Beth:
Hi, I’m Beth with TB Properties Buys Land. Today we’re going to discuss how long you might expect for your vacant land property to sit on the market before it finally sells.
Many of you might have seen that things have begun to slow down in the housing market. Real estate prices have continued to fall in many areas, and we might say that they’re settling, but who knows what’s really going to happen? We do know that interest rates are incredibly high which can mean that when you’re selling your land and someone needs a loan in order to purchase your property, it’s going to cost them a lot more money on their loan. Sometimes at those interest rates, it can make the monthly payment unaffordable.
Another thing that’s affecting the real estate market right now are the bank failures that we’re seeing. How the bank failures can affect you when trying to sell your land is that the existing banks are tightening their controls and making it more difficult to get a loan from them. This may mean that your credit rating must be higher in order to get a loan from the bank, on top of the interest rates being more expensive already. Add the high inflation affecting so many Americans today on top of a stellar credit score required in order to get a loan and the high interest rates driving up the monthly payments, it can narrow the market of sellers for your vacant land.
What this may mean is that if you’ve got property on the market and it’s more expensive property, it may be harder for people to be able to obtain a loan in order to purchase your property. In some cases, you might see someone put a contract on your property and it fails to close because the bank has denied them a loan. That would add to the time in which your property is on the market.
One important thing to recognize is if you’ve got vacant land property and you’ve got a larger property, or it’s in a more valuable area and more expensive, people may not have that kind of cash in order to purchase your property quickly. Cash is a sure thing for the most part, so long as your title report doesn’t show up something really funky. Still, if someone’s going to purchase your property in cash, you have very little to worry about with regard to the purchase going through.
On the flip side, if someone needs to get a loan in order to purchase your property, there could be some roadblocks. One, they may not be able to be approved for a loan, or they may end up getting the interest rate quote back from their bank and finding it too ridiculously high for them, or even their payments may be too high that they no longer feel comfortable moving forward.
Another point to recognize when your buyer is working with a bank is the appraisal process. Remember that the banks are tightening up their requirements for loan approval so your buyer may have to have stellar credit but the second part is that it’s going to be really important that your property appraises for the value of the loan your buyer is seeking. If the bank does not find that your property is worth the value of the loan, then it is very possible that the person purchasing your property may not be able to get that loan. That may delay the sale of your property in that the buyer completely backs out and you have to start over from square one and put your property back on the market. If you’re lucky you may be able to salvage the sale by dropping the price of your property to meet the bank’s appraisal value in order to sell. You would have to be okay with dropping the price but at least you’d finally be able to close.
In review, those are just a few things that might affect how long your property may have to be on the market before it can sell. If it fails to sell, you may just find yourself lowering the price of your property over time… and lowering it and lowering it. Right now, if you look at property that’s on the market, maybe it’s a higher price per acre, just look to see how long it’s been on the market for. That’s a really important indicator of what’s going on in your particular market.
These are just a few things to consider when it comes to answering the question of how long will your property be on the market. I hope that answers your question.