This episode provides a disposition portfolio update across three active properties, each presenting unique challenges that illustrate broader market dynamics. The lakefront lot purchased in late summer 2024 immediately encountered a market freeze where cash buyers disappeared and nothing moved for six months, forcing the decision to pull the listing until spring to reset days on market rather than continuing futile price cuts into a vacuum.
Key Takeaways:
- Price Cuts Only Work When Buyers Exist Reducing prices on the lakefront lot accomplished nothing because the entire neighborhood froze, when nothing is moving regardless of price, taking properties off market until spring preserves positioning better than accumulating dead days on market.
- Disposition Issues Keep You Up at Night More Than Any Other Business Problem Properties that aren’t moving create unique anxiety because extended sit time usually indicates flawed initial assumptions, and longer market exposure typically means settling for outcomes below original underwriting.
- High-Variance Lots Require Protective Purchase Terms Properties with inferior characteristics like distant lake views or challenging build conditions need aggressive purchase price protection and favorable terms built in from acquisition, anticipating potential downside scenarios before committing capital.
Listen to the full episode for the complete analysis of how weather impacts site visits, managing broker relationships through slow periods, and making strategic decisions about when to persist versus when to pull listings.
(Podcast transcript below)
Hey, Chris Duff here at Serious Land Capital, vacant land funding partner. I just wanted to go over some updates related to disposition, primarily how we work with realtors. I mean, this is a multi-hours long type of discussion here, but I think it’s relevant to check in on this on a Monday because…
out of any day of the week. is usually first thing I’m logging in is checking our Dispo or properties up for Dispo and seeing if there was any performance over the weekend as possible site visits went and so forth. Some realtors will be in touch with a little bit more reliably over the weekend.
But I’d say on average, we’re really trying to get firmer and more detailed updates kind of first thing in the week. that generally when I’m kind of getting off to the races, the start of the week, checking in on Dispo’s like my number one item. There’s anybody who’s been in this business long enough, especially if you have a lot of capital deployed.
I think properties that aren’t moving and disposition strategies that are kind of faltering a bit, there’s at least personally nothing that keeps me up more at night than issues there or pretty much any other part of the business. They’re important and you always want to be working to solve them. But if your dispo is falling apart, it’s just…
a certain level of panic that starts to be building up just because the longer things sit, oftentimes is a higher likelihood that you were just incorrect with your initial assumptions and more time for the market to turn, usually not in your favor. Sometimes it will be, but in our experience, it’s oftentimes having to settle for an outcome that…
we weren’t necessarily planning for or underwriting for. So even just to give some examples here, again, you can hear my thoughts might even be a little bit jumbled just because I’m already creating a bunch of other future podcasts in my head just to handle Dispo-related strategies more generally versus like specifics. But for instance here, we we Dispo’d a…
whole slew of our portfolio, our biggest month over, well, really the last six weeks, we just disposed almost all of our portfolio, very fortunate, even over the holidays and so forth. And now we’re trying to rebuild it there. So we have three properties firmly within our channel here. We’re anticipating closing on some here shortly, but they all have
some unique challenges associated with them. And I’m going to leave some of the details deliberately vague just because they’re still active. we have, of course, confidentiality agreements with our clients here. But I can at least convey over some of the kind key lessons and features that you might be able to directly.
take into your own business. And so one that we’ve been sitting on the longest is, lakefront lot in a, primarily residentially focused area. and it’s down in the South and what made this one pretty interesting, was that when we were considering purchasing it, end of last summer,
is that there was a lot, just a couple, another lakefront lot that was just a couple parcels north of this one. The subject property that we were looking at that had multiple cash offers over the past few months, but all the buyers backed out because there was only, or the septic,
Soil evaluation could only support a one bed and maybe only one bath. I’m not sure some of the details escape me a bit because there was a neighboring well that was too close to that property. And so we thought, okay, we got a soil evaluation that doesn’t have that issue. can support, I believe up to four beds, four baths again.
As I’m speaking here, it doesn’t sound like I’m too informed about our properties. I promise you, I knew these details back and forth when it came time for acquisition. And so we thought, okay, we can also just hire out the realtor who was listing that other one and just try to reverse engineer bringing in those previous buyers who had, within the last quarter, expressed interest in the cash offer and we can just present a better property for them.
and even discount off that other price just to undercut the existing market anyway and try to move this thing. Well, unfortunately, the market had just dried. All those cash offer buyers just disappeared. And there really hasn’t been anything that has moved in that particular neighborhood for the last six months, lakefront or not, houses or land.
all of it has been at a standstill. So we really trapped ourselves in a, just rapidly changing market, like pretty much as soon as we bought it. and even though we tried a couple of price decreases, you’re kind of throwing those decreases into a, into a vacuum there, because there’s just no buyers in, general.
So definitely some lessons learned there because there were only two, maybe three other lakefront comps besides the, well, including the one that was just north of the subject property that we bought. So it wasn’t as robust as a market as we typically like. It’s just, we thought, hey, we have kind of an info advantage here. We have some existing cash buyers who know for a fact we’re looking very recently.
And you can chalk it up to luck or just poor diligence on our side. I always kind of defer to the ladder there. We can always do better. so this property, a couple of weeks ago, we ultimately decided, hey, know, middle of winter, lakefront lot, even though it’s down in the South, like it’s not that cold. It’s just generally going to be kind of a dead period. And let’s just take this off the market until spring.
And then we can reset our days on market, get it fresh instead of sitting there for months. And we had a potential lead come in even when we were off market that didn’t end up going anywhere. But ultimately that’s the strategy we settled on. I hate doing that, especially if things are just off market, have no chance really to sell that thing anyway. You’re still going to be incurring.
carrying costs just from, you know, minor amounts from taxes, but, know, just capital locked up is always opportunity cost anyway. So that’s just something to keep in mind for,
you know, how we’re thinking about properties like that. And if you have something similar, especially, you know, in those kinds of just nasty markets that might’ve suddenly changed where it’s just like, okay, you know, price cuts are usually going to be your best option for, you know, selling something. You know, if it’s not moving, you know, just kind of cut, cut, cut until you can find a way out.
get your capital back if needed, but if nothing’s moving there, it’s just not going to change anything. So you have to be a little bit more patient and try to find a better time to sell. And generally, spring is going to be the best time of year to sell pretty much any land around the US. Not always, but often.
So that’s the way we’re approaching that one. One other one that we picked up very recently, like two weeks ago, maybe. Or maybe it was, yeah, I think it was like right after Christmas, right around there, or maybe right before now, I’m kind of forgetting. And it’s also kind of middle of the country.
South as well, similar, not quite lakefront, but it has a lake view. Also residential, it just hasn’t been that much activity. And we knew that one was going to be a high variance lot. So we tried to price accordingly, both with our purchase price as well as our anticipated sale price on that one. as we well know, like the weather has been pretty poor around the whole country at the moment. So.
Yeah, I’m not that immediately concerned there. I would like to see, are we getting any type of phone calls, regardless of site visits even, and there hasn’t. So I’m getting a little bit concerned with that one, but we built in a lot of protections to our terms to anticipate potentially more, you know,
down downside focused outcome for this particular property. Just because we were seeing so much variance in the market, you know, very, very good broker, excellent system behind it. But, you know, the underlying asset ultimately has to drive drive interest in in the deal. So that’s another one that we have. And then we have a much larger property that, again, we had excellent terms on because we anticipated it being a high, high variance outcome.
very attractive area as far as residential build outs, like extremely high price per acres, but the underlying property is more inferior, both from a neighborhood perspective, the elevation a bit. everything backs up being able to build on it. It’s just a lot of people are trying to like subdivide it out and build more houses, but it just, doesn’t really allow more than one.
in most cases, so we’ve had countless numbers of calls and site visits, even a couple of firm offers, but they had backed out from, from that one. So I’m still feeling really confident we’re going to get a good outcome there just because the activity is so high. but because of the, again, the weather kind of pushed out all these site visits that we had scheduled until this week. So I won’t really know more of where we’re sitting with that one, but that one we bought.
a few months ago as well that I thought we were going to exit like a month or so ago, but it just, it just didn’t quite end up being there. So that’s just to give you an update on our portfolio, how we’re thinking about it, which ones are more confident and then others. But yeah, you’ll probably hear me comment a lot about this. There’s just endless lessons when it comes to disposition. You can never learn enough and never have enough experience.
but with that, will end this one. Again, if you have a deal ready to be funded, serious land, dot capital, check out, land, daily diligence, Facebook group for zero costs, diligence on your land deals and check out landpricer.ai for the most accurate and simple way to price land across the U S take care everybody. See you on the next one. Bye.
