This episode covers a 50-acre Dallas subdivide purchased at $400K that went under contract at $863K (17.5K/acre), only to have buyers spend $50K on engineering and discover $500K in required dirt work due to inadequate drainage gradient, forcing deal termination at the 60-day halfway point.
Key Takeaways:
- Flat land creates invisible drainage nightmares Buyers spent $50K discovering the property required $500K in dirt work—a fatal flaw impossible to identify during standard due diligence.
- Reset days-on-market counters boost algorithmic visibility Relisting child parcels after termination provides fresh DOM counts, improving buyer interest and platform ranking.
- Developer DD belongs to sellers per contract Standard clauses guaranteeing seller access to buyer engineering reports can face resistance—always get this in writing upfront.
- Tier pricing strategy for subdivides Dropped parent parcel pricing to $17.5K/acre while setting child parcels at $20K/acre creates multiple exit pathways across buyer segments.
Listen to the full episode to understand how uncontrollable property characteristics can destroy six-figure deals despite pristine location and infrastructure.
(Podcast transcript below)
I Chris stuff over at serious land capital vacant land funding partner. So this has been turning out to be a tougher year compared to the roaring start to 2025 that
was initially kind of heading in that direction. So I know I alluded over the last couple of weeks that that 50 acres subdivide parcel that we have just south of Dallas. I know I’ve mentioned this property multiple times on the podcast since we initially planned to purchase it and then did purchase it.
earlier this year. So we had bought it for 400K, about as prime as it gets, 45 minutes out of downtown Dallas. Has water power as well, new builds right across the street. And we were getting written offers roughly every seven to 10 days.
when we initially listed this property and we went under contract with a variant experience development group who have handled many projects, several larger than this one within the area for roughly 17.5K per acre, which equated to roughly $863,000 cash deal, with the caveat being that that was going to take four months.
to close. we had, I think as of today, was like exactly the halfway point through the deal. Initially, everything was looking great with it. And I had remarked on the pod recently is that the land is actually so flat that there wasn’t a solid water kind of dispersal.
pathway or a gradient for the various.
you know, drainage that was going to be needed for the property, especially when it was developed up into, you know, one to two acre residential lots. And so they kept going back with their engineers, see how they could figure this out. and ultimately they determined, this, the dirt work that we would have to do here is going to cost near like a half million dollars. So.
when I initially heard that the buyers were making a last ditch, chance of making this deal work out yesterday, you know, I indicated to our broker, Hey, like, you know, you don’t need to talk numbers precisely. Just, yeah, but just let them know before you get a termination agreement, that, Hey, we’re understanding of the situation. We can work with you guys.
We had so much profit built into the deal that the numbers were less concerning to me compared to having to get back on market and the length of time, especially since we had already been under contract for 60 days with a lot of principal up in the air. So that’s what the situation was. And then they came back today that they’re out of the deal and
You know, better to rip that bandaid off sooner rather than later so we can get things back on the market. But, you know, they weren’t, they were just like, Hey, yeah, even if we cut even a couple hundred grand off our purchase price, it’s just not enough to preserve the margin they needed to develop the rest of the property. And I these guys got far into it and they spent 50 grand of their own money to do all this DD and engineering. Um, and.
Yeah, sometimes when these situations come up, uh, you know, from a male perspective, at least like it’s, just, it’s, it’s been a lot of kicks in the nuts recently. Um, and some stuff that is just beyond our control like this, you know, we thought this was a home run purchase and just steadily over time, more hair kind of crept up on this property and stuff that like wouldn’t really come up on DD. Like even this, the land being too flat. Um,
from a development perspective. mean, the fact that the buyers had to spend 50 grand cash just to determine that answer, like that’s just not something realistically we could have figured out even before we purchased the property. And even if we did know that, you know, our initial thought like I’m saying it’s always 2020, right? Like we always thought that the most likely buyers were just going to be.
three child parcel owners since we subdivided it up into 16 and a half acre chunks. But developer interest was stronger. we dealt with the cards or we played the cards that we were dealt as they came up. And unfortunately this one just didn’t work out in an already pretty difficult.
quarter where wins have been tougher to come by, admittedly. I really wish we could share a lot more positive news, but I know we’ve built up the reputation and we share it how it is so we can all continue to grow together and that’s just the reality of situation. So you can’t just…
sit in your sorrows when things break down, you gotta recover quickly. Okay, what are the next steps here? First, we had as part of our contract, just something that’s like standard for any time you engage in a closing timeline with the developers that, okay, if they bail on the deal, then we have the rights to receive all of the written DD that they had done and ordered.
for the property. That’s just again, standard clause. We have that in writing, it’s all signed. And now when our broker went back to that, these guys are saying, hey, we can give it to you for a fee. And so, you know, that is obviously not what you want to hear either, considering again, we have this all in writing, but we’re also not going to sue these guys if they…
You choose just to play hardball with this. I guess not worth throwing extra money at this anyway. And sometimes even when you have things in writing, like there are very few things that are really worth fighting legally over and this wouldn’t be worth it in our estimation either. And so, you you always,
want to work from a point of trusting your counterparties and sometimes people are going to burn you. know that the industry-wide reputation for developers is usually not the most favorable across the country. There’s a certain stereotype of just being kind of slimier.
operators and business owners and so it’s like, you know, you hate to see anything that kind of fits that stereotype but here we are like, you know, hey, we have all this in writing and now you guys are backing out from what your word is. So, you know, I told the broker, okay, like just, you know, really see if you can figure it out but understand, yeah, there’s not legal teeth behind this. We’re not gonna try to throw thousands of dollars to get them to fork over.
docs and it’s also there’s a certain trade-off that we have to keep in mind because if we do get these docs like ethically we have to share all those findings with any future buyers and because the findings weren’t positive right like they did all this engineering and determined okay yeah it’s gonna be super expensive for dirt work or they’re gonna have to build water retention ponds and so forth like that
cuts into the pros of our property. But at the same time, even if we don’t get the docs, like I would be really cautious about engaging with another developer. because if they went through the whole process and spent their own money, like we get stuck in the same situation. So you kind of have to disclose it either way, which is why I’d rather have the docs because maybe there is a route that we could creatively figure out a solution with another developer if needed though.
Again, these guys are really experienced if they could have made it work. They would have figured it out, but you know, clarity and transparency is always going to be preferred. that was yet another.
Yeah, punch across the face there for an already unfortunate situation. But then it’s like, okay, now what else are we going to do here? When we initially listed these, we had the child parcels up as well as the parent parcel. We thought child parcels were going to get a ton more interest. They did not. And we had them priced at roughly 25k per acre. We did get one firm offer at 19.5.
So I’m like, all right, you we’ve already held this property now for more than a few months, roughly. So it’s like already is a lot of principle in this deal. I want to start moving this thing. Let’s cut our per acre pricing for the child parcels down to 20 K and let’s cut our parent parcel pricing, which was at 22 K prior to going under contract here all the way down to 17 and a half K. What we did have it under contract for just recently.
And if we can blend it, exit this thing for 15 K per acre, that will still be a very solid exit, still below market for like anything in the region. Plus we know at least the child parcels, there’s not going to be any issue with needing to do larger drainage engineering. It’s just, your residential footprint is far less. Anybody can just throw a house up on there. So.
We are trying to re-engage all of those previous leads that we had, including the child parcel one. There were a couple other developers that were looking at this with different projects, including like an RV park. I’m not sure if that’s going to be as affected by possible drainage issues. You know, I don’t have enough firsthand knowledge to know what the distinctions are. And we had gotten a firm offer before like quick close cash 15K breaker from an operator like that. So.
See if we can re-engage them. Our broker already has another developer he’s going to reach out to again too that was doing a different type of project. So we just have to get these things back on market, see what we’re able to sort out. And again, with the knowledge that, you know, we were still getting written offers every one, one and a half weeks prior to going on a contract here. Yeah, obviously would have loved to close this one out.
It was looking super, super likely up until like the last two weeks and then it all fell apart. But that is real estate sometimes. Yeah, I’d say the macro.
obviously still uncertain here. It feels a bit better than what April felt like with all the stock market crashing, ups and downs, et cetera. But again, things change on a week by week basis. We just have to assume there’s just general uncertainty as well. And, you know, keep moving on with that in mind. But you know,
I was looking at another property in the area that seemed like it could really be solid, but I only wanted to line it up if we actually closed and exited this property, because that’s just not good diversity of parcel exposure if we bought another like $300 plus thousand dollar property subdivide in the same county and one hadn’t exited yet.
Like that is a high risk scenario to take part in. Um, and we’re still waiting on the Louisiana parcel to even be on market, hopefully over the next three to four days is the goal here. So, you know, I just have still a lot of portfolio that we really now need to churn through to feel a lot more comfortable here. What can you do? This is the, um, the update as it is. So hopefully this is helpful.
For you all And yeah, just understanding hey some of these things can just happen no matter how good your DD is deals can fall apart And then how quickly do you recover and figure out? Okay? What is the next step forward to? Figure out how to move things, but yeah, it’s not always fun fun games Business was easy everybody would be rolling in cash
Yeah, it’s just been a tough year, but when things are hard, you just gotta stay focused here. So that is what we are doing. With all that in mind, serious land.capital for any of your funding needs, zero cost review of your land deals at landdailydiligence.com Facebook group and landpricer.ai for the most simple and accurate way to price land, the most reliable land.
pricing tool on the market that is what we are building got actually a lot more product progress done earlier today with my team gunning for July 4th launch is our plan with all that in mind subscribe and share talk to you all soon take care bye
