This episode reveals the gold-standard testing methodology for LandPricer accuracy using actually-funded properties with full diligence reports and real offers, exposing initial 20% overvaluation that’s being systematically corrected through mathematical weight adjustments. Testing focuses on recent deals where comps remain relevant and actual market performance validates pricing accuracy.
Key Takeaways:
- Plus-or-minus 10% accuracy threshold mirrors manual underwriting success rates Market variability and negotiation swings make pinpoint precision impossible; downside protection matters far more than perfect precision.
- Active listings require blanket 15% discounts beyond time-on-market penalties Properties listed at 2-3x per-acre market rates skew averages even with significant discounts; harsh penalties on active comps prevent overvaluation.
- User characteristic judgment introduces the largest accuracy variable Dropdown selections for comparing target property to comps remain time-consuming and subject to bias despite systematic frameworks.
The full episode details the iterative mathematical refinement process and explains why conservative exits always outweigh aggressive acquisitions in risk-adjusted returns.
(Podcast transcript below)
Welcome to Get Serious excited to be back here today. I wanted to give you a few updates on just running through some test properties for land price are here and you know, just how I’m kind of orienting around what adjustments need to be made for max accuracy. So it’s really been a balance there. I know from our first, you know, really the goal.
from the start has just been focused on accuracy and reliability of pricing properties. That’s something we think we do better than any other firm in the industry, or at least within the absolute top echelon, especially from a national basis. And we have the track record to back that up. And so that was really the impetus for building this product. And we also…
quickly realized like that’s not quite enough. Like the property or the software needs to be easy enough to use and quick enough to use to still justify people actually go through the exercise of pricing properties. Like if it took you a year to price a property with 100 % accuracy, like no one would do that, right? So we didn’t match that time.
um, uh, time block that, know, typical users would allow for themselves, um, to, you know, still arrive at a mostly accurate answer. So we were just trying to maintain that, uh, high level of reliability and accuracy while we, you know, reduce the amount of time required per property. And we’ve definitely got it below five to 10 minutes. And like I’ve tested it myself to do that, um, to get below that, um,
that number here. And so as I was going through and the way that I’m structuring how to ensure that things are fully accurate is that I’m taking properties that we’ve actually funded. And so we have a full written report on our diligence. And ideally, some of these properties that we have funded, both are more recent. So the comps are still going to show up in a reliable
Manor, you know, there’s still gonna be recent comms like if we did a property we funded three years ago Not that we were funding properties three years ago almost Like those comes wouldn’t show up because they’re no longer relevant so we could manually add them but you know still not As helpful as a recently funded property, so we have been doing that. So the correct comms are gonna be showing up
And ideally we’ve already gotten offers on the property. So we have in a couple of these circumstances. So, that that’s kind of the gold standard that I’m using. It’s like, okay, we have a property we did a full review on. We actually funded it. Plus we got offers and, you know, at least anticipating selling the property. So we know the true accuracy of our measurement. and that our buy price was truly accurate in relation to.
the market. So you can’t ask for better data than that. So one property that we had recently funded, I talked about in the last podcast is Illinois property. When I run it through land price or, you know, it’s off by roughly 20 % the price calculation. You really can’t hold that number.
in too high of a steam because unfortunately there’s too much noise within the calculation. there’s too many bugs that are being fixed as I speak during this podcast. But even when all of those are fixed, still think it’s going or the current lamp price or is overestimating some of the value of the comps and therefore overestimating the value of the underlying property. So.
Like I never expected that our, you know, backend weights and,
You know mathematical formulas we’re gonna be a hundred percent accurate like without thorough and rigorous testing like they’re always gonna need continuous tweaks But I’m starting you know based even on this initial bug you know buggy review and even accounting for that I can already start telling Why the pricing is being overestimated by a bit and like
You know, we don’t ever expect either to be, you know, a hundred percent pinpoint accurate too, because there’s this, there’s, you know, there’s too much variability within the market. And even within our own manual comp reviews, we treat it as a win. If our exit price is within 10 % of the anticipated exit that we had written down before we even funded the property. Like if you can be within 10%,
You know, that that’s generally going to be, uh, um, you know, what, what you could consider to be very accurate, just cause like, can be so much flux, like even in, you know, negotiations, like for instance, this Illinois property we were doing, um, like we bought it just under 60 K or like right at the 60 K number, including closing costs.
And so like the initial offers closer to like 118K, like he was fast. I probably would have taken that if the buyer was just dead set on that number. But like we ended up getting them closer to like 127.5. So that’s almost a 10 % swing in and of itself, but that really was just, know, fluctuating during the negotiation period there. But in terms of what we thought would be a favorable result on a property.
like either of those numbers would have worked. Obviously the higher one is better, but like you can see that the value of the property was still like within this, you know, roughly 10 % variance. In fact, it was even higher because we got 140K offer, but it was contingent on a house sale too. So that, you know, is even an increased.
Value on the property more than we thought it could be worth that was even higher than our Listing price which like never happens in in today’s market. So That that’s a bit of an outlier there but that’s just to show like you can’t really ever expect to be like a hundred percent pinpoint accurate but what you can be within ten percent, especially on the The downside scenario so like
It doesn’t really matter if you’re 10 % above what you thought or 10 % or more Above what you thought the exit price is gonna be because that just means you made more money Especially if you already bought the property. Yeah, it could affect it. Like if you’re using land Pricer and you’re underestimating the exit of the property you might you know, lowball the seller too much that you know
keeps you from purchasing a deal, rarely people run into that scenario. Almost always people are overestimating the value of the property and that’s by far the worst possible mistake to make because you get stuck in a really nasty scenario and potentially lose money or get stuck with a property that’s not moving. we always orient to be more conservative towards downside protection versus underestimating the…
or rather overestimating the property’s worth. So that was just kind of like, you know, my thinking behind, okay, what do we need to get to? So if it was like 20 % overvalued, it’s like, okay, I need to be able to shave off at least 10 % more from the value of this property to feel like we’re more accurate. Like it’s not too far away. So it’s already telling me like my math is pretty in line here, but as I was going through it,
And seeing all the backend weights and there were, you know, like a lot of areas in the country, like there’s a ton of active properties. Generally there’s going to be more active properties. Like the sell through rates have just not been very good, in many parts of the country for like most of this year. so I’m expecting there to on average be more active properties being considered as comps, for, a lot of areas of the country and.
generally, you know, for active properties, you all things being equal from a characteristics perspective, we want to undercut pretty much everything on market. And usually I’d be especially, you know, subdivides are maybe a bit different story. But even if it’s a one off parcel, like, unless my, my characteristics are crazy, superior, I want to be undercutting the active market as a whole by
you know, at least five to 10%, at least, potentially more. So that’s why, like, as I was going through the land price or mechanisms, like, I had a lot of just harsh penalties on active properties, like if anything’s been listed even for longer than 14 days, like it already starts getting hit a bit harder, but I think I need to say blanket hit.
on just being an active property outside of any, like even if something’s been listed for a day, like it probably serves better to have like a 15 % just blanket discount on that price and to account for like more user error when you’re trying to judge characteristics. that’s another discussion. That’s probably the.
Still the trickiest part of land price right now, at least for the current iteration of the product is that you have to be able to judge the characteristics of the comps in relation to the target properties. That’s by far the most time consuming part, but we still try to make it a drop down. And even myself, like, you know, some properties, it’s a little harder to determine. There’s a lot of variables involved. So I’m trying to reduce the potential user bias from…
from those calculations as well. So all of this to say like there’s some more finesse that is needed here to really get things in line. But the biggest takeaway at the moment is I think I just need to penalize active properties in and of themselves more so than usual because like even if you have some built in discounts, I mean anybody who’s been in the land industry for a while, like you can just have these active properties that are
listed for two, maybe even three X, the going rate of per acre pricing in the area. And even if you like significantly discount those, it’s sitting on market for a while, but like, let’s say that’s not like, you know, somebody just puts a fresh listing on it three X, the going rate of price per acre. and it’s not really penalized for doing that. That can just drive the average per acre pricing too high.
In in relation to the subject property and what like an appropriate sold price would would actually be and the you know Corresponding by price if you’re actually trying to acquire the property, so I’m really trying to keep that in mind And I have some you know, I just walked through some ideas and how I’m fix that But again, I just want to give you guys some behind-the-scenes on How I’m making these adjustments
And again, just using gold standard criteria because it’s like, yeah, if I have true, you know, real info based on how our own properties were priced and actually performed on the market, like that gives me the best data possible because then I can just tweak to get the right answer from the math side and feel much more confident that it’s going to work across.
multiple parcels all across the country. And again, we’re only like 10 % off from being within that, you know, plus or minus 10 % window of true pricing anyway here. So like, yeah, that’s going to be the goal. Always, you know, the closer you can reduce that variability, the better. But again, we think we’re like the top underwriters are close to it within the industry and like 10 % threshold is our…
goal so we think that is probably good enough for everybody else as well. So hopefully this one is interesting for you all. Excited to deliver more value both on the behind the scenes as well as you know launching the product itself very soon. SeriousLand.Capital for any of your funding needs 50k purchase price plus and Land
Daily Diligence Facebook group for zero cost review of your land deals and LandPricer.ai, which I just discussed, most reliable land pricing tool on the market. Subscribe and share everybody. Enjoy your holiday weekend. I will be back next week. Take care. Bye.
