In this episode, a problematic two-acre Tennessee lakeview lot purchased at $90K gets slashed from $70K to $35K—a 50% discount from original listing—as creative exit strategies emerge including offering to clear a homesite at company expense for a qualified buyer with a $25-35K budget.
Key Takeaways:
- Price cuts accelerate exits on stalled inventory Dropping from $70K to $35K creates urgency and attracts different buyer pools, even at significant losses.
- Mental bandwidth costs exceed capital losses Waking up at night obsessing over problem deals signals it’s time to eat the loss and move on.
- Creative buyer incentives unlock dead inventory Offering $5K lot clearing at seller expense can close deals when price cuts alone fail.
Listen to the full episode for the complete breakdown of multi-angle strategies deployed when a deal goes sideways.
(Podcast transcript below)
Hey, it’s Chris, Serious Land Capital, vacant land funding partner. So today wanted to give another update about probably the most problematic deal that we have in our portfolio is Tennessee infill lot. I I’ve remarked on it before, actually before starting. If you listened to yesterday’s episode about the 50 acre, Texas deal, where the buyers spent 50 K on their due diligence and unfortunately backed out due to
water drainage issues for their plan development. and initially it seemed like they weren’t going to give up their DD that they had spent, but we did have that in writing within our contract. And as of today, they actually are going to hand that over. So that’ll be advantageous for us to have. already have the properties relisted. and fortunately the child tracks have a fresh days on market.
counter, so that’s always going to when it comes to the algorithm and just general buyer interest as well whenever you can get a fresh count because lower is always going to be better. So the other property, this roughly two acre Lakeview lot that we have in central Tennessee, we knew it was a higher variance property when we bought it.
six months ago. and it’s just proven extremely tricky, uh, to where we initially listed this one at 70 and we thought reliably it could exit for probably between 55 to 60 K. I just dropped the price to 35 K today. So I mean, half off, obviously that falls on us falls, you know, even though they don’t have money in the deal, it’s still, you know, the brokers, they obviously, uh, were off on their assessments. Everybody was off.
in terms of how we thought this property was going to perform. And so just wanted to mention a couple, you know, kind of strategies on how we’re dealing with a tricky situation like this. Now it’s, you know, how do we reduce our loss as much as possible here? And, know, in some of these tricky buyers markets, like you just, you’ve got to pull out every stop. So I personally cold called a ton of builders. Some of you even to visit the property.
Nothing really stuck. We also listed on some of the other third party platforms, all the various Tennessee Facebook groups. And we actually got a lead over this weekend. And yes, it was this woman who is actually visited the property and she had a budget of roughly twenty five to thirty five K. She loved the area, but was like, hey, I want to clear a lot.
you know, to find something that’s just going to be more of interest for her and her family. So, know, I really had to consider that, you know, I hate throwing more money at bad deals, but I’m also like cognizant. OK, I still don’t know what the bottom is for this particular property. think I’m nearing it. But if I could get this lady to agree to 35K and that’s what I told her it was priced at.
You know, could I potentially get a home site cleared for 5k max, you know, based on previous properties, similarly sized, actually a little bit larger. got work done for that at most. Maybe we, I don’t know how thick these trees are, how much work would actually be required, but yeah, if I’m like, all right, if we could get a clearing done while we get this woman under contract.
You know, there is still inherent risks. Like if they bail all at the end and we end up clearing for nothing either way, it’s still a value add. but yeah, having to throw more money at the deal. when it’s already going to be a nut loser, but you know, I posited that back to her. It’s like, okay, Hey, we’ll, we’re willing to clear it at the cost of my company. If we’re able to go under contract and she asked a bunch of follow-up questions, Hey, let me talk to my husband about this. ask for all these like per tests and.
numbers for planning and zoning and I handed all that over like this was and you know, fast responses to again, great customer service. Like you should be responding to people as quickly as possible. And this is a problematic property, one that I’m like personally taking responsibility for to figure out how to move. And you know, in situations like this, you had to do what it takes to to be creative and sort things out. And even though like
uh, most my instincts and general decision-making guidelines. Like, yeah, don’t throw more money after bad deals. If it’s still a route where I could get a deal done at basically breakeven pricing from the gross price. Plus I could just negotiate with our brokers. Hey, we brought this buyer in, you know, can we reduce the commission percent, whatever.
to sort that out. So that gives us a little bit more leeway there. But, know, we’ll see if she comes back and see if we can get her under contract. In the meantime, you know, I went back to the brokers, hey, let’s drop this price again. And they had already indicated, hey, you know, we were initially at 6 % commission. This has gotten so low. We can do 4 % here.
But I also brought up with them, you know, our listing agreement. never signed listing agreements longer than six months. That’s coming up at the end of June here. You know, let’s really formalize. Okay. It’s going to be a lower commission to find a way to sell this. And again, I reminded them to like, Hey, all like this is obviously underperformed. All of our expectations. Like we cut the price in half from initial listing price. Like that’s it. You know, you can’t ignore those facts.
massive discount and we’ve still had like, you know, very minimal interest. Like it’s just been an all round bad deal. but you know, I also threw a carrot in there of like, Hey, you know, if we can extend as necessary, obviously we’d love to get under contract prior to, this current listing agreement ending, which
technically they have in writing where they would still have a higher commission percentage. So they’re still incentivized from that side anyway, even though I think tacitly they would agree to lower. But also through, like we’ll give you guys a you know, realtor review as needed. Hey, like, and just be honest with it. This was a super difficult property, but you know, they found a way to work with us or agreeable terms, whatever. you know.
sometimes that can help with other businesses too and challenges arise who rises to meet them and are they able to renegotiate and look out for their clients’ best interests as well, even at the cost of potential commission to them. So through that back at them,
Um, they’ve been fast responders here. can’t like totally blame the, ultimately again, these, these issues, they fall on, you know, my company is the one that wired out the money. was just a bad deal overall. Um, and, uh, uh, you know, we just can’t ignore that fact, but, um, all that considered as well, like it’s just, it became a trickier market and these realtors saying, yeah, it’s just.
You know, they’re not trying to hide behind any facts. like, yeah, this is, you know, we’re perplexed by this market as well. We’re struggling to sell homes in the area. It’s just been trickier. And I’ll do another pod soon about this too, but like a lot of these COVID boom markets, there’s just a lot of extra inventory, especially in infill lots or, you know, SFR inventory. And a lot of folks have just migrated back to the Midwest and Northeast, which
It’s just kind of a remarkable trend when we consider where we were a few years ago. So, you know, we’re dealing with that within this central Tennessee market as well here. That’s certainly not helping anything along with just the general macro uncertainty that has been expressed ad nauseam. So just wanted to update you as far as like, Hey, even when deals go bad, like
You still got to pull out some extra cards here. How can you reduce the damage as much as possible? How can you be creative with buyer? Like if you know, the buyers have an upper hand on you, what else are you willing to sacrifice to get out of a nasty deal? It’s sometimes like, it’s not just about the dollars at stake, but it’s also like the mental bandwidth that’s taken up. That’s arguably more valuable. You know, when I’m waking up in the middle of the night thinking about it, this deal is just.
bothering me so much. You know, got to get it off your plate and just know, okay, how much pain am I going to have to eat to to move on from this one? So it’s just another consideration as well. Hopefully this is helpful if you’re stuck with a nasty property as well, even if you’re not at the moment. Yeah, you may encounter one in the future. Hopefully not. I don’t wish it on anyone, but you know.
It’s the nature of being in business. Sometimes things don’t go as planned and you have to figure out how to dig yourself out of holes. So with that in mind, SeriousLand.Capital for any of your funding needs, zero cost review of your land deals at Land Daily Diligence Facebook group and LandPricer.ai for the most simple and efficient way of pricing land deals, reliability.
within an easy to use software. Subscribe and share, talk to you all tomorrow. Take care, bye.
