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Land Investing Online

Why Land Owners Sell Us Their Land at 40% Market Value (DEBUNKED)

In this episode of The Real Estate Investing Podcast, Ron Apke and Daniel Apke delve into why land owners are often willing to part with their land for as low as 40% of its market value.

Their insightful discussion reveals that many sellers opt for quick transactions due to various financial pressures, such as the burden of taxes on unused land or urgent personal financial needs.

Sellers might also live out of state, rarely visit their properties, or have inherited the land without having significant plans for it.

By offering fast cash deals, land flippers can provide a hassle-free option compared to the prolonged process of selling through a realtor, which involves listing, showings, and lengthy.
Listen or watch the full episode below to hear the truths behind why people sell their land for cheap!

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Dan: You don’t just only buy poor people’s land like you would imagine, you would think, oh, all these people need money. There’s been a handful that have been so well off, they just wanna liquidate and get rid of it. One property, they were opening up a coffee shop, they were well off. Not only is it gonna be a slow transaction if they use a realtor, it just starts digging in your margins.

And sometimes on those smaller properties, the math really makes sense for these people to go with the quicker option. A lot of the things we hear, they’re just sick of paying the taxes. They don’t need it. They live out of state. They’re in rough financial times. Typically if they’re struggling, their rent is the number one thing they’re struggling with.

Ron: Is is the absolute last thing someone wants to do is sell their house. People get put in tough situations. They get a letter from us offering cash for a piece of land that they never have seen, or they’ve never been to, or they haven’t been to in 10 years, or they just don’t need.

Dan: Hey everyone. Welcome back to the Real Estate Investing Podcast. Today’s topic. We’re discussing why sellers are willing to sell their land at 40 percent of market value. I’m your host, Dan Apke, joined again by my brother and business partner, Ron Apke. And this is one of the most common questions we get in land investing is just, you know, when we’re on the phone with, uh, potential students at land investing online, their number one thing is why, like, how, how, why are people willing to, uh, Take an offer, 50%, 40% of what their land is worth.

But not only that, when I’m talking to people who don’t know the business model from the outside, friends, family, relatives, whatever, uh, they ask that as well. They just don’t understand why someone would want to do that. And in this episode, we’re gonna uncover the motivation and why sellers work with us, but more importantly.

After the sellers work with us, why they give us five star reviews and they say, I would work with them. I recommend working. They refer people, things like that as well.

Ron: That’s a good point. Cause going to the backend, like we never get sellers coming back complaining about their experience. If you make it a good seller’s experience.

And like you said, it is the number one cause probably for skepticism, right? As far as like, It just doesn’t make sense to a lot of people. And that’s why we’re going to get into this. We’re going to talk about all the reasons why a seller would do this. And, uh, we’ll go from there.

Dan: Exactly. And there’s multiple layers of seller’s motivations.

There’s people, I mean, if you classify them one, two, and three, one is, you know, they’ve thought about it, selling it. They don’t really know maybe in the future. Two is, okay, I’m in the middle. I could go either way right now. Um, probably leaning more towards selling it and then in the more near future. And then three is like, I’m ready to rock and roll.

Let’s get this going. I want this money. And when we break those down, one is more of like a longterm drip. You can maybe convert them over time, uh, figure out why they’re thinking maybe they will sell it. You know, it’s in the back of their head, how often they use it. You can dig and engage that motivation to a lot of times.

That’s where a lot of the money’s made and the two’s run. Two’s where they can go either way and with the right sales and negotiation and everything in place you can hopefully swing them That’s where you know you can add your Pipeline two deals a month to three deals a month just from that one extra and really take it to the next level and threes Are the deals you send a blind offer someone with the D minus sales?

Background can still get because they just want that money and ready to go.

Ron: That’s a good way to put it I like how you put that I 100 percent agree those middle people, those people who some people would close and some people wouldn’t close. That is what makes people’s businesses. That’s what. Can turn your six figure business into a seven figure business is being able to close the sellers that are a little skeptical Um because the sellers can be skeptical.

Yeah when they come in as well and like Closing them being able not convinced I don’t want to say convince but just closing them building that trust with them is where the real money is made in this business

Dan: Yeah, exactly. And and the first thing we want to talk about is needs. Like, why are they selling?

Um, and I’m, I don’t want to talk about their motivation and why land is such a good asset for them to sell. We’re going to get to that next, but first we’re just going to talk about the seller’s needs and the reasons that we hear when on the phone with them, why they want the money.

Ron: Yeah. I mean, financial, financial times being tough, like them just need needing money fast.

I think that’s like the number one thing, like being able to have, move. Land, which isn’t a very liquid asset, become liquid money for them is enticing for sure. Tough times, situational things is probably one of the more. Common things we hear from sellers. It’s just a situation that comes up. Uh, they need money fast.

They don’t want to pay the taxes on the land anymore, whatever that is. That that’s what I hear the most of. It’s when you try to draw out the closings to be six month closings or something like that. That’s when a seller loses motivation really fast because their need for money fast. Like that’s not money fast and it’s questionable.

And then they, they fall off.

Dan: And we’re going to talk about that option too. When you start planning that a 90 day closes and stuff, because there is a room in the market for that and specific, uh, sellers, whether they’re one, two and three and how you can maybe get them to sway. You can use some of those other tactics.

So yeah, a lot of the things we hear, they’re just sick of paying the taxes. They don’t need it. They live out of state. Um, they’re in rough financial times, whatever that is like they’re, they owe their mortgage bill. The number one thing, someone the number one expense someone has has is their rent. So when you look at someone and you.

You’re trying to uncover their financial needs. Um, typically if they’re struggling, their rent’s the number one thing they’re struggling with. So typically it’s their mortgage to keep their house, foreclose on it, things like that, that they’re concerned about. So that’s probably the most common because rent.

Is your number one expense in America and probably everywhere you live. That’s just a fact. Um, so going from there, Ron talked a little bit about the liquidity of land and how it’s not too liquid and it takes time and you need a realtor and you put it up and it might take months and months to get a sale and then closing might fall out.

Um, which is very true, but another big point and probably the biggest point is when you look at someone’s net worth and all the assets that they have under them, if they have their house, If they have a, you know, their house that they’re living in and their family’s in, and then they have, and they need 50, 000, uh, but they have 50, 000 of other assets, like stocks, uh, stocks and bonds and that type of stuff and land, which one are they going to sell first?

Ron: Land.

Dan: Yeah. Stocks, bonds, land, things like that. Right. Whatever one they want more, but that the house is almost the last asset that they’re going to go to. before, you know, when times are tough, that’s what they want to go to last because they absolutely, you know, need shelter, need that. And if they, they can move out and downsize depending on their situation.

Yes. But they live there and they need that, right? Land is an asset where a lot of these people inherited it. And a lot of them have never been there or a lot of them bought it for intentional purposes to build or whatever it is and never got to it. And the motivation of land, this is why this business model works so well is because it’s such a strong asset class.

People inherit it. People didn’t spend much money on it. They got a long time ago. It’s five X in price and they’ve never done anything with it. They barely go there. They thought they were, it was a cool thought to them and they just never, it never came to fruition and it’s just sitting there and they don’t do anything and they’re barely paying any tax on it.

And it’s just such a strong asset because they can liquidate that when they need that money and they’re going to do that before they sell their house.

Ron: Yeah, that’s a good point. And yeah, I mean, people aren’t going to, it is the absolute last thing. Someone wants to do is sell their house, sell their primary residence, whatever it is, because it’s just not much option before that.

Cause you’re gonna have to put your money to live somewhere else in reality. So. People get put in tough situations. They get a letter from us and Offering cash for a piece of land that they never have seen or they’ve never been to or they haven’t been to in 10 years Or they just don’t need that’s the difference like you need shelter houses shelter.

You need that Um, you need water you need all that stuff You don’t need a piece of land 100 miles away from you to hunt on once a year twice a year, whatever it is so That’s just the situation. That’s where we can help these people out by helping liquidate this, this property where hiring a realtor for a 30, 000 piece of land is very difficult.

It’s not easy for them to go and sell a 30, 000 piece of land themselves. And that’s why we can do deals over and over again every single month.

Dan: Yeah. And it’s fast money versus slow money. You hire a realtor, you do all that, you know, we can close in one to two weeks. That’s what we offer. Uh, you want to go hire a realtor, you’re going to be, you know, realtor’s going to need to go out there, take a look, get you a, you know, an opinion on what it’s worth, post it, get it under contract, uh, you know, 45 day close on that.

And you’re looking at months and months. So if you have someone highly motivated, they want fast, you know, really fast cash and on the vice versa, like if someone needs money, they need it now. And we have people that go and look at other options all the time. We sold one property when I used to do our sales.

I remember a lot of these motivations, uh, you know, one property they were opening up, uh, a candy shop or something or a coffee shop.

Ron: I don’t remember what it was.

Dan: It was a 135,000 property. They’re opening up brick and mortar. They, um, they, they were well off. Like you don’t just only buy poor people’s land.

Like you would imagine you would think, Oh, the, all these people need money. Some of them just don’t want to deal with it. And they’re so, there’s been a handful of them have been, that have been so well off, they just want to liquidate and get rid of it. They’re whatever, they’re retired, they have it good, they’re living well, they have, you know, good financial stability.

Um, and it, the motivation, but it’s all if they want it fast or slow. And then there’s something in the middle there. There’s, um, where they want closer to market value, and they, um, because you can’t get close to market value and fast, you kind of, Like you have fast and cheap so you can get it low price break, you know, low great price on it.

And then you have like slower and a little better price or you have the slowest and max price. And it’s kind of like a swing where they kind of both sweat correlate together if that makes sense. Um, so the slower you take the typically get it, the more money you can get, because then you can post it with a realtor and do all that and vice versa.

You know, you can take a lower offer at 40, 50 percent and get your cash next week. Yeah. And they’re on the two opposite sides. But in the middle, there’s something that we do called a double close. And if you guys have listened to us, you know what that is already, but it’s where you just ask the seller for 90 days, find a buyer, line it up, get closer to market value for them, maybe 70%, 75%.

Someone on the call last week said they did a, I think it was a two 50 sell for two 80. Yeah, it was small. It was small, but it’s still a 25, 000 deal. That’s our average flip profit margin. So those make sense. It’s very small margin, not much room to work with, but when you have those type of sellers, A in exchange for uh, me going up on price to here.

I’m going to need more time. It’s like an exchange So that’s kind of the middle ground there that I want to shout that the people typically aren’t as highly motivated to get out Absolutely now, but they’re motivated to get out Um, they just have a little patience and can wait

Ron: and you can get them a little more money Like you said like buying for it’s far from our average deal even average double closed buying for 250 selling for 280 Um, there’s just not much margin

Dan: Typical margins would be for buy for 130 to 150 so for 300 ish.

Ron: Yeah. But even with the double close, I’m saying like, if I, if I, unless I thought I could sell it for three 50 and I just like quick sold it for two 80. If I, if I’m buying something for two 50, I want it to at least be 300 plus. Um, even with the double close in my opinion, because things can go wrong so fast and then-

Dan: You just have no margin to drop the price.

But that’s what happened to him. He had a lower offer.

Ron: But, um, Yeah, that, I mean, double closing is an option for those mid tier people. It’s something you don’t want to rely on immediately because sometimes those. People in the middle, you talked about number one, two, and three, the people in the middle, those two people who are like somewhat motivated, you got to bring them on board.

It does not just mean throw more money at them all the time. And sometimes people throw more money at them right away, get to the double closing thing, or they throw more money that and they’re like, Oh crap, I can’t find a funding for this because now the margin’s too tight. Opposed to sticking to your number, selling what you’re selling.

You are selling Fast cash, you’re selling the ability to get that money fast. And some people go away from the value we bring. And like Dan said, at the beginning, the customer feedback, the seller feedback we get is, I don’t have negative feedback. I want to say a hundred percent positive in terms of like the experience.

And like

Dan: we collect back and we used to do it more, but we would collect a lot of back end.

Ron: We haven’t had bad. Any bad reviews, like zero bad reviews from our sellers where we’re buying for 40 percent of what their plan is.

Dan: We have those. Yeah. I can prove those. The referrals that we get from those people to, Hey, my aunt and uncle want to sell a property.

Can you talk to them? I guess it’s nonstop of that.

Ron: It means you’re providing a service. Like when people are referring to other people, you’re providing a meaningful service and sometimes people look at it. We’re buying for 40 percent like that’s no service. It is a service because we’re providing something that other people can’t do.

Dan: Yeah. And then you also, one thing to understand too, Not only is it going to be a slow transaction if they use a realtor, then they’re 10 percent down or 20. You know, if a realtor is selling a property for 25, 000, he might have a minimum of 4, 000 commission or something. Um, that’s very, very common, correct?

Ron: Yeah. 10 percent or 3, 000,

Dan: 4 000 or 10%. So that cuts in the price. And then you have closing fees on both sides, you know, say 400 total. And it just starts digging in your margins. And you look at this and you’re like, okay, I can get 50 percent now. Or, you know, at the end of the day, this is going to be 74 percent after fees and everything, or whatever it ends up being, you can do the math.

And sometimes on those smaller properties, the math really makes sense for these people to go with the quicker option.

Ron: Yeah. And the asset class going on a little bit, Dan, something else like the asset class of People look at it because they compare it to houses all the time. The asset class of being able to buy land for 40 percent versus a house, you’re not going to buy for 40 percent really ever, maybe 40 percent of what it could be worth after a big renovation or something, but you’re not going to buy for 40%.

You’re not going to get someone to move out of their house. Like it’s such, it’s so, such a simpler transaction with land. Like you talked about at the beginning. of their house. Like, they’re just signing papers essentially and getting money for a piece of land that they visit X times a year or X times a decade, whatever it is.

And that’s what makes the transaction as simple. And we try to do that. That’s one of our selling points too, is making the transaction as simple as possible for the, uh customer.

Dan: yeah, exactly. And, and going off the three, uh, steps just to reiterate what we said before. So, uh, the number one option, because we have double closed and we have traditional, so get their money quick or ask for a longer time for more money, essentially.

The number one thing you want to do is, is close to deal with the offer price you offer them, right? You want them to accept that, you know, there’s good margin there. You know, you can buy it quick. You know, you’re going to make a ton of money. Number two is to negotiate. Maybe they didn’t like that 25, 000 offer.

They want 30 to 1000 or whatever. Meet somewhere in the middle, hold your ground, negotiate up, uh, negotiate a quicker code, whatever it is, use all the, like the money’s not the only thing to negotiate with, like Ron said. And then number three, uh, if they’re not willing to negotiate. Then go up and do a double close.

And those are the steps of like what you want and what you want to grab and what you want to put the most emphasis on first, get it out that offer price. That’s where you’ll make the most money by far. Number two, negotiate to something that still makes sense to where you can close it still in a couple of weeks and get that fast close, but maybe they wanted a little bit more money, but it still makes sense on both sides.

And then number three, the least desirable, but where there is still a lot of money is a double close. And the reason that’s not as desirable is one, you lose out a lot of margin because you’re going up so much. And number two, the sellers are more likely to back out. You’ll probably have 10 to 20 percent of sellers may be back out or maybe not 20 is high, but maybe 10%.

It just happens. I don’t have a stat. I’m just making that up, but

Ron: with double closing. Yes. Yeah. And you definitely, the longer, and from the day you talk to a seller to the day you close, the shorter the time period that is, The least likely, the less likely they are to back out. As that extends every single day, something can, can happen in their life.

They can die, like anything can happen in their life or they just change their mind and they try to back out and you try to sue them, whatever it is, but every day, The closing extends a short, a lower percentage of chance. It might just be a half a percent or something each day, less than that. But it, it definitely, definitely lowers from all of our data.

We have the shorter, the faster the closes, the higher likelihood of closing without a doubt.

Dan: Yeah. Anywhere else you want to go with this?

Ron: I don’t think so. It’s just like, you gotta, you gotta gauge motivation, I think. And that is what drives this business. Like we talk to our members all the time. Like if you don’t have a motivated seller, you don’t have a deal.

Dan: And you can ask them that on the phone. How motivated are you to sell your land?

Ron: Why do you want it? Yeah,

Dan: exactly. And that’s like literally one, two or three kind of like a listed out and you can go from there. But as always guys, please like, and subscribe our YouTube channel. It really helps drive our mission forward.

Thank you for joining and we’ll see you guys next episode.

Ron: Thanks guys.

Dan: As always, thank you for joining. Please do us a huge favor and like, and subscribe our YouTube channel and share this with a friend. It really means the world to Ron and I, but more importantly, it could help change the life of someone else.

Thanks for joining and we’ll see you next episode.

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