All too often, developers and builders think about tomorrow rather than the here and now when placing a valuation on land and current development targets. A piece of land holds different values to different people, but what a parcel is worth in current values is simply whatever the market will pay for it. It's only from the perspective of supply and demand that land can be purchased and sold with a minimal amount of risk and a maximum amount of gain. Today let's visit marketing and selling land that is fully entitled and confront some of the experiences builders have in entitling, buying and selling it.

Risky Business

The concept of entitling land in hopes of increasing its value from the purchase price and selling it for an entrepreneurial profit is among the riskier aspects of real estate development. Even with that fact, many see the development process as a very personal, very emotional one in terms of creation, personal investment and of course, leveraging professional relationships.

Regardless of how hard you try to separate emotions from investment, that property will have a piece of you.

For that reason, nine times out of 10 the property and the way in which you've managed to get it mapped-or zoned-isn't the problem: your expectations for your return on that investment in the current market conditions are.

How to Make the Market Work for You

Let's rewind a bit and consider some ways to avoid the above scenario where the property owner has hard-to-achieve expectations. Let's focus on how to make the process of marketing and selling your property a snap. How do we do that? Start from the beginning. When the large builders zig, I zag. My clients are builders that sell fewer than 2,500 units a year, so generally speaking, they have the ability to be nimble, minimize risk and hedge their portfolios in a variety of ways.

Have the Right Land at the Ready

The most common ways my clients hedge their portfolios is to always have land that many of the big (publicly traded) builders would buy on the spot: all cash, with a close inside of 30 days. The client may even own the land outright or carry a little debt on it. This may seem extreme, but it's possible. And every builder out there can do it with the majority of property they own and develop, if they so choose.

Three Guidelines for Entitled Land

They can do this because they are constantly asking themselves three things when they look at an acquisition:

1) What value does my company bring to a property?

2) How long will it take to get the property entitled?

3) What will other builders look for (in terms of entitlement) when the property reaches maturation?

The above may seem rudimentary, but it's extremely valuable for you to do this from the start with every single piece of land that you look at. Note of warning: If you can't assess using these guidelines, bring someone on to your team who can! It's extremely important to have someone involved in your acquisitions process who's watching the market and the direction it's headed.

What If I Don't Want to Sell Entitled Land?

Now, before you think I'm preaching doom and gloom, there are many ways to aggressively position and market your property regardless of its entitlements and get a handsome rate of return on your investment. All it takes is removing your developer's hard hat and putting on your very best door-to-door salesman's walking shoes.

Take a Competitive Review

First, know the competition's parcels. What marketable features do you have and which ones do they have? In a situation where you've got a great piece of land that's turnkey-or has great value-added entitlements-it is crucial to look into seeing what it's competing against that is either keeping your property from selling or getting offers in the range you're looking for.

Property Litmus Test

Here's a quick test you can take to focus your sales efforts:

- Who is my ideal OR most likely buyer?

- What's the best way to reach them?

- What properties in this area would they also be interested in?

- Why would they purchase my competitor's over mine?

- Why would they purchase mine over the competitor's?

Once you've done that, you're ready to talk.

Creating Urgency

From here you need to establish buyer motivation to move on your property today. You can't create depth of market, but you can create a sense of urgency in a situation where you know there are at least some interested parties. I'd recommend applying one or some of these techniques to your property when it applies:

- Create a date certain for sale, with the addendum that no reasonable offer is refused.

- Send letters to adjacent property owners letting them know your property is on the market.

- Provide owner financing or market the possibility to joint venture the project with a developer that has a suitable track record.

Finally, in a marketplace that is flush with fully entitled land for sale, the biggest opportunity might be right in your backyard.

Dealing with Local Government

Local municipalities often grant zoning permits based on the set goals of expanding their property tax base. With developers selling off and walking from options at a record pace, these local governments are in a position where they need to make up for lost or expected revenue. The opportunities within many local governments abound, so here are a few ideas to look at:

- Expanding your current zoning to include aspects that are more profitable or bring the value of the property up to a point that you can raise money against it.

- Joint venture with local housing agencies for entry-level and affordable housing. Remember, even if it cuts into your margins, you're endearing yourself to local government, keeping your subs and employees working good hours, and most of all-not letting all the hard work go to waste.

- Look into the numerous tax credit scenarios that exist. The quickest and most profitable avenue might be to not develop it. So with all that said, what are you waiting for?