This episode examines why properties sold by neighbors living adjacent to vacant land consistently fail to close, despite appearing as routine opportunities. The analysis reveals three distinct risk factors: psychological attachment driving inflated pricing expectations, adverse selection where inferior parcels remain undeveloped, and proximity-based drama that can sabotage marketing efforts after purchase.
Key Takeaways:
- Seller Motivation Drops 90%+ When They Live Next Door Adjacency creates psychological loss aversion that kills deal margins, forcing sellers to demand near-market pricing instead of the 50% discounts needed for viable flips.
- Built Lots Signal Quality, Vacant Ones Flag Defects When sellers improved one parcel but left another vacant, the undeveloped lot typically has inferior characteristics (drainage, access, buildability) that justified the original construction choice.
- Family Drama Becomes Your Marketing Problem Local sellers or their relatives can actively interfere with buyer visits and showings, creating hostile conditions that collapse exit pricing by forcing discounted sales to escape the situation.
Listen to hear the complete breakdown of why strict filtering on seller proximity protects your capital and deal flow quality.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, Vacant Land Funding Partner. Today, I wanted to go over another topic that routinely comes up with properties sent over to us. And if you’ve been in land investing game for probably even a few months, you’ve probably reviewed a property where the seller
of whatever vacant property you’re looking at lives right next door to the property. And so maybe they have a separate parcel. They’re just looking to offload that they haven’t improved on yet. So those are always warning signs for us. I think I was remarking on my live
Lend Daily Diligence session yesterday that I don’t think we’ve ever successfully bought a property from a seller who lived right next door to the subject property. Yeah, for a few reasons. Usually their motivation is going to be less than a
a seller who doesn’t live right next door or, you know, lives out of state or even out of country, ideally. Um, yeah, I mean, just kind of think about it. If you were living, you know, right next to some vacant land, uh, you know, you’re just, you’re looking at it every day. You probably have some higher level of attachment, uh, to it. Um, and wanting
you know, more of a return for the property because then, you know, that psychological fear of loss can creep up a bit more from the seller’s perspective and just wanting to make sure, you know, that they’re not getting hoodwinked in a deal. you know, not saying that that is the whole goal of the land industry, certainly not. It’s just, you know, trying to match motivations.
of sellers with being able to solve their problems. Oftentimes that is just a quicker sale to get out of a property they don’t have any attachment or concern about anymore. Maybe it was just kind of foisted or handed over to them or they inherited it. These are all the ad nauseum seller motivations that
most of us have heard a hundred times, but you you can kind of think, hey, if this person’s trying to buy property cash from me, really, you know, if I’m looking at it every day, I’m probably gonna be thinking about, I really want to make sure I’m getting a better deal on it versus again, somebody who may have just inherited the property or has never even seen the property or hasn’t seen it for years or they’re…
Um, situation has changed. They’re planning to build on it. Just, uh, you know, the, those plans fell through. So, um, you know, all of those motivations are usually going to be stronger for potentially getting a better deal on the property, whether you’re trying to purchase that, you know, kind of the standard 50 % of, of market value for possible flip opportunity or even, um, uh,
purchasing slightly below value in a wholesale manner or, you know, trying to set up a double close. You you still want to make sure there’s enough margin to make it worth your while to go through the effort and to be able to live on your promise to the seller for a successful sale, you know, compared if there’s not enough margin on it and you’re having to…
price above market or at market and not able to achieve the anticipated closing timeline to still get the seller their funds before your option contract runs out. So just something to consider from that side in terms of seller motivation. The other piece too is that if a seller has already improved one of their properties that they’re living right next to, usually that is going to be
the higher quality property from a potential improvement perspective. Otherwise, more than likely, they would have built on the still vacant lot. It’s possible they acquired some of the land next to them after they had already improved the property that they’re on. But more often than not, they had acquired
you know, the, the, total land that they own in that area all at the same time and chose to improve one of them. So you’re running into some adverse selection with potentially having a more inferior property, to sell than, what the neighbor had already built on. So that’s just something to consider is that usually you’re going to be fighting some type of hair.
on the property and really have to measure out those potentially inferior characteristics compared to the existing market or properties that had already been improved on in the area. Not always going to be the case, but that is a fair risk to consider as well.
So those are kind of the two primary reasons to really look out for in that regard there. You know, I’m trying to think if there’s any other things that I’m kind of missing top of mind in regard to this. You know, the other one that is
potentially a bit chancey is just understanding the temperament of the seller because you know, there’s kind of debate within the land industries. How upfront are you with the, you know, future usage and marketability of the parcel that you’re buying because, you know, some people will say,
Yeah, just try to say as little as possible or not really disclose what your plans are for the parcel. or, know, some it’s like more of a don’t ask, don’t tell, you know, if the seller asks and you indicate, Hey, my plan is just to sell this property, you know, after, after buying it, you know, some people might, you might do a little bit of value add potentially on the property. It might make sense to do that. but if.
the seller kind of gets wind of that and they live right next door. Again, that kind of comes back to motivation side where it’s like, you know, if they’re out of state, it’s like, okay, maybe who really cares? Yeah, I just need to get rid of this one or they inherited it, do whatever you want with it. But, you know, if it’s somebody who lives right next door and they’re like, man, this person’s just gonna buy it.
bit of a discount and then just try to sell it. Like why not try to get a bit more out of it and leave some money on the table here? Or if they don’t have kind of wind of that potential and then as soon as you buy the property, you’re slapping a sign down and having people visit and the seller wasn’t aware that that was the plan. Like that is a potentially adverse situation.
And we’ve dealt with that in the past where the neighbor wasn’t the actual seller, but it was a family member. And there was some inherent family drama that we didn’t get wind of until after we bought the property. And then they were behaving pretty negatively and annoyingly towards possible buyer leads that we ended up having to exit that property at just the lower price than anticipated.
So that’s actually another avenue is whether the seller lives right next door or it’s a family member, just be more cautious in those situations because you don’t know what family drama might be going on behind the scenes. But yeah, if the seller is like, this guy just, guy, or I use guy and again, a non gender specific role here just casually, you know, just bought this.
property right under me and that’s just marketing immediately, know, depending what area of the country you’re in and the seller’s temperament and kind of state of state of mind, it could lead to some negative interactions with, you know, potential buyers trying to visit the site and acquire it there. you your risk of negative
feelings is definitely higher the more local the seller is. Whereas, you know, if they’re out of state or what have you, it’s just, it’s not going to be as in their face and, you know, less chance of seller’s remorse as it is if they’re like, man, yeah, this property is selling for, you know, twice what could have been done. And, you know, you never know how people react to that. So.
That’s just something else to keep in mind as far as a risk there. So those are really the primary ones to be aware of. But in general, be very, very cautious trying to negotiate with a seller who lives right next door. Because more often than not, from a pure monetary perspective, you’re not going to get a good deal on the property. Maybe wholesale, possibly better chance of that. But from pure flip.
Again, we’ve looked at thousands of properties. I don’t think we’ve ever bought one where a seller live right next door. Have we be proven wrong? Might happen someday. But so far that hasn’t been the case. So be careful out there. Again, looking for funding, seriousland.capital, land daily diligence Facebook group for any zero cost review of your land deals and then landpricer.ai for the most simple and accurate way to price land.
was doing a lot more work on that today, getting super, super close to testing. Can’t wait. Take care, everybody. Bye.
