This episode addresses the persistent complications of commercial vacant land deals, which rarely pass funding criteria despite regular deal flow. Commercial lots face longer average days on market than residential or recreational land, with additional friction from multiple decision-makers, franchise approval processes, and significantly more complex due diligence timelines across all buyer types.
Key Takeaways:
- Commercial Zoning Variance Affects Valuations Dramatically Industrial warehouse zoning versus small repair shop restrictions creates vastly different price per acre and buyer pools—verify specific zoning utility and future land use designations rather than broad commercial categories.
- MLS Underrepresents Commercial Comps LoopNet provides more reliable commercial listings but only shows actives without view counts, save data, or price decrease history—call brokers on closest comparable properties to extract actual market activity intelligence.
- Hyper-Local Context Trumps General Zoning Street-by-street analysis of neighboring improvements (residential versus commercial) and grandfathered zoning from outdated comprehensive plans determines true market positioning more than official designation alone.
Get the complete framework for commercial land assessment, alternative comp sourcing strategies, and why opportunity cost usually favors residential and recreational lot velocity.
(Podcast transcript below)
Hey, Chris Duff over at Serious Land Capital, vacant land funding partner. Today, just wanted to comment on a few notes regarding commercial acreage for vacant lots. It’s something that we do have experience in and have successfully fled commercial lots. We get sent a number of them, but very rarely.
Do they pass muster? So a few notes regarding them. First, in general, you just have to assume that days on market are going to be on average higher than residential or many recreational vacant land lots. Pretty much every realtor is going to tell you that too.
You know, there’s just less commercial and buyers generally. You know, occasionally you might come across something on a corner of, you know, great highway frontage or, you know, perfect setup for a franchise, fast food joint or something like that. But that is quite a rare circumstance. And even if you do find one of those, the
due diligence timelines and kind of solidifying the actual close date and procedure of getting all those docs in order is generally still going to be longer anyway, just because you have more decision makers that are going to be involved in that process, especially if you’re working with possible franchises.
of larger companies that might have brick and mortar commercial establishments there. So that’s just something to keep in mind anyway. And then comping out these properties are oftentimes a bit more difficult because commercial acreage is not as reliably marketed on
the MLS compared to residential and recreational lots. So when you are reviewing the local market, know, checking Zilla, Redfin, have you, in many areas, you’re not necessarily going to come across commercial acreage. Sometimes it will be a little bit more common and very, very rarely there will be circumstances where the commercial acreage is actually more common than residential. It depends on
the specifics, but we have occasionally come across those circumstances before. So when you can locate some of those comps, you really want to double check the actual type of zoning for the commercial too, because residential, the characteristics might be
a bit more, or at least the underlying zoning will probably be a little bit more similar, whereas commercially you just have wider variance in terms of what might be able to be done on it. You know, if you can do a full industrial warehouse versus being restricted to a small repair shop and that’s just to mention a previous property that we had done, which I’ll do a case study on.
another time here, that can dramatically affect your end valuation as well as potential buyer pool. you know, understanding what the true utility is for the underlying property is going to be necessary. And you have to keep that in mind. What are the more valuable types of zoning within the commercial umbrella?
in relation to comps that you are finding and how you might value the actual subject property. And I’m always cautious about, you know, am I buying a lot that is right next to existing commercial to make that a lot easier? Or, you know, is there some grandfathered in existing zoning from, you know, 30, 40 plus years ago where the whole
plans layout or the whole town or cities layout kind of changed over time and some parcels that weren’t developed upon just weren’t rezoned in accordance to the actual true usage of the land surrounding it. So that can get complex as well because even if you have the right
zoning for a certain area, it’s also possible that the FLEU, the future land use could be different and the certain land that you’re looking at is already designated for another usage anyway and sometimes that can be outdated. I have another example property that we can go over another time reviewing issues like that but you can
quickly see as I rattle off a few things here, how complicated things can become pretty quickly. So yeah, really understanding things from the planning and zoning perspective and just, you know, assessing that hyper, hyper local market, you know, the street by street where the individual neighbors are they next to Rezzi buildings or they next to commercial, et cetera, can, can, you know, make me feel a lot more confident versus not. Generally, I’m not going to be wanting to purchase.
commercial if I’m the first one on the street and completely surrounded by other residential properties that’s going to make a much tougher sell on average. But going back to the comps perspective, so it is tricky to figure out from the MLS.
in many markets what the true commercial comps are. So if you aren’t able to find any and you only find residential lots, you can’t really consider that to be particularly valuable from an acreage. That’ll probably tell you the bottom level pricing you might be able to get from your commercial acreage because all things being equal, which is a tough thing to say for these particular properties.
A commercial acreage is going to be more expensive on a per acre basis compared to residential, virtually everywhere. You’ll find some examples that that’s not the case, especially if the residential is just on spectacular trophy type terrain.
But other than that, commercial is just going to be more valuable and oftentimes by a significant multiple on top of what nearby residential acreage or recreational might be. So that’s also something to keep in mind. And if you can’t find anything on the MLS, then I would check out LoopNet.
and on other live reviews, I’ve pointed this out before. So that is a more reliable source for active commercial properties. As far as I’m aware, the UI is little shaky. You’re not able to look up sold properties. You’re stuck looking at actives. You’re already going to be limited in that regard.
in regard to assessing comps plus You’re not able to get any insights into true activity, you know, like Zillow is so helpful for that with the views and saves Nor do I believe you can see price decreases either so it’s it’s kind of similar to lamb.com or it’s a bit of a black box in terms of what’s actually been going on with the underlying listing you can see when it was
listed and They’re usually not even sorted by you know when date When the property was listed, I’ve seen a number of commercial properties that might have been up for six plus years And just to throw a number out there And you know if I’m starting to see that okay That’s already telling me. Okay, the appetite might not be there or it’s just significantly overpriced
or there’s certain characteristics that aren’t gonna be as attractive or it’s just a completely different type of commercial zoning than the underlying subject property you’re looking at. So that’s something to keep in mind too. if you’re still not able to find any comps on Redfin Zillow’s side and it’s hard to assess, which it generally is via LoopNet, what the underlying market might be, again, because you really only need to be able to…
be able to see actives and oftentimes there’s not that many in most areas, especially from a land perspective where they might have existing improvements. You see that often on loop net, even though you’re only supposed to be searching for land. I would call up one of those brokers attached to the loop net deal for probably the comp that’s closest in terms of characteristics and sizing.
in location to the underlying subject property and say, you know, have a possible listing here. for the I found you on LoopNet. I see this property has been listed since whenever. Like, have you gotten any, you know, calls or site visits, possible lowball offers? Like, I don’t know. Maybe the seller is like only interested in, you know, their list price and who knows what activity is going on behind the scenes. But if you can really
pin down where the market might be at and just ask a lot of, you know, smart questions and see, okay, maybe there’s an area or a way to work together and try to price the commercial lot to actually move a bit faster. that is generally going to be our go-to strategy when we’re considering, possibly funding a commercial lot, but they are not our favorites to do on average just because usually the market.
is going to be pretty tricky and the opportunity cost is going to be significant in relation to just turning and burning more reliable Rezzi or recreational lots, whether they’re straight flips or miter subdivides. So that is just our general overview for commercial. can get a lot more specifics on going. Again, if you have any funding leads, check out serious land dot capital.
or landpricer.ai for the simplest and most accurate way to value land parcels around the US, or Land Daily Diligence Facebook group for zero cost due diligence on your land, whether you want funding or not. And if you wouldn’t mind leaving a rating or sharing this podcast if you found it valuable with somebody else.
That would be extremely helpful for us as we grow and you if you can provide any feedback, what you like, what you don’t, we have a couple weeks under our belt here. So excited to keep this going indefinitely here. Lastly, Dave Dennison’s on conference. Use my last name, D-U-F-F, all lowercase for $200 off your ticket for the event in August of this year. Hope to see you.
There, with that, take care.
