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Buying Land

Not All Real Estate Agents are Competent about Land

Not All Real Estate Agents are Competent about Land

Not every real estate licensee is qualified to help you buy or sell rural land. Their license may make it legal to practice, but their inexperience in land transactions could be costing you thousands of dollars.

WARNING: Some agents who primarily sell residential real estate and dabble in rural land sales will be offended by this article.

The National Association of Realtors (NAR) Code of Ethics and Standards of Practice states:

Article 11
The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage; specifically, residential real estate brokerage, real property management, commercial and industrial real estate brokerage, land brokerage, real estate appraisal, real estate counseling, real estate syndication, real estate auction, and international real estate.

REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client. Any persons engaged to provide such assistance shall be so identified to the client and their contribution to the assignment should be set forth. (Amended 1/10)

The point of Article 11 is to protect consumers and clients from hiring an agent that is not competent in specific areas of real estate. All real estate agents and brokers are not members of the National Association of Realtors, and that is fine. An agent does not have to be a member of an association to be a great real estate agent (so please don’t scream at me in the comment section below). The point of me quoting the Standard of Practice is to show that on a national level there is recognition that there are different aspects of transacting real estate, and that an agent should be competent in the field in which they practice.

Oftentimes I will have a satisfied client or friend ask me if I would be interested in helping them sell their personal residence. I immediately tell them what a horrible residential agent I would make, wearing muddy boots into their house, etc… I honestly tell them “no” because that is not what I do. I am not a residential agent. I have no expertise in that field at all. Listing a residence would possibly be an opportunity for me to make some more money, but I know that I can not provide the level of service my client needs. I want to leave them with a good taste in their mouth about me and my company.

Land Brokerage was recently added to this NAR list due to the recognition that this vein of real estate requires a special knowledge base and skill set to conduct transactions successfully. For instance, a few years ago I was representing a seller on a 32 acre tract and the buyers hired an agent to represent them. This agent was primarily a residential agent but was helping them sell their commercial building and they decided to use him to buy a rural homesite too. When we were previewing the land he wore his nice loafers and slacks, and decided not to walk the perimeter of the tract with me and his buyers. When we all met up again after seeing the property, the buyer asked me,”Will the property perc.?” I said a perc. test would need to be done. The buyers’ agent asked me, “What is a perc. test?” The buyer and I looked at each other silently with a mutual understanding that this agent was not very knowledgeable about rural homesites because he did not know how to gauge the land’s suitability for a septic system. He was accustomed to in-town transactions.

A landowner or buyer of rural property can put their assets or money at risk by enlisting the help of an agent that is not competent in land sales. Every business person has to make the best decision they can with the information that is available to them at the time. The job of a good agent is to bring all of the available information to the table so the buyer or seller can exercise good judgment in a transaction. Sometimes people entrust a friend or relative who sells real estate to help them buy land or list their land for sale. Unless they are experienced or uniquely qualified, I would recommend using a land specialist. You will usually come out better, and afterward you will still be on speaking terms with your friend or relative.

Readers may say, “Jonathan I think you’re exaggerating the number of problems in land sales.” I am a relatively new agent, only getting my license in 2008. But it seems like every land deal I have has some crazy wrinkle in it. I have had listings with 2 camp houses vandalized, a property with a registered sex offender next door, found marijuana planted, a survey that showed a barn on the wrong land that had to be taken down, title problems that killed a deal, a dead man found in a pond of one of my sellers that we had to disclose to the buyer, racist adjoining owners, and lots of other experiences that are funny now but kept me up at nights then. People who have been in the land business longer than I, have many more horror stories. Yesterday I sat in the living room of an owner that bought 100 acres that were distressed in 1999, and he spent the next 10 years in court fighting claims of adverse possession and lawsuits from surrounding owners. He had no title insurance and spent 3 times the price the surveyor quoted him initially to have the survey drawn. At the end of the 10 years he only owns 20 acres and has spent thousands of dollars on attorneys and surveys. It took such a toll on him personally and financially that it is visible how beaten down he is by the whole experience.

The point of this article is for consumers to select the agent who can best help you conduct your land transaction smoothly with your best interest in mind. Look for agents that in addition to being licensed have some professional experience or designations that will be of use to you in your deal. Agents with a long history of land sales or a background in forestry, geology, soil sciences, a long-term farmer, or are members of the Realtors Land Institute are all good things to look for. Check them out before enlisting their help. When you use an experienced land professional, you are increasing your odds of enjoying a smooth successful transaction. Let your land agent spend the sleepless nights; that’s what we get paid to do.

By: Jonathan Goode



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