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The Land Investor

News and Commentary on Land-based Investment

High Value Land Sales – The Case for Private Marketing

High Value Land Sales – The Case for Private Marketing

There are many methods available for the marketing and sale of specialized high value land-based assets in addition to traditional real estate listing arrangements.  There are advantages, disadvantages and tradeoffs associated with every marketing approach; and the best strategy for the marketing and sale of a specific property will vary based upon ownership objectives and the particular land asset category and value.

One approach, which can be the optimal method in certain instances, and in which Terraqua LLC excels, is private marketing.  A private marketing arrangement can be advantageous to the seller of a very specialized high value property with a thin market; and could be stigmatized and shop worn from over-exposure.  High profile, specialty or trophy ranch, plantation and estate properties can quickly become “old news” with the shotgun marketing associated with the prevalent public listing web-based approach or auction format.  The highly advertised and unsuccessful attempted auction of a high profile property that does not achieve its reserve price and fails to sell, can stigmatize the asset for a long time.

There are some real estate assets that can best be marketed privately.  An example would be a specialty offering that has a limited yet identifiable buyer pool. In this case a Seller could be well advised to protect him/herself from over-exposure by utilizing a careful, private marketing approach.  Prospects can be prioritized and approached in a pre determined sequence.  Buyers are attracted to this approach because the basis for the submittal is buyer specific.  If a property is not perceived as shop worn, buyers will listen to carefully presented, well thought reasons that are unique to their prospective ownership of a particular land asset.   Private marketing is most effective when the price is derived based upon an expert and defensible valuation which will enable your representative to carefully walk the prospective purchaser through the components of the property’s value.

Private marketing is all about a fair value proposition since there is not the opportunity to bid up the fixed price set forth as in an auction.  With the public competition element removed the private sale can result in well thought out rational decisions by buyer and provide the buyer with more incentive to spend time and resources focusing on and understanding the asset than in a free for all marketing approach which can be a turn-off to high net worth buyers.  In some cases private marketing can serve as the “plan A”, and triage to a “plan B” public listing or auction approach if the private marketing to key identifiable players does not yield a sale.   And the general marketplace will have been unaware the property had been confidentially on the market; and therefore, not perceived as a passed over property that just about everyone has seen.  In this case, much can be learned from the private marketing phase that can be invaluable in positioning a subsequent public sale.  A private sale frequently involves lower transaction costs to buyer and seller than a public auction or public listing.

There are indeed situations where the auction or public listing format makes the best sense, such as cases where the Seller is not the owner, but a party responsible for the sale of the property.  There can be no question with an absolute auction format that the fiduciary duty of the seller has been completed in a sale that has been conducted in public view.   Another advantage of the auction for many is the fixed date for completion of the sale process with timing coordinated with owner objectives which can include tax and estate planning needs.

On the other hand, a disadvantage can be prospective purchasers who drop out due to their inability to meet a rigid timetable.  Also, if the owner is selling a portion of his/her landholdings there may be concern as to who the property is sold to.  The private sale enables sellers to be more be in command in situations where they want control as to who the property is sold.

To learn what Terraqua can do for you in the confidential and private marketing and sale of your unique and specialized land-based asset, contact John Watson at 303-900-4226 or watsonj@terraqua.us .

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    1625 Larimer St., Suite 506
    Denver, Colorado 80202
    303-900-4226
    watsonj@terraqua.us