Commercial land development offers landowners an opportunity to maximize their return on an investment and have many things to consider before listing their property such as site selectionand evaluation, the commercial real estate development process, purchasing commercial land, and managing capital expenditure. As a seller, being aware of certain aspects can significantly impact the selling price and overall success of the transaction. From understanding the different price options to navigating the complex regulatory landscape, these insights will provide valuable information to help you along your decision-making process.
Two Prices: Cash Price vs. Contingency Price
To effectively maximize the value of your commercial land investment, it’s essential to recognize that there are two distinct prices to consider: the cash price and the contingency price. The cash price refers to selling the property “as is” with no warranties, which typically results in a lower selling price. On the other hand, the contingency price involves giving the buyer sufficient time to obtain regulatory assurances, such as zoning and site plan approvals. This comprehensive process can take several months and involves multiple departments at the county, state, and even federal levels.
The Importance of Due Diligence
During the initial due diligence period, which is typically around 120 days, various aspects need consideration. These include examining factors like wetlands, soil conditions, and property topography. Buyers seek assurance that the land’s topography is suitable for development, which paves the way for subsequent phases, such as rezoning and permitting. It’s worth noting that most developers require the necessary permits before closing the deal.
Zoning and Permitting of Commercial Land
After the initial due diligence period, landowners should anticipate a further 6 to 12 months for the zoning and permitting phase. This duration is primarily determined by external factors and lies beyond the control of both buyers and sellers. It’s crucial to understand that this time-consuming process involves addressing any issues raised by the county, which often leads to additional review periods. Even minor changes can result in the submission being returned for reevaluation.
Selecting the Right Professionals
Maximizing the value of your property requires the expertise of professionals who specialize in different areas. Engaging the right specialists, such as engineers or attorneys, can streamline the rezoning and permitting process. While not all zoning and permitting tasks necessitate an attorney or engineer, consulting with an experienced professional, such as a land broker, can provide you with the proper guidance. When selecting consultants, avoid choosing solely based on personal connections or media influence. Instead, prioritize expertise and specialization.
Attracting Buyers to Commercial Land
Sellers often benefit from taking certain steps to attract more buyers before listing their property. Rezoning the commercial land is a vital step that allows buyers to understand the potential future uses of the property. Obtaining preliminary site approval for the land also entices a higher number of buyers by providing them with detailed information about its specific land use. A smoother sales process, which can be achieved through these actions, consistently attracts buyers to consider your property over others.
Conclusion
As a landowner, understanding the dynamics involved in maximizing your commercial land investment value is crucial. Recognizing the distinction between cash and contingency prices enables you to make informed decisions. Conducting thorough due diligence, navigating the complex zoning and permitting processes, and engaging the right professionals can significantly enhance your property’s value. These are just a few of the steps you can take to maximize the value of your land. If you are interested in learning more contact one of our land specialists, John Lochner at (360) 901-9329 or Deborah Tamargo at (813) 220-5123.
