Mark Birmingham
In this historic market, buying land can be just as challenging as buying a house, and the competition is just as fierce, since existing housing stocks continue to dwindle, and demand continues to build for new construction. Anyone looking to build on a piece of land for sale has to move quickly.
The collapse of the Miami condo building earlier this year shocked everyone, except the owners. They knew the fix would cost them $15,000,000. A swimming pool had been leaking into the garage below, causing structural rebar to rust. Groundwater infiltrated as a result of construction next door as well. Delay or unwillingness to fix the issue killed 98 people. Dozens of lawsuits totaling hundreds of millions of dollars have been filed.
In the last two years, the real estate market has changed fundamentally, affecting all of us. So, it’s worth taking a look at the state of the market at the end of this year, 2021.
Both the residential and commercial sectors saw robust activity this year, carrying momentum from the previous year. And, in both sectors very strong demand dramatically increased the dollar volume of land sales, as buyers’ needs were not fulfilled with current inventory.
Technology is changing our lives with blinding speed, leaving a lot of folks worried or excited about changes in the real estate industry. With the sole aim to pay less, home sellers are embracing discount brokerages all over the country. To those who are experienced in selling their own property, this might be a good option. To those who aren’t, it could be costly or even disastrous. The DIY movement has been expanding exponentially, and it’s understandable that a DIY approach would apply to selling a home too. But, like with anything else, there are pitfalls to navigate.
On the surface, buying a piece of land seems simple enough, especially if the land is high and dry–a level cleared pasture. But, a nice-looking piece of land can also have pitfalls that may not be apparent without investigation. To buy raw land hoping to build either a dream home, a subdivision or a new factory requires a significant investment in order to reveal what’s going on under the surface. It is the reason that 104 hours of study is required to gain an “Accredited Land Consultant” designation (ALC) from the National Association of Realtors, by far the most intensive course of study of and real estate designation.
In the current political landscape, the age-old tug of war between liberals and conservatives is as tense as ever. The urge to dismantle what is perceived to be a tool solely for the rich is truly misguided. In place for over 100 years, the Internal Revenue Code Section 1031, is a valuable tool to defer capital gains taxes on income real estate, and it benefits landowners directly, and many other people indirectly.
Is what you see what you get, upside down or right-side up? When a buyer goes under contract on a home or commercial building, the due diligence period begins. Now it is the buyer’s chance to unearth anything that needs repair or replacement. An attorney or title company will look for defects in the title, encroaching lot lines, hidden easements, etc. Most of the time it’s a material defect that needs attention, and this can only be revealed by home inspection by a knowledgeable inspector. Sometimes, even an experienced inspector can get lazy and make a mistake.
In the world of commercial real estate, it is common for a listing agent to sell a property to a buyer who is happy to represent himself, thus the agent would be entitled to the entire brokerage fee. This frequently happens because commercial buyers are typically savvy about the process, and comfortable with its “buyer beware” environment. But, in the residential world, this is rarely the case, although a surprising percentage of buyers brush aside the opportunity to have a buyer agent represent them, be their advocate, their “bad cop”, and their research resource.
If I had a nickel for every time I heard “not gonna give it away!” I’d have enough to retire. That expression always comes from the homeowner based on whispers and third-hand information, rarely from actual sales data. More often than not, homeowners divine the price they think their house is worth, perhaps to recover renovation costs or a refinanced mortgage, and that becomes their target sales price.
When you buy a house, or even a banana, you are supposed to do this: due diligence. How “diligent” you are lowers your risk in the purchase, and determining what is “due” forms the list of questions that need to be answered. In the case of a banana, your due diligence is simple – if fruit flies are circling, you’ll pass. For a real estate investment, conducting thorough due diligence using trusted experts is a must. Even then, there are always things that can be missed. But, the large items – the roof, HVAC systems, etc. – should be looked at carefully.
Kathy Ostrander Roberts
Broker – Owner
2 Storer St., Suite 112
Kennebunkport, Maine 04043
207.205.3417
kathy@kennebunkportandshorerealty.com