Can you have too much of a good thing? Well, that’s up to your interpretation. If you have too much property, you may find it’s difficult to maintain or secure. But that land may also present an opportunity.
Yes, you can sell just a part of your property, but it’s not as simple as selling the entire property. If you own the property outright, you may legally sell any part of it unless bound by a legal agreement saying you can’t. If you still have a mortgage, however, you may not subdivide parts to sell without your lender’s approval. Attempting to sell parts of a mortgaged property without a lender’s permission risks triggering the loan’s “due on sale” clause, forcing the seller to pay the entire mortgage at once.
Selling part of your property is possible but the process is not quite like selling an entire property. In this piece, we’ll explore the logistical, legal, and financial considerations of selling a piece of property and discuss the steps you need to take to do it successfully.
There are numerous differences between the land market and the existing homes market. The better you understand them, the better prepared you will be to sell your land. Some of the key differences:
The biggest distinction between selling a home and selling land is that the rules for doing so are different. Before you can even begin to consider selling part of your property, you have to ask two questions.
If zoning ordinances permit selling a part of your property, your lender will give you an established procedure to follow. Selling part of your property likely changes the value of the part that you keep, meaning the value of the mortgage might not meet the value of the remaining property. In that case, the lender may ask for a partial loan payoff or require you to make a payment out of your current equity. Expect the approval process to take several weeks or even months before you and the buyer can approach the closing table.
Now that you know the rules, here’s how to go about selling a part of your property.
When selling a home, you don’t really need a target buyer because most homes won’t require consistent advertising to generate interest. To sell vacant land, however, you need to think about it a bit more. Do you want to sell to big developers? Small developers? The government? Before you put your land on the market, think about who your potential buyers will be and what they’ll need to know about the land so you have that information available for them.
Knowledge of local schools, shopping, and nearby amenities can all matter to potential buyers. Developers will want to know about zoning information and the location and capacity of water and sewer services. That might require hiring a contractor or contacting city officials to survey your property.
First impressions go a long way, especially in real estate. Just like you’d probably turn around and walk away from a house in dire need of exterior repairs, buyers may avoid land on which they can’t see potential. That means you should clean up the part of your property you want to sell before listing it or showing it to buyers.
Cut the grass, remove weeds and trash, and take photos when the property looks its best. Also consider having a survey done in advance so you can clearly mark your property boundaries and show setbacks on the survey. All of this information and planning can make your property look more enticing to buyers.
Pricing your piece of property is the easiest place to make a mistake. Pricing land is more difficult than pricing a home and the wrong price could scare off buyers in an already scarce market.
Why is it so hard to price land? Every piece of property is unique and, well, part of another property. Empty lots in developed communities may have a more clear market price based on the sale of similar lots, but pieces of land likely have few comparable sales to use as a guideline. While property appraisers exist, most aren’t trained to appraise just slices of a property.
As such, setting the price is up to you and depends on a number of factors. For one, how large is the tract of land, and how much should that land sell for? This guide from Carolina Realtors will help you calculate acreage. Second, how could a buyer use the land? Could it be a high-end home development? A sports complex? Or could someone just build a house or two on the land? Big developments bring more dollars/acre than single home constructions.
Also ask yourself how fast you want to sell the selected piece of property. If you put it on the market for a more appealing price, you may get a buyer fast. Price it too high, you may have to wait months or even years to find the right buyer. A good real estate agent with experience selling land would be helpful in this process.
Marketing to homebuyers is obvious, there are dozens of services that specialize in that specific niche. Selling a parcel of land is no different. A great marketing plan for your piece of land should include some of the following:
Selling land is not the same as selling a home. Selling a piece of your land is not the same as selling an entire lot. There are many things to consider when you want to sell a part of your property, from your mortgage status to local zoning laws. If you’re interested and able, you should work with experienced professionals to help you outline the right parcel of land, set the right price, and find the right buyers.
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