Are you selling investment land? Investors do not want to buy a pig in a poke

Adequate preparation of land for sale allows for fast transaction and is often the key factor in the purchase decision process. But how to prepare the documentation? teamed up with JLL’s experts in order to create an extensive compendium.

Are the plot owners well prepared to sell their land?

− “I own an attractive plot and I want to sell it well− this is the sentence that is often the beginning… and the end of the owners’ approach to the process of selling investment land. A long period of waiting for a buyer follows, which is a proof of the inadequacy of this approach. Land owners often lack even basic expertise on the land they offer. Not being familiar with the local plans, they do not know what types of investments can be made in the land. They are often unaware of the possibility of connecting the property to technical infrastructure. They do not expect the legal situation of the plot to be complex.

Let us not forget − a well prepared plot means a well prepared owner!

What should I know about the land in order to properly prepare it for sale?

A thoroughly prepared investment memorandum is a formal confirmation of the actual status of the land. Preparing full documentation of the plot for sale significantly boosts its attractiveness in the eyes of potential buyers, as it allows for quick examination of the conformity of desired parameters with the actual conditions.

How to increase the attractiveness of the land?

There are few real estates that are perfect in terms of their preparation for sale. Even if the plot has some flaws, such as contamination or lack of access roads, its value does not have to be permanently decreased. Steps might be taken to remove these defects not only prior to the appearance of an investor, but also when the potential buyer is already there. From the buyer’s point of view, the potential of the land is often more important than its current state.

Because of the amount of required paperwork, the process of selling land is often lengthy.It provides additional time for adapting the property to meet the requirements of the investor or to mitigate its flaws.It might be conducted on the expense of the land owner or the potential buyer, but both parties have to agree on the distribution of the costs.Some investment projects require such a large purchase of land that municipal support or governmental aid is necessary for their completion.All these cases require the coordination of the process of obtaining the documents and permits, deciding on the responsibilities of the parties and cooperation with the authorities − explains Agata Zając, Land Transactions Coordinator in JLL.

What are the benefits of cooperating with a municipality?

A number of concessions increasing the attractiveness of the land for sale can be gained while cooperating with the local authorities.

Many municipalities pursue an active policy of attracting new investments, hoping to create new jobs and boost the economy of the region. Local authorities are particularly interested in supporting production investments.

The local governments are responsible for making and altering local plans, redevelopment of technical infrastructure networks and road investments. They are also willing to provide investors with incentives in the form of property tax exemptions.

Perhaps the plot for sale is a part of the land where a larger investment will be made. In such cases, the investor can be assisted by municipalities or provinces in reparcelling public or private land.

Discovering the potential of the land

A good investment memorandum should not only describe the plot, but also show its potential and say what has to be done in order to produce the desired results, e. g. the connection to necessary utilities.

Agata Zając points out that describing the current state of the property is not enough to allow for the assessment of investment potential. That is why the investment memorandum should be a comprehensive study of the condition of the plot, its problem areas and the ready-made solutions for their removal. This applies to situations where there is no technical infrastructure within the property. One should then apply for the attainment of appropriate conditions for connecting to the grid. Thus, the potential investor will be provided with clear information on the deadline for the installation of grid connection, its expected costs and the responsibilities of the parties.

What is extremely important for an investor is the security of the transaction, that is minimizing the risk related to the purchase of land and avoiding a situation whereby the land does not meet all of the criteria. Experience shows that when investors do not know enough about the plot and collecting information takes months, they turn their attention to other plots, whose technical and legal documentation is complete.

Providing the buyer with full information on the potential of the plot helps to convince him to purchase the land.

Cooperation and coordination are the key to success

Preparation of investment land for sale is not just gathering paperwork. It is, above all, taking action in order to recognize and take advantage of the full potential of the plot. Therefore, measures should be taken in order to increase the attractiveness of the land – for example, by mitigating its disadvantages. In order for the process to be effective, one has to work with many partners − local authorities, offices or the owners of adjacent land. Many years of experience and knowledge are needed to coordinate all these aspects. All of this should serve a single purpose − optimal preparation of the land for sale in order to improve the prospects of receiving an advantageous purchase offer.

Agata Zając

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