What Rural Land Buyers Look For

Key Hot Buttons of Rural Land Buyers:

Rural land buyers are not much different than any real estate buyer regarding the steps in the process of making a buying decision, but they do look for different things than a person buying an existing home on a traditional lot. The key things that a rural land buyers look for are their “hot buttons”. Hot buttons are any characteristic of the land, community or the transaction itself that will cause a buyer to move on to the next step in the process. They are the things that keep the buyer moving forward toward a contract and closing.

I have done projects that had million dollar homes on them and I have done one project that had only manufactured homes. In no case have I stick built or placed manufactured homes on any of my lots since I am strictly a land guy, but I’ve dealt with a wide range of income levels with the dirt I have developed. Here’s what I have found: Despite wide ranging income capabilities, many of the hot buttons of my rural buyers turn out to be exactly the same.

Let’s look at some:

Privacy:

Privacy is the hot button I hear from almost every one of my rural buyers. As a developer of large lots, usually 5 acres, one might think that the lot size alone would be enough. Not really.

This is because the perception of privacy can vary. Is the buyer looking to build the home where it can’t be seen from the street or by the neighbors? Does privacy mean a community with fewer homes and less on-site traffic? Or, could it mean the community itself is located in a small city or area with light traffic and minimal strip malls?

Land developers are stuck at some level with the location of the project and what the county and land characteristics will allow, but I always try to consider how to design a project to create private conditions. One area I always focus on is the location of homesites on neighboring lots. That’s why I put in rough driveways and clear suggested homesites. I have never statistically tracked it, but I think I am safe to say that over 90% of the time my cleared homesite site is where the buyers actually place their homes. If they use the site that I clear, residents are not looking at each other to the greatest extent possible.

Specific land features are important:

My rural land buyers are picky about their lots. They are not looking for just a nice building lot, they are looking for a “rural experience”. That means they pay a lot more attention to the dirt than a regular home buyer would. They typically have future uses in mind for the land besides the house. Some want a big shop or garage, some want expansive gardens, others want limited barnyard animals and a barn or stable for them. It is typical to see a heightened interest in any environmental or topographic issue that would affect the lot’s use for their intended purposes. Buyer feasibility studies (inspections) are usually 30 days in the contract. I don’t pressure anyone during inspections since I would rather refund the earnest money and move on, than have someone close and find out later that they can’t do something that is important to them with their lot.

They are also more aware of the lot infrastructure costs. Things like the cost of utility runs to the homesite and drainage requirements. As an example, if a home is placed 150’ back from the main road, the cost for the power run to the house is a lot more than if it is only 25’. The developer, as seller, and his listing agent should be prepared to handle the unique questions that rural buyers have smoothly and accurately.

I notice that as an overall cost for land and home, the lot itself is a higher percentage of the total cost than would be typical in a non-rural environment. One might think this is obvious, but it should cause the developer to give careful consideration as to what minimum home size and design requirements are to be put into the CC&R’s. A buyer that puts 80% into the land and 20% into the home can result in a community eyesore! Good CC&R’s, full pre-closing disclosure and strict CC&R monitoring and enforcement is essential.

Financing:

Many rural buyers do not pay cash at closing and land by itself is more difficult to finance. As a result, most of my offers have a financing contingency attached in the contract. This allows time to secure the new construction loan as a condition of sale. I’ve not had to delay closings very often, but Raye, my ace agent has kept close track of financing progress to avoid unnecessary extension requests. I have been asked many times to carry contracts on the land I sell. I don’t do it and I never will. I am not in the financing business and I have investors that want to move along to the next project without delay.

I need to mention a guy I met one time when “carrying paper” worked very well. His name was Earle and he owned a big chunk of land in eastern Oregon that had been in the family for generations. His land was just off a main north/south highway, but very remote. Everybody knew everybody in his county planning department and Earle was a big shot with all the guys down there. Way back whenever, before I met him, he quickly and easily platted 100’s of lots with the help of his planning department friends. His biggest challenge was that his project was very remote, but he took advantage of the situation by putting in a little 9 hole golf course, stocked nice rainbow trout in the existing ponds and even put in a grass landing strip for small aircraft. He marketed it as a recreation and retirement community and he would carry his contracts with easy down payments and reasonable interest rates over a fair amount of time.

It worked for him because he owned the land outright, he lived on-site to enforce the rules and he was spot-on with collecting the monthly payments. Earle was a one of a kind dude. He motored around the project in a golf cart with a gun rack in it for his .223 Remington AR automatic that had been “converted” (by him) to a full automatic weapon (complete with the high capacity banana clip.) Every once in a while as he was tooling around the project and spotted a really nice buck, or he needed to refill the freezer, he would wheel on over to the side of the road to harvest some venison. In season… out of season … it really didn’t matter to Earle. I really enjoyed getting to see Earle’s little piece of heaven and meeting this one of a kind man. Damn…Frank Sinatra’s song “My Way” is how I will always remember him!

Spec Builders:

Spec builder hot buttons vary, but usually tie into ease of site prep, home placement and take down schedules. These are three reasons why spec builders are not always that interested in rural lots. However, I did sell a fair amount of 5 acre product to a builder named D.B. He saw the positive potential of a big project I had and wound up building on 42 of the lots. He was doing it on a spec basis and he was a smart guy. Since I knew he was going to be building spec houses we worked together and I sold him 42 lots on a dead end finger road that was all by itself running north and south on the west side. He did nicely for himself and really cranked up the overall energy of the project for me with the steady traffic.

Spec builders love to put homes as close to the front set back as possible since it results in cost savings with shorter driveways and utility runs. I was clear about my required set backs with D.B. and he complied even though they were farther back than he wanted. As a spec builder and since his crews would be out there anyway, he wanted to set up a take down schedule. Close on 22 lots now, then contract the other 20 on an future closing date. I was a little hesitant about contracting for the 2nd takedown but I checked D.B. out and he was a pretty stand up guy, so I went for it and tied them all up. In the end it all worked out because he blew through the first 22 pretty quickly and closed the second set early. D.B. was a good builder experience for me.

Controlled flexibility:

The hot buttons of rural buyers vary, but the ones I have identified seem common to almost all of them. They want flexibility to do what they want (within reason), but they also want overall CC&R control and enforcement so that some idiot doesn’t mess up the feel of the project. For this reason, I put a lot of thought and effort into my CC&R’s. Experience over time has helped me and in fact, the subject of rural CC&R content reminds me to write a future post on exactly what I allow and don’t allow.

But let’s look at one closing example - Fences. Before I figured it all out I had a project where I did not specify fencing locations, specs and materials. I am thinking about 3 homes on adjoining lots where they all built fences around the perimeter, even around to the front. Having stupidly not said anything about it in the CC&R’s, I had an eyesore that drove me nuts (although I fixed the problem in future projects). As I would drive by I looked at one guy that had built a cedar fence, the guy in the middle had a chain link fence and the guy on the other end had a “not sure what” fence. Together, they were ugly as original sin and it drove me nuts to drive by these homes. This single example points to the fact that rural developers need to consider the hot buttons of buyers, but they also need to build in checks and balances so that everyone’s unique build out of their properties works for all involved. Good luck!