So you have an INHERITED LAND….. Now what do you do with it?
Probate Resource is a company that offers real estate solutions focusing on probate and inheritance properties. Although we are based in metro Atlanta, we purchase houses across various locations, not just in Georgia. Our specialty lies in dealing with probate and inheritance properties.
Today I would like to discuss the topic of inheriting a piece of land and the decisions one has to make in such a situation. In many cases, individuals who inherit land may choose to keep it within the family, especially if it has been in the family for a long time. However, there are also instances where people decide to sell land that has been in their family for generations.
Family Land
A great example of this is the property where my personal house is located. The previous owners of this piece of land had it in their family since the land lottery in the 1800s. They had owned a large amount of land, but over time, they sold off bits and pieces. My house is one of those pieces. The family’s children are now in their sixties and are retiring. One of them, who lives two doors down from me, has put his property up for sale. They want to move to the mountains and live there peacefully, away from the congestion of the area. However, the area is not that congested.
It’s true that sometimes circumstances change and people may feel uneasy about selling their family land. However, it’s important to understand that each person’s situation and needs are unique.
For instance, in my case, I had made an offer for an 18-acre plot of land behind my property. The land was owned by an estate, but in reality, the sole heir was a gentleman who inherited it from his father. His sister had passed away, leaving him as the executor of the estate and the sole owner of the land.
The Plan
He was selling this property so we made him an offer. My business partner and I made an offer to buy it, intending to split it into three-acre lots and sell them as estate lots. We planned to include a small street with a cul-de-sac. The property’s shape was perfect for this vision. You’d simply create a 300-foot-long street ending in a cul-de-sac, then fan the lots out around it to form a minor subdivision.
We had plans to buy the property, but unfortunately, the owner received an offer from another developer that was significantly higher than ours. Ironically, the other developer has done nothing with the property for the past 18 months and has been having issues with the county. He had to revise his plan several times and even attempted to sell the property for the same price he paid for it. It wasn’t a good investment on his part because he paid too much for it.
I think the other offer came in for about $400,000 more than what we offered. It’s great for the seller that they made more money than our offer. They must have been happy about it. As for why the seller sold the property, well, they already owned their own property about four miles away from here with 15 acres of land. During a conversation with them at their driveway, they mentioned that they didn’t need this property as their children weren’t interested in it and they already had their own little mini farm with horses, goats, chickens, etc. One of their children lived in Dallas, Texas, and the other lived out west somewhere.
He said he didn’t want to do anything with it and would rather sell it to someone who had a cool idea for it. He was very particular about who he would sell it to, as he didn’t want it to be turned into a high-density development. However, building any kind of development on that land would not have been feasible anyway due to the lack of sewer access nearby.
It’s going to be a minor subdivision with houses on a large estate, each having a septic system. Although there is county water available, all houses will be on a septic system. You want to sell this piece of land, and you’re wondering how much you can sell it for. As someone in the real estate business for a number of years, I can tell you that land sellers tend to overvalue their land more than any other sector of real estate. I’m not just saying this from an investor developer perspective, but also from a perspective of wanting to get good deals on everything. If the numbers don’t make sense, I don’t buy it.
Overpricing The Land
It’s common for land sellers to overestimate their land’s worth and put a price tag that’s much higher than the actual value. You can easily attest to this by taking a drive and looking for old, faded land for sale signs. Once you start paying attention, you’ll notice a lot of such signs all over the place. These are properties that have been on the market for years, yet they haven’t sold yet. There are two reasons for this; the seller has either grossly overpriced the property, or they’re not really interested in selling and are waiting for a ridiculously high offer. Personally, I find the latter strategy to be quite odd, but everyone is entitled to their own opinion.
Sellers often tend to overprice their inherited land. So, if you want to sell your land at its best price, you should consult with experts who can evaluate its worth. A builder or developer is the most experienced person to tell you the actual worth of your property as they have the knowledge and expertise to develop and build it. You can approach someone like me who can guide you through this process.
Real Estate Agent
I believe the next step in selling your land should be to hire an experienced real estate agent who has a proven track record of selling land, not just listing it. It’s crucial to find someone who has experience in selling land in your specific area. You can check the sold properties and see who the listing agent was, as they are the ones who are likely to have the expertise to price your land appropriately for sale. It’s important to listen to their suggestions and recommendations as they are professionals who do this work on a daily basis.
I have witnessed many instances where property sellers have criticized their real estate agents for undervaluing their land and insisted on listing it for an unrealistic price. They often say, “My agent is stupid, and this land is worth a million dollars. We will just find another agent who will list it for that price.” However, when they do so, the property remains unsold for an extended period of time. It turns out that their first real estate agent was not an idiot, but rather the sellers were unaware of how to accurately price their land, overvaluing it significantly.
The Value In Land
Let’s discuss what makes land valuable. Whenever we consider a deal, we focus on the most beneficial use of that land. We evaluate what can be done with the property, taking into account the surroundings, zoning regulations, construction expenses, and other factors. What is the best way to use this land? I have examined many properties that, in my opinion, had no value, or were too expensive to work with.
1. GEOLOGY
There are properties that have a lot of rock in their GEOLOGY, which makes it expensive to develop them. In some parts of the country, such as the northeast, there’s a type of rock called ledge or granite, which is very difficult and expensive to remove. This is because you need to blast and chip it to make a buildable site. This cost can be prohibitive, and it’s not easy to find a buildable site in these areas. While it’s not as common in Georgia, it’s still something to keep in mind when considering the cost of developing a property.
2. ACCESSIBILITY
Land value is influenced by various factors. One of these is ACCESSIBILITY. Does your land have an easement? Is there a direct road frontage or even a road on the land? The more accessible the land, the higher its value.
3. UTILITIES
Another factor is ACCESS TO UTILITIES. Does the land have access to power, water, internet, and sewers? Sewers may not be necessary as a septic system can be used instead. In some cities, people may not be familiar with septic systems, but they are common in rural areas. Septic systems are perfectly fine if properly designed, and can last for many decades.
I have found that pumping my systems every five years helps keep them healthy and functional for a long time. The cost for a professional to pump the system out is usually between $350 and $400.
Also, one thing to consider when purchasing land is access to utilities. While there may be power available, if the land is located far off the road, the cost of running electricity all the way back there can be very expensive, often tens of thousands of dollars. Potential buyers will take this into account when considering the property. Power companies typically have a minimum distance they will go before charging extra. If the distance is under 100 feet, they may install the power for free or for a nominal fee. However, if the distance is further than that, it can cost significantly more.
For instance, my house is located 150 feet away from the road, which required me to pay an additional fee of around $800 to have power lines installed. Furthermore, I wanted 400 amps of power, which meant that two power cables had to be run from the transformer to my house, resulting in an added cost.
Setting up water lines involves similar expenses, particularly if they need to be buried or if the geology of the area requires rocks to be broken. Water lines must be installed below grade, which drives the cost even higher.
4. FLOOD ZONE
Floodplains are another factor that can affect the cost. If you’re not sure whether your property is located in a flood zone, you can check FEMA’s flood maps, which are available online for all states. The major flood zones are the ones you need to be concerned about, such as Zone A, Zone AE, and Zone X (if you’re in a coastal area).
Even if you’re not on the coast, you may still have to deal with flood zones like A and AE. These are considered high-risk areas, which means that your property may require mandatory flood insurance. Unfortunately, flood insurance can be quite costly. If your property is mostly in a floodplain, it may be challenging to build anything on it or very expensive to do so.
In some cases, the county may not even allow you or anyone else to build on it. For instance, I once had a business partner and we bought a property in Decatur, Georgia. It was a 1960s Decatur Ranch, and the flood maps were redrawn in 2013. The new maps showed that the flood zone touched the corner of the house, which made it difficult to sell or build on.
We were planning to remodel a house, but there was a problem – a three-foot or four-foot triangle of one corner of the house was in the flood zone. The irony was that we wanted to do an addition on the opposite side of the house, which was not in the flood zone. However, the county gave us a hard time about it because the property was in a flood zone.
We had to get an elevation survey done to determine how high above sea level we were. We showed the county a certificate that proved that the real elevation of the house was not in the flood zone, despite what FEMA’s maps showed. This helped us get the necessary permits to do the addition.
Now, because the lot was partially in the flood zone, we ended up keeping that as a rental property, but the buyers would’ve had to get flood insurance, although because of the elevation survey we got that showed that the dwelling, the house, is not actually at risk of flooding, plus it was built in 1960 and it’s never flooded ever, ever. Even in the 2009, 500-year historic flood event we had here in Atlanta, it didn’t flood.
It’s a moot point but anyways, you still have to get flood insurance but it’s significantly cheaper if you can do an elevation survey and basically prove that your dwelling is not at risk, but your lot is in it.
5. POWER LINES
I want to discuss POWER LINES as an example. High tensile power lines are a concern.
Recently, we looked at a property that was advertised as eight and a half acres. Developers and builders were interested in it. Unfortunately, the power lines ran across the property and covered about five to six acres of the total land. This means that it’s not possible to build a house under the power lines. The land can only be used for open fields or pastures.
Many potential buyers of this property might be hesitant to purchase it due to its proximity to high tensile power lines. The electromagnetic radiation and other concerns associated with these power lines can be a significant cause of worry for many people.As a result, this could negatively affect the value of the land. Additionally, as a developer, I would face limitations in terms of how I could use the property. Since the only usable portion of the land already has a house built on it, it would not be possible to divide it into smaller lots. While we considered demolishing the existing house and building a bigger one, the house that was already there had been a mobile home at one point and had undergone various additions, making it poorly constructed and in need of significant repairs.
We were planning to demolish the old house and construct a new one because it is a great area with a fantastic location. Interestingly, Chipper Jones, the famous Atlanta Braves player from the 90s, bought a new house just around the corner from us. However, the asking price for the land was too high, especially considering that the agent who listed it wasn’t familiar with the area and didn’t understand that most of the eight-acre lot was unusable. It’s unfortunate that the agent overpriced the property.
6. TOPOGRAPHY
Another factor is the TOPOGRAPHY of your lot. Is it steep? Can you build on it? Is it buildable or would it require a lot of money to build on it? I remember looking at a riverfront lot a few years ago. The seller claimed that it was a great lot, but when I saw it, it was basically like a cliff. It was too steep to be able to build anything without incurring a lot of engineering costs, concrete, pylons, piles, and piers. Moreover, it would be too expensive to install a septic system on the property. There was nowhere to put it on the lot, so I would have to buy the neighboring lot and pump the septic system over to the neighbor’s house. It was not a feasible option for me.
Bottomline
If you have a piece of land to sell, it’s essential to determine its actual value beforehand. I recommend consulting a professional who is knowledgeable about the real estate market and can accurately assess your land’s worth. Listen to their advice on what you should list it for.
Let’s Connect
Alternatively, if you want to sell it right away, you can reach out to professionals like myself who buy properties and houses all over the country. While I specialize in probate inheritance, I’m interested in purchasing any property. I work with strategic partners throughout the country, whom I’ve handpicked. I only choose to work with people I trust and who are experts in their respective markets. Rest assured, you’re not dealing with an average Joe fly-by-night kind of guy.
If you have a property you want to sell, we would be delighted to take a look at it. You can access our website by visiting probateresource.com. Alternatively, you can call us using the phone number provided on our website. We are always available to discuss your property with you. Thank you for taking the time to watch this video. I know it was quite lengthy, but I hope it was helpful. This is a fairly complicated topic, so if you have any questions, please don’t hesitate to contact us. Have a great day!