Chris Miller, Director of Real Estate Services, noticed he was receiving a number of mail offers for his property in South Carolina. As a real estate and forestry expert, Chris is able to sift through the offers and determine the quality of the purchase agreements. It helps to have a trusted advisor who understands the value and terms of a mail offer, so Chris collaborated on this blog post to inform landowners who receive letters like these so they can make informed decisions about their land.

As a property owner, I have been amazed at the number of offers I have received by mail to purchase the timberland our family owns in South Carolina. The offers come from companies all over the United States, typically with a cover letter on the first page and a one-page offer to purchase enclosed. The cover letter usually describes how fast the company can close on the property. All costs associated with closing are paid, and the offer appears to be straightforward. The company may also describe themselves as a family business, and they are willing to purchase land that is not currently utilized. They may assume that out-of-state owners have less attachment to the property and are less familiar with the current local market conditions. These letters rarely have physical addresses of the business locations or names of real people who own or work in the business, and it may be challenging to get someone on the phone. Typically, sellers are referred to a website that is just as veiled. As a professional land broker, these letters concern me. I know the senders of this mail must be purchasing property as a result, or they would not continue to send these mailers out.

Why Are They Sending These Letters?

Rural land is in high demand in many areas around the country. Available property for sale is low. If you are receiving these letters, that is a positive sign that you own land in a market area that is in demand. This active marketplace provides an environment for these groups to purchase property at below-market values and resell or flip it quickly at a profit. Make no mistake; these entities are not long-term investors wanting to pay landowners top dollar or even fair market value for their land. They want to find uninformed, unrepresented sellers and purchase their property at a price level where they can quickly turn a profit. They are sending these letters based on tax record data for vacant properties in desirable areas within a certain size range, 20-100 acres, which gets a lot of attention and has good attributes like road frontage and power.

Beware

The offer prices generally align with property tax values for rural land. However, county tax values are only re-evaluated every five to eight years, depending on the state, and can be much lower than current market values. The offers range from 50%-75% of the current fair market value of the land, and there is no consideration given for my timber value. These letters will have a contingency in fine print with statements like “property must meet purchaser needs” and “property must pass inspection by purchaser.” This vague language is a simple way out for the company if they have offered too much for the land or their profit margins cannot be met. Finally, these simple one-page contracts have enough language to bind sellers legally to the sale but not any language to protect them from harm by the seller or compensate them if they waste their time or damage the property and walk away.

Don’t Be Offended; It’s a Compliment

If you are getting these offers, you own a valuable asset. If this solicitation piques your curiosity, then what should you do? The best process is to engage a professional who will represent your interest and who has a deep knowledge of the kind of property you own. This person will prepare a broker price opinion that compares your property to multiple properties in the same area that are similar to yours in size and attributes. This will help you gain insight into what the current fair market value of your tract is. Suppose you decide you would be interested in a sale at that level. In that case, this land-focused broker can position your property for success in the marketplace with high-quality marketing, experienced negotiations, and agreements that are fair and protect your best interest, all the while maximizing the sale value and net proceeds you keep at the conclusion of the sale.

If something seems too good to be true, it probably is. AFM Real Estate has experienced land professionals who can help you make good decisions about marketing and selling your property with confidence. If you get a letter like this, call our team to discuss it. You obviously own a valuable asset!