Transcription
So, if you're someone that wants to go out into the market and buy a piece of land of your own to invest in or to build a home in, you're really set up to fail. You know, part of why the issue exists is that the average real estate agent, like, doesn't really understand land.
The problem is that they're licensed by the state Real Estate Commission, and so they have this idea of being an authority in real estate. Land is the definition; it's the heart and soul of real estate. So, for them, there's a sort of ego that plays in, and they're not going to tell you the stuff that they don't know. They're not going to tell you the stuff that they don't know in most cases, and in some cases, they'll actually bluff you. They'll tell you things that they think are true, or they make assumptions based on what they believe to be true, but those things aren't always accurate, and you typically will find out after the fact.
The main system that people use to approximate the market value of land is this concept of price per acre, which is a completely flawed concept. And yet, the tax assessor office and all the appraisers and a lot of the real estate agents, and certainly the sellers you'll be talking to, they think in terms of price per acre almost exclusively. A price per acre—it's like when you're selling a piece of land, you're selling a painting; it's kind of like a piece of fine art. It's an illiquid market with very few buyers, and you can approximate the value of a painting based on looking at the qualitative features of other paintings by similar artists of similar eras and seeing what they sold at auction. To say that a piece of land is more valuable because it's larger is like saying that a painting is more valuable because it's larger. Anyone can do a bigger painting, but does that painting sell for more money on size alone? Absolutely not.
The number of times that we've bought land from sellers who are selling to us at a steep discount from the purchase price that they had paid just one or two years prior is astronomical; you wouldn't even believe it. And a lot of times, the mistakes that they made were mistakes that were allowed by the buyer agent that represented them. Because what they find out later is that the buyer agents in the market are typically not going to make enough money relative to the amount of work that it takes to manage a land transaction for a buyer, in order to properly manage and analyze the due diligence process of that property and get you all the information that you need to know about that land to buy it with confidence. And honestly, I can't blame them; it's not really their fault because the market for land, it just attracts tire-kickers; it attracts unserious, hobbyist buyers like moths to a flame. And so the good land agents and brokers, they have to manage their time, and they have to filter out those clients, and they have to prioritize the activities that make them money. Because if they didn't, they wouldn't be able to make a living in this business. And so it's one of these things that when you understand the incentive, you can't really blame them for it.
The market data for land is scarce, and where it exists, it's completely bewildering. Because, for example, this one-acre lot sold for $20,000, and this one-acre lot right around the corner from the first one sold at $43,000, and then this one in the same general neighborhood is listed for sale at $200,000. Make sense? Got any questions about that?
Buying a home—it's not easier than buying land; it's much easier. It's much easier because you have built-in support systems that are like hardwired into the transaction. For example, you're working with a buyer agent that is a residential agent that's getting the amount of money that incentivizes them to give you all the support you need. It's worth their time, and they can put a lot of time and attention into that deal to make sure that you can be successful. The second thing is that a lot of home purchases involve loans, so the mortgage lender is going to get an appraisal process, which means that it's almost impossible to overpay for a home. Because if you do, that appraisal is going to come in low, and so you have checks and balances that will make overpaying for that home almost impossible. The other thing is you typically have a home inspection. So, if there are hidden maintenance issues that are going to cost you money after you buy that home, you're going to find them. And not only will you find them, but they're all going to be itemized out, and so you can see the cost of all these different line items, and then you can bring it back to the seller and negotiate the purchase price or get a credit from the seller. None of that exists in land, not really.
And so, for land buyers, like, you should know, even if you have an agent, even if that agent is good, for all intents and purposes, you're on your own. And I want you to know that because, like, the cavalry is not coming to help you. But, but you can still be successful. You can still be successful in the process of buying land, and what I want to do is to help you to do that.
So, if you're trying to buy a piece of land and you don't know where to get started, understand that I'm going to give you everything on this channel for free. Anything that I know and anything that I learn, I'm going to put it in a video. And I've got to package it the right way, or else YouTube's not going to give me any audience for it, so I've got to play that game too. But that's all part of it. I want to make it fun, and I want to entertain and also educate at the same time. So, if you have any comments, if you have any questions, if you have any suggestions for future video topics, I want you to leave a comment here because I would love to hear from you personally, and I'm sure the other audience members would want to hear from you as well. And so again, if I can help you in any way, please let me know. And thank you for the time; that's it for now.