,000 only to find himself in dire financial straits after his wife’s untimely passing and had to sell the land fast. Even though the original cost of buying the property seemed reasonable at glance, what wasn’t known by either the seller or interested buyers was that the property’s soil quality was marginal. This meant that traditional septic systems were not feasible resulting in the need, for engineered systems that could cost as much as $35K. This mistake had an effect on the land’s value, potentially cutting the value in half from its original price tag he paid for it just 12 months before! How did this slip through the cracks with the real estate agents that helped manage the earlier transaction?! This case really shows that when you have experts backing you up as a buyer, it’s still crucial to put in the effort to research on your own. Support and Due Diligence: What to Expect When purchasing land, for the time it’s important to note that you may not receive much assistance as anticipated from real estate agents since their focus is primarily on residential home rather than land. Photo by Scott Graham on Unsplash Buyers often discover that they have a better grasp of the basics of buying land than the some of the agents who are paid to provide their expertise, highlighting the need for education in the land buying process. The Importance of Soil Quality The quality of the soil plays a role in deciding the value of a piece of land as it affects aspects such as potential for development and overall usability significantly. Prior, to buying a property make sure to do an assessment of the soil to grasp its features like depth and drainage capacity that’re crucial for septic systems in rural regions; without this insight there’s a chance of acquiring land unsuitable for residential purposes.  Septic drives residential development potential in rural areas across the US, and for many landowners who want to sell their land fast, many buyers don’t want to pay for a perc test – so it’s to everyone’s advantage to have the soil work complete in advance. Understanding Market Pricing Many people mistakenly believe that the prices listed for properties accurately represent their market value when in reality they are often inflated and not reflective of the worth of the property, in question. For example; In Pender County in North Carolina a study comparing the prices of listed properties with those that have been sold recently showed that many listings were priced at a 70 percent higher, than the actual selling prices of similar properties. It’s crucial to recognize that listing a property at a price doesn’t guarantee it will sell for that amount.  Overpricing land could result in prolonged time on the market and potentially lower offers compared to pricing it competitively from the beginning. Market Dynamics: The Role of Pricing Strategy When valuing land for sale or acquisition, it’s crucial to take into account the market conditions and trends at play in the locala re of interest. It is worth noting that setting a property’s price too high could deter interested buyers and make the property seem less appealing to them. On the hand; pricing it reasonably can evoke a feeling of competitiveness among buyers and result in receiving multiple offers for the property. Photo by Scott Graham on Unsplash Consider a scenario where a 15 acre property was initially put on the market for $210‚900 but eventually had its price lowered to $165‚000 resulting in a quick sale a few weeks later. In contrast‚ another property priced at $325‚000 stayed unsold for six months‚ underscoring the impact of pricing, on sales pace and outcomes. Quality Over Quantity: The Right Metrics for Value Buyers are often under the misconception that the value of land is mainly based on its size, however aspects like accessibility to roads the quality of the neighborhood zoning laws and soil conditions play a more crucial role in determining a property’s value. Photo by Brian Botos on Unsplash For example; Lets look into two pieces of land, in St. Johns County in Florida as an illustration. A 20 acre property sold for $600K thanks to its superior road access, topography, soil conditions, and neighborhood home calues.  Another 56 acre property nearby was sold for $285K due to its notable drawbacks such as an undeveloped easement, prevalence of wetlands, and limited development potential. This goes to show that bigger parcels of land may not necessarily be worth more money on the basis of size alone. Conclusion: Be Prepared to Do Your Homework Overall when it comes down to it. If you’re thinking about purchasing land. It’s crucial to do your homework and grasp the elements that could impact its worthiness. From the quality of the soil, to the market patterns. It’s essential for potential buyers to equip themselves with insights in order to steer clear of costly errors. It’s not wise to depend solely on real estate agents. Take charge and educate yourself about the piece of land you’re looking to buy. FAQ What should I look for when buying land?

Buying Land

The True Cost of Buying Land to Build a Home

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  When considering the journey of buying land for a home, many people often underestimate the complexities involved. While the cost of construction might seem like the main expense, the reality is that the land itself can carry a multitude of hidden costs and risks. Understanding these factors can save you thousands of dollars and help you navigate the process more confidently. Understanding Hidden Costs Buyers are often caught off guard by expenses when purchasing land as they tend to concentrate the buying price at first glance; however when construction begins unexpected costs may surface along the way creating surprises that were not anticipated at the onset of the process.”It is worth noting that once a contract, for construction is signed ” says a reliable home builder,”the construction costs tend to remain stable.” Nevertheless the land itself may present variables that could significantly impact your total investment and potentially render your land unsuitable, for housing altogether. Photo by Avel Chuklanov on Unsplash Utilities: A Major Factor Utilities can sometimes come with hidden expenses that need to be considered when investing in property ownership; understanding the location of existing utilities and the potential costs involved in connecting them to your land is crucial, before making a decision. For example if you’re looking at a property that has access to city water but the nearest water line happens to be 300 feet from your plot of land. It could end up being quite costly to extend that line all the way to your property. Typically these extensions can run up a tab of $100 per foot added. Meaning you could possibly see tens of thousands of dollars increase in your budget just from this one expense alone. Photo by American Jael on Unsplash Site Preparation Costs Prepping a site can differ significantly depending on the characteristics of the land— for adjacent plots of land! For instance; forested areas might need a lot of clearing work done; on the hand slopes will require extensive grading efforts to make it suitable, for building on it! These tasks can be quite costly and can add up fast, so its crucial to evaluate the lay of the land and any preparatory work needed before finalizing the purchase. Soil and Drainage Issues Soil health and proper drainage also play a role in this context. In cases where the soil’s not conducive for septic systems function properly due to soil drainage or limiting soil depth, an engineered system may be necessary which can add $20K – $30K in extra construction costs. Furthermore  in situations where the land’s terrain is flat it could lead to drainage challenges necessitating extra site modifications. Being aware of these issues upfront can prevent unexpected problems down the line. Photo by ThisisEngineering on Unsplash Topography and Property Shape The layout of the land can also have an effect, on how you’ll spend building your home or property. For instance; “flag lots” that are narrow in front might need longer driveways, making the project more expensive. If you’re thinking about constructing in an area, be prepared for extra costs because you’ll likely need retaining walls or additional structural support. Photo by novila misastra on Unsplash Zoning and Regulations Many buyers encounter difficulties with zoning and local regulations when looking to buy property.  It’s important to be familiar with the zoning laws that govern the land you’re interested in before making a purchase decision. These laws can determine the scope of your activities on the property, for example some areas enforce rules on minimum lot sizes, setbacks, and the type of construction that’s allowed. Photo by Toby Dagenhart on Unsplash Restrictive Covenants Besides zoning regulations, in place for regions or neighborhoods some subdivisions may also impose agreements that could impose additional constraints on your property use. These could involve specifications on construction materials or a minimum size requirement, for residences.  Being informed about these guidelines can help avoid blowing out your budget on your construction project. Photo by Patrick Perkins on Unsplash Negotiating Your Purchase Price Finding these hidden expenses ahead of time provides you with an edge, during discussions on the buying price, with the seller If you can show that extra expenses will arise from utilities or preparing the site negotiating a reduced price to cover those costs becomes feasible Photo by BENOIT LAMARCHE on Unsplash FAQs What should I consider when buying land for home construction? When purchasing land, for your property needs it’s important to take into account the utility access, soil conditions, landscape features, zoning regulations and any additional expenses that may arise during site development and building construction. Being aware of these aspects can assist you in planning your budget with precision. How can I identify hidden costs before purchasing land? Delve into your research by visiting the sites and seeking advice, from builders or real estate experts to gain valuable knowledge about prevalent challenges, in the vicinity and evaluate any undisclosed expenses that may arise. What are the common hidden costs associated with land purchase? Typical additional expenses to consider are charges, for extending utilities, on the property and preparing the site accordingly for construction work as addressing drainage problems or any extra costs arising from zoning restrictions or building covenants that might necessitate more costly building techniques. How can I negotiate the price of land effectively? Make sure to gather details, about any expenses that may be involved and share this information with the seller to demonstrate your understanding of the situations costs, which could enhance your bargaining power and lead to a favorable deal. Conclusion To purchase land, for building a house involves more, than buying a piece of property. By recognizing the expenses linked to utilities, site preparation, zoning regulations and other factors you can make a choice and potentially negotiate a more favorable deal. The process of constructing your home begins with preparation and understanding of all possible costs included. Photo by Scott Webb on Unsplash If you’re looking to sell your land quickly

Buying Land

A $30K Land Buying Mistake

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  Purchasing property can be an adventure filled with possibilities and surprises; however it comes with its share of risks and challenges too, especially when dealing with owners who want to sell their land fast.  This cautionary anecdote sheds light on a buyers encounter with a piece of land strewn with garbage prompting reflection on the expenses tied to buying land with unforseen issues. Photo by Hermes Rivera on Unsplash The Neighborhood Dump When the realtor initially contacted me about the property, for sale. Mentioned the issue with trash on the premises seemed exaggerated, at first glance; however… After receiving a zip file with 90 photos of the trash pile it became clear just how serious the issue was. The pictures showed a mix of discarded objects; used mattresses, stacks of clothes, broken plastic toys and unidentified clumps that had hardened into stone. The crew tasked with clearing the junk faced a job not because of the large amount of trash but also because of the unfriendly dogs protecting the neighboring property. Photo by David Taffet on Unsplash Assessing the Cleanup Costs Upon evaluating the clutter situation at hand a professional, in waste removal estimated that the expense for clearing the rubbish would range from $25K – $30K.  However a note of caution was sounded that this figure was merely an estimate.  Delving further into the heaps of junk might reveal concealed concerns,such, as oil barrels prompting environmental alert notifications and necessitating cleanup efforts. Photo by The Tampa Bay Estuary Program on Unsplash Upon thought the buyer realized that buying the land was not a good idea, due, to the high expenses and risks involved in environmental cleanup and potential liabilities associated with the property. Photo by Karsten Würth on Unsplash All Good Land Has Problems Although this particular property had challenges to contend with the truth is that every piece of land comes with its share of complexities. It is crucial for potential buyers to meticulously research the property before making a purchase. During this process buyers might discover issues that could greatly affect the propertys worth, such, as easements, environmental risks and unanticipated land use limitations.  Would-be sellers who want to sell their land fast should know that problems such as these require an experienced buyer who’s willing to take care of these problems at their own expense in exchange for a discounted price. Photo by Brian Botos on Unsplash For example a beautiful 20 acre piece of land might have power lines running through it or a charming spot, for a house could be spoiled by a family burial ground that must remain undisturbed. Buyers need to understand that flaws are typical and don’t necessarily make the property undesirable altogether. Understanding When to Renegotiate When important problems are found that have an impacton the propertys value it might be an idea to think about discussing a possible adjustment, in the price.This isn’t about trying to bargain for a cost without reason; it’s more, about dealing with valid issues that influence the worth of the property. Photo by BENOIT LAMARCHE on Unsplash In a scenario where the soil assessment indicates conditions requiring an upgraded system at a higher cost; this finding impacts the construction costs of a future home significantly. The purchaser may share the results with the seller. Suggest adjusting the price to accommodate the expenses arising from these unforeseen challenges. Photo by Nima Izadi on Unsplash Conclusion: Lessons Learned This tale is an example of how purchasing property can bring about obstacles along the way One must thoroughly investigate and be ready to discuss when major issues arise Keep in mind that every piece of land has its flaws; however not all flaws justify a decrease, in price Knowing when to persist and when to take action is crucial FAQs What should I do if I find trash on a property I want to buy? To start off with this project effectively assess the amount of debris. Gather estimates from professionals, in junk removal services for an accurate overview of the situations scope and potential expenses to weigh against any environmental concerns before finalizing any decisions about moving forward with the purchase. How can I conduct thorough due diligence on a piece of land? Make sure to dig into the background of the property and look out for any easements or zoning limitations while also carrying out evaluations to get a picture of any factors that could impact the propertys worth. When is it appropriate to renegotiate the price of land? When there are concerns affecting the lands value, like cleanup requirements or significant usage limitations discovered later it might be necessary to renegotiate the terms. Should I buy land that has imperfections? Some flaws shouldn’t be deal breakers when considering a purchase decision, for a property long as they don’t greatly impact its value. How you plan to use it. What are some common issues to look for when buying land? Potential challenges often involve risks related to the environment such, as hazards in the surroundings and restrictions imposed by zoning laws; factors like easements and soil conditions can also play a role, in decision making when buying property.  

Real Estate Market Trends, Stories and Legends

The “Affordable Housing Conspiracy” Exposed

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  The issue of affordable housing in the United States has reached a crisis point. As millions of families struggle to keep a roof over their heads, a deeper, more insidious problem lurks beneath the surface. This blog delves into the conspiracy that has kept housing prices artificially high, affecting the lives of countless Americans. We will explore the roots of this conspiracy, the roles of various stakeholders, and the potential solutions that could reverse this troubling trend. The Scope of the Problem To understand the gravity of the affordable housing crisis, we must first recognize the scale. Recent data shows that a staggering 25% of American households are paying more than 50% of their monthly income on housing. This alarming statistic is not just a reflection of recent economic downturns; it indicates a long-standing issue that has been exacerbated by a series of systemic failures by political leadership. Families are forced into precarious living situations, often sharing homes with friends or relatives due to the skyrocketing costs of housing. Photo by Nathan Dumlao on Unsplash The Conspiracy Unveiled At the heart of this crisis lies an active and ongoing conspiracy conspiracy—one that involves both public and private interests working in tandem to maintain high housing prices. This conspiracy is not a recent development; it has been in place for over a century, adapting and evolving to ensure that the status quo remains intact. It operates through local land use restrictions that prevent the construction of affordable housing where it is needed most. Zoning laws have been manipulated over the decades to cater to the interests of a select few, effectively shutting out those who need affordable options the most. The Legacy of Zoning The roots of unaffordable housing in America can be traced back to the early 20th century, particularly in the context of racial segregation. As African-Americans migrated northward during the Great Migration, many local residents resisted their presence through exclusionary zoning laws designed to enforce segregation. While these overtly racist laws have been outlawed, the legacy of such policies persists in the form of fiscal zoning practices that prioritize property values over community needs. Photo by Chris Lawton on Unsplash The Economic Implications These zoning practices come at a high cost, often referred to as the “zoning tax.” This tax represents the artificial increase in housing costs attributed to restrictive zoning standards, such as minimum lot sizes and maximum allowable density. In cities like San Francisco, this zoning tax is estimated to contribute up to 53% of all housing costs. If these regulations were lifted, the same rental unit could potentially be halved in price, making it accessible to a wider demographic. Yet, the challenge remains: how do we dismantle this entrenched system? The answer lies in understanding the motivations behind these zoning laws and the players involved. Who Benefits from the Conspiracy? The players in this conspiracy range from local government officials to entrenched homeowners who fear that increasing housing supply will devalue their properties. Homeowners’ groups often lobby against zoning reforms that would allow for more affordable housing, as their primary concern is maintaining their property values. This self-interest effectively stymies efforts to create a more equitable housing landscape. Photo by Parker Coffman on Unsplash Government Solutions and Their Shortcomings Despite the pressing need for affordable housing, government interventions often fall short. Policies such as rent control and tax incentives for developers have been implemented, but they frequently fail to address the root causes of the housing crisis. For example, rent control may prevent price gouging but can also disincentivize new construction, leading to a long-term reduction in housing supply. Moreover, a significant percentage of households in need of federal housing assistance do not receive it. A study indicated that approximately 77% of those eligible for assistance are left without support, highlighting the inefficiencies within the system. Capitalists and the Market Response Interestingly, the same capitalists criticized for exacerbating the housing crisis are also capable of providing innovative solutions. An example comes from Nashville, where a former motel was transformed into affordable housing, providing homes for over 130 individuals. The rent is set according to fair market values, demonstrating that market-based solutions can exist alongside government interventions. Photo by Breno Assis on Unsplash Resistance to Change: NIMBYism Despite these positive developments, the movement toward affordable housing reform faces significant hurdles. Homeowners’ groups, often referred to as NIMBY (Not In My Backyard) groups, actively oppose upzoning regulations. Their resistance is rooted in a desire to maintain the character of their neighborhoods and protect their property values, even at the expense of broader community needs. For instance, groups in cities like San Francisco have organized to prevent new housing developments, arguing that such projects would disrupt the existing community fabric. However, this self-serving approach ignores the pressing need for affordable housing solutions that could benefit the wider population. Public Awareness and the Path Forward Fortunately, there is a growing awareness of the affordable housing crisis and the conspiracies that underpin it. Movements promoting upzoning and housing reform, such as “YIMBY” (Yes In My Backyard), are gaining traction. These groups advocate for policies that relax zoning standards and increase the supply of housing where it is needed most. Case Studies: Successful Zoning Reforms A notable example of successful zoning reform occurred in Minneapolis in 2019 when the city eliminated single-family zoning altogether. This groundbreaking decision allowed for the construction of multifamily units, resulting in a significant increase in housing supply and a decrease in rent prices over the following years. While the path to comprehensive reform is fraught with challenges, the success of such initiatives proves that change is possible. As public awareness continues to grow, the pressure to address the affordable housing crisis and dismantle the conspiracy that supports it will only increase. Conclusion: A Call to Action In conclusion, the affordable housing crisis is not merely a consequence of economic factors; it is a product of an ongoing conspiracy designed to benefit a select few

Buying Land, Selling Land

Understanding Soil Conditions and Their Impact on Land Value

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  🌍 The Importance of Soil Evaluations Soil conditions play a crucial role in determining the value of rural land. Without a soil evaluation, you cannot accurately establish the market value or development potential of the property. It’s akin to participating in an auction for abandoned storage lockers, where you can only peek inside without truly knowing the contents [think: Storage Wars]. A lack of understanding about soil conditions can lead to drastic price reductions, as we’ll discuss in the examples below. 💰 The Consequences of Poor Soil Conditions Three properties illustrate the severe impact of inadequate soil conditions.  In each of these cases, we planned to buy the property but found out during due diligence that the soils were unsuitable for septic systems. As a result, we were able to compare our initial value estimate (assuming septic could be installed) with the actual sale price that resulted after the unsuitable soils were disclosed and the property was sold on the market. Property 1: An acre and a half with an estimated value of $38,000 sold for only $8,000 due to poor soil conditions. Property 2: A desirable lot near a lake valued at $30,000 sold for $6,500, again because it could not support a septic system. Property 3: A four-acre property also valued at $38,000 sold for just $7,800 due to similar issues. These examples highlight discounts of up to 80% when soil evaluations indicate poor conditions for septic systems. 🔍 Clarifying Soil and Septic Terminology The real estate market often misuses terms related to soil and septic systems. Many agents may not fully understand the difference between a septic permit, soil evaluation, and other important distinctions that can impact land value on the order of tens of thousands of dollars. As a long-time land buyer, I have invested over $150K soil reports and have pulled over 100 septic permits across various County markets in the US. Understanding the nuances of soil types and their impact on development potential is vital for buyers, and most real estate agents don’t understand the most fundamental elements — but that won’t stop them from giving you advice that can potentially lead you down the wrong path. 🏡 The Role of Soil in Subdivision Potential Soil quality not only affects septic suitability but also influences subdivision potential. A property with favorable soil conditions may attract buyers willing to pay a premium, even if they only plan to build a single home. Subdivide potential alone can significantly enhance market value for land even in cases where a buyer only plans to build one home. However, it’s essential to consider zoning regulations alongside soil conditions to determine the viability of subdividing a property.  It’s not just about good soil – you have to have good soil in the right places. 🧐 What Buyers Should Look For Before investing in soil evaluations, buyers should consider the following: Check the county’s soil map to assess the prevailing soil types and their characteristics. Look for deep, well-drained soils that are typically favorable for septic systems. Be aware that county, state, and even federal maps can be wrong as it relates to soil conditions and wetlands locations; always consult a qualified soil expert for accurate assessments. Relying solely on county maps can lead to costly mistakes, as they may not reflect the true conditions of the land as verified by a soil scientiest on the ground. ❓ FAQ Section What is a soil evaluation? A soil evaluation is a detailed assessment of the soil’s characteristics, including its ability to support septic systems and its overall suitability for development. Why are septic systems important for land value? Septic systems are crucial because most rural land is zoned for residential use, and the ability to install a septic system directly impacts the land’s usability and market value. How can I find out about the soil quality on a property? You can typically access county soil maps online, but it’s recommended to hire a soil expert for a thorough evaluation to understand the specific conditions of the property. What should I do if the soil conditions are poor? If soil conditions are poor, it may significantly reduce the property’s value. Consider consulting with real estate professionals or soil experts to explore possible solutions or alternative properties. How can soil conditions affect my ability to subdivide land? Good soil conditions can enhance subdivision potential, allowing for more residential development. However, zoning regulations and minimum lot requirements must also be considered.  

Real Estate Market Fundamentals, Real Estate Market Trends

Why The September Rate Cuts Will Not Prevent A Decline in US Housing Prices

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  The housing market is a dynamic and ever-evolving landscape influenced by various economic factors. Recent data from August indicates significant shifts in buyer demand and pricing trends across major metropolitan areas in the United States. This article will delve into the current state of the housing market, examining the implications of Federal Reserve rate cuts, historical cycles, and affordability challenges that many buyers face today. August Housing Market Data Recent reports reveal a noticeable decline in buyer demand, with transaction volumes falling year over year. Redfin’s latest analysis highlights an increase in price drop activity, indicating that sellers are becoming more flexible with pricing to attract buyers. Major cities like Denver, Tampa, Miami, and San Francisco are experiencing median list price declines ranging from 5-12% year-over-year. The Impact of Federal Reserve Rate Cuts As the Federal Reserve prepares to lower interest rates, many anticipate a positive reaction in the housing market. Lower rates could make borrowing more accessible, leading to increased homebuyer activity. However, a closer examination of historical data suggests that rate cuts at the end of a real estate cycle may not prevent a housing crash. Photo by Joshua Woroniecki on Unsplash Historically, significant rate cuts have coincided with periods of declining housing prices. For instance, from 1989 to 1993, the federal funds rate decreased from 10% to 3%, yet the housing market continued to decline. Similarly, during the 2006 to 2011 period, the federal funds rate fell from 5% to 0%, and yet real estate prices declined by 25-30% in most markets across the US. Understanding Different Types of Recessions To comprehend the current housing market’s trajectory, it is crucial to distinguish between two types of recessions: mid-cycle and end-of-cycle recessions. During mid-cycle recessions, such as the one experienced in 2020, property values tend to remain stable or even increase, allowing banks to continue lending. In contrast, end-of-cycle recessions are marked by falling real estate values, which can significantly hinder lending and exacerbate economic downturns. Photo by Boston Public Library on Unsplash As we analyze the current market, it appears we are approaching an end-of-cycle recession characterized by declining housing prices. This shift poses a risk to the overall economy, as falling prices can lead to a decrease in bank lending and consumer confidence. Affordability Challenges in the Housing Market Affordability remains a pressing concern for potential homebuyers. The ratio of home prices to median income is currently above seven to one, a historical extreme compared to the typical five to one ratio. Additionally, the average mortgage payment now exceeds forty percent of gross income, far above the recommended threshold of twenty-eight percent. Photo by Breno Assis on Unsplash This unsustainable situation suggests that many buyers are priced out of the market, leading to decreased demand and further price declines. As interest rates are expected to drop, there may be a temporary increase in affordability; however, this will not be sufficient to stabilize the market long-term. The Role of Bank Lending in the Housing Market Bank lending is critical to maintaining a healthy housing market. When housing prices fall, the value of collateral backing loans decreases, leading banks to tighten lending standards. This tightening can create a vicious cycle, where reduced lending further depresses housing prices and economic activity. Photo by Julien Riedel on Unsplash Furthermore, as unemployment rates rise, the risk of loan defaults increases, further straining financial institutions. The current economic climate indicates a significant uptick in unemployment, raising concerns about the stability of the housing market. Historical Context: Lessons from Past Housing Crises Examining historical housing crises can provide valuable insights into the current situation. The savings and loan crisis of the late 1980s and the global financial crisis of 2007-2008 share similarities with today’s market dynamics. Both periods were marked by high housing prices, unsustainable lending practices, and ultimately, significant price corrections. These lessons underscore the importance of understanding the cyclical nature of the housing market. As we approach what appears to be an end-of-cycle downturn, it is crucial for buyers, sellers, and investors to remain informed and cautious. Future Predictions for the Housing Market Looking ahead, the combination of high housing prices, rising unemployment, and declining buyer demand suggests that a further correction in housing prices is likely. While the Federal Reserve’s rate cuts may provide temporary relief, they are unlikely to reverse the overarching trend of declining prices. Experts predict that the housing market will continue to face challenges in the coming months, with affordability remaining a key issue for potential buyers. As prices adjust to more sustainable levels, it will be essential for both buyers and sellers to adapt their strategies accordingly. Conclusion: Navigating the Changing Housing Landscape The current housing market presents a complex landscape filled with uncertainties. As we witness shifts in buyer demand, pricing trends, and economic indicators, it is vital for stakeholders to stay informed and prepared for potential changes. While the Federal Reserve’s actions may influence short-term conditions, the long-term implications of a declining housing market could be profound. Photo by Rowan Heuvel on Unsplash In conclusion, understanding the historical context and current dynamics of the housing market is essential for making informed decisions. Whether you are a buyer, seller, or investor, staying abreast of these trends will be crucial in navigating the evolving real estate landscape.  

Real Estate Market Fundamentals

How Urban Land Prices Shape Cities and Create Jobs

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Urban development is a complex interplay of economic forces, primarily driven by urban land prices. This post explores how land prices shape cities, influence the construction of skyscrapers, and affect labor markets. By examining these relationships, we can gain insights into the economic staples that underpin urban planning and development. The Role of Land Prices in Urban Development At the heart of urban development lies the cost of land. When land prices escalate, the dynamics of construction shift—developers are compelled to build upwards rather than outwards. This phenomenon is particularly evident in major cities where land scarcity drives up prices, prompting the construction of high-rise buildings. Why Build Upwards? Building high-rise structures, despite their higher construction costs, becomes a viable option when land prices surpass construction costs. Developers recognize that the potential rental income from a skyscraper can offset the significant initial investment required. This trend illustrates a fundamental economic principle: when the cost of land is high, the incentive to maximize its use through vertical development increases. Cities Are Labor Markets First And Foremost The movement of people to cities is largely motivated by jobs. Cities serve as labor markets where individuals seek employment, and businesses search for talent. The interaction between these two groups creates a vibrant economic ecosystem that drives all related aspects of urban growth. Benefits of Urban Labor Markets In urban settings, workers benefit from a higher concentration of job opportunities, which leads to increased earning potential. Conversely, businesses gain access to a larger pool of specialized talent, enhancing productivity and innovation. This symbiotic relationship fosters economic growth and attracts even more people to urban areas. The Impact of Commuting on Job Access Commuting plays a crucial role in the dynamics of urban labor markets. The average commuter spends about 25 minutes traveling to work and will rarely commute more than 60 minutes each way to work. Thus, the effective ‘job market’ for talent and businesses is almost completely defined by the employers and job candidate within a 60 minute commute. Location Impacts Job Prospects Different urban locations offer varying degrees of job accessibility. For instance, living in the Central Business District (CBD) allows residents to access a vast number of jobs within a short commute. In contrast, suburban or rural areas typically provide fewer job opportunities, limiting residents’ employment options. Even though remote work has impacted these dynamics at the margins, these locational dynamics in the labor market are alive and well. The Economics of Location As one moves further from the central business district of the city, land prices generally decrease. A big reason why is that more rural locations reduce access to jobs. Consequently, individuals living in the city center may pay higher rents for the convenience of proximity to work, while those in suburban or rural areas face lower rents but more limited job access.  This tradeoff is constantly working itself out in the land market. Trade-offs of Urban Living Choosing to live in the city often involves trade-offs. Higher rents in the city center can be justified by the benefits of access to a robust job market and the associated lifestyle perks. However, this also means that residents must navigate the challenges of high living costs and potential overcrowding. Regulatory Influences on Urban Development Urban development is not solely dictated by market forces; regulations play a significant role as well. Zoning laws and height restrictions can artificially constrain supply of buildable land and associated floor space, leading to increased prices and reduced availability of housing in desirable areas. Height Restrictions and Their Consequences When city planners impose height restrictions on buildings, they inadvertently drive up living costs in all locations of the city – in the city center due to decreased supply and in the suburbs due to artificial demand.  Moreover, these regulations make the city less productive by forcing workers into longer commutes and/or shrinking the size of the effective labor market by creating undue traffic that would not have existed otherwise. Conclusion In conclusion, land prices are a critical factor in shaping urban landscapes and driving market forces. As cities grow and change, the relationship between land costs, labor markets, and regulatory frameworks will continue to influence the future of urban development. Acknowledging these connections will be vital for creating sustainable and vibrant cities.

Real Estate Market Fundamentals, Real Estate Market Trends

How Land Prices Drive The Long-Term Market Cycle

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When it comes to conversations about real estate, the land market doesn’t receive nearly enough consideration. Land markets have a primary impact on real estate markets, and the real estate market in turn has a primary impact on long-term market cycles.  In this article we’ll delve into the predictable cycles of the land market based on past downturns and look at what may lie ahead in the years to come. “This Time Is Different” The belief that “this time is different” often dominates conversations about the state of the real estate market. People tend to be skeptical about the possibility of another downturn especially after seeing the drop in property values during the 2007 to 2012 financial crisis and how long ago that was. Nevertheless history demonstrates that real estate markets follow cycles and undergo adjustments. In the recent economic downturn the nationwide real estate market saw a significant drop of around 32.8%. However the impact on the land market was even more severe with commercial land prices plummeting by 59% and residential land values falling by 69% from their peak in 2006 to their lowest point in 2011. This stark contrast highlights that while home prices may stabilize land values can undergo declines during periods of economic hardship. Cities such as Atlanta and Chicago saw a decrease, in land values by 74% and 76% respectively during this time frame. Even prosperous areas in South Florida faced a decline of 83%. These statistics underscore the susceptibility of land prices to economic downturns and stress the importance of being cautious for landowners and investors during prolonged periods of rising land values. How The Market for Location Works To truly understand how the land market works it’s essential to grasp the idea of location. The saying “location, location, location” sums up the notion that the worth of land is closely linked to where its situated. For example when it comes to selling newspapers setting up shop in a busy business area can bring in more profits compared to doing so in a spot with greater foot traffic – even if the underlying activity (selling newspapers) remains identical. The difference in locational value is due to what economists call “economic rent.” This refers to the potential income attributed land solely on its location. Its important to note that while structures, like houses, may lose value over time the land itself retains its worth. This makes land particularly susceptible to changes in business activity. The value of land is influenced by fluctuations in the economy more than any other real estate asset. When there is a surge in activity the demand for prime locations rises. On the other hand, during periods of economic decline the demand for land may drop sharply resulting in adjustments in prices. It’s crucial for investors and landowners to stay aware of these changes to make choices. Land Market Crashes in History Throughout history there has been a pattern of land market downturns happening roughly every 18 to 20 years. For instance during the savings and loan crisis in the late 1980s and early 1990s land values plummeted by about 50% when adjusted for inflation. Similarly the recession that occurred from 1973 to 1975, due to the oil crisis also led to significant decreases in land values. Throughout the Great Depression home values dropped by approximately 37% with land prices experiencing an even sharper decline. These past instances suggest that substantial declines in the market are not unusual occurrences but rather a recurring pattern. Recognizing these trends can assist investors in bracing for upcoming market adjustments. Regularly examining data and grasping the economic signs that signal a recession is crucial. Since inflation influences how people view their wealth it can cloud the actual fluctuations in property values in real time. This complicates the process of accurately evaluating market trends. Land Prices and Market Cycles The relationship between land values and the wider real estate sector is essential. Real estate encompasses a mix of residential and commercial properties that are more important to bank lending than stocks or bonds. Approximately 50% of bank loans are backed by real estate underscoring the importance of the land market to long-term credit cycles. When the economy bounces back from slumps property prices tend to go up prompting more lending. This boost in lending activity then fuels additional economic growth and real estate investments. However once the market reaches its peak signs of excessive borrowing start to show. This results in an increase in unsold properties, a drop in transaction volumes and eventually a decrease in prices. More urgently, declining real estate values crush the value of bank collateral, which puts a chokehold on bank lending.  As credit dries up, prices plummet even further. Bank failures soon follow, at which point you know that the most recent phase of the long-term real estate cycles is reaching its final conclusion. Falling real estate values and the financial crisis it creates distinguish end-of-cycle recessions (Global Financial Crisis of 2007, Savings and Loan Crisis of the late 1980s) from mid-cycle corrections (Dot Com Bubble, 2020 Pandemic) – when real estate values keep rising, banks have nothing to fear.  When they fall, banks have everything to fear. The Next Crash While examining the state of the market it’s important to stay alert. Past trends indicate that we might be approaching a point in the land market cycle. Recent information shows that land prices have remained steady and the impact of inflation could be hiding drops in value that are already occurring. Investors need to keep an eye on real (inflation-adjusted) home values in incoming sales data and be ready for possible market downturns that begin to appear in the data. By looking at trends recognizing the fundamental significance of location to real estate and the impact of real estate on long-term market conditions, investors and landowners can effectively handle the challenges of the land market and get ready for upcoming developments. For individuals engaged in real estate investment

Selling Land

Essential Tips for Selling Your Land Quickly

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When it comes to selling land, many owners find the process can take longer than expected. However, with the right strategies anyone can sell their land as quickly as professional land agents and investors. This post will cover several effective tips that can help you expedite the sale of your land while maximizing your returns. 💰 If I Had A Dollar… If I had a dollar for every time a land sale took longer than anticipated, I’d over $100. Selling land can be challenging and unpredictable, even when you follow the right steps. Trust me – I know from experience.  However, with insight gained from selling over a hundred pieces of land, I can share what works and what doesn’t. It’s crucial to understand that selling land isn’t just about listing the land on the market and waiting for offers. It requires strategic thinking, market knowledge, and sometimes a little investment upfront to attract buyers. Photo by Harper van Mourik on Unsplash 💵 Don’t Overprice The Land One of the most significant aspects of selling land is the pricing strategy. Overpricing your land can lead to prolonged time on market and ultimately a lower sale price due to the stigma that this creates. Buyers often overlook overpriced properties, thinking they are not worth the investment, then once they’re on the market for months these same buyers assume there must be some issue with the property that prevents is from selling. Consider this: if your land is priced too high compared to similar properties, it may sit on the market for years. For instance, a property listed at $300,000 that dropped to $229,000 still failed to sell after two years. In contrast, a comparable property sold for $160,000 within five months, highlighting that buyers who would be interested in the first property are excluding it from consideration due to price. To effectively price your land, research comparable sales, and set a competitive price that reflects the market. Remember, a well-priced property is more likely to attract interest and lead to a quicker sale. Photo by Scott Graham on Unsplash 🌱 Do The Soil Work Upfront Another critical factor in selling land, especially if it will be used for building a home, is the soil quality and suitability for septic. Many sellers are advised by agents to leave this up to the buyers, thinking it’s part of their due diligence and thereore note your problem. That’s bad advise in my view because leaving this work undone will reduce your leverage with interested buyers and lead to a slower and less profitable sale in most cases.  No one talks about this, but I assure you it’s true. Having soil work done upfront can provide definitive evidence of the land’s value and site potential. Properties that have completed soil tests and septic permits are much more attractive to buyers and are likely to sell faster. Investing $500 to $1,000 for soil testing can yield a significant return on investment on the back end when the land ultimately sells. 📏 Establish Clear Boundary Lines Clearly marked boundary lines are essential when selling land. Many sellers assume that county maps provide accurate boundary lines, but this is often not the case. Ambiguities in boundary descriptions can be found on older deeds, leading to confusion and disinterest among potential buyers. Consider getting a boundary survey done, or at least pull existing plat maps from the county if any can be obtained online (usually this is free). By demonstrating clear boundary lines, you can alleviate buyer concerns and enhance the property’s marketability. This step can range in cost but is crucial for a successful sale. 🎨 Paint A Clear Picture Sometimes, buyers struggle to visualize the potential of a property. If your land has unique features or layout challenges, consider creating a 3D rendering of what the finished site could look like. This can help buyers imagine the possibilities and make your listing stand out. While this may cost between $250 and $500, the potential to quickly attract buyers and close a sale can make it worthwhile. Providing a visual representation can help buyers see the property’s full potential, leading to faster offers at higher prices. Actual Rendering Used on Past Listing ⏩ Communicate With Speed In the world of sales, speed is often a crucial factor. Studies show that responding quickly to inquiries can significantly increase your chances of closing a sale. For example, companies that respond to leads within five minutes are 21 times more likely to engage with potential buyers compared to those who take longer than thirty minutes to respond. When selling land, ensure you are responsive and available. Whether it’s answering calls or emails promptly, being proactive in communication can differentiate you from others. A dedicated, hardworking agent can often outperform an experienced one who is complacent and slow to respond. Photo by Carlos Muza on Unsplash ❓ FAQs What is the best way to price my land? Research comparable sales in your area and set a competitive price that reflects the market. Avoid overpricing, as it can lead to prolonged listings and lower sale prices. How important is soil testing? Soil testing is crucial, especially if the land will be used for residential building. Having this information upfront can enhance buyer confidence and lead to quicker sales. Do I need a survey for my property? A survey can clarify boundary lines and eliminate confusion for potential buyers. It can be beneficial to have this information readily available to enhance the property’s appeal, but a deed plot or a previously recorded plat map can offer a lower cost option to than getting a full boundary survey. How can I make my land more attractive to buyers? Consider making improvements such as clearing the land, conducting soil tests, and providing visual representations of potential developments. Also, ensure clear communication and responsiveness to inquiries. What if my land doesn’t sell quickly? Reevaluate your pricing strategy, marketing approach, and property presentation. Consider making necessary improvements

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