Failed Attempts to Sell Land for 3 Years

Chicago, Illinois
Land & New Construction
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Failed Attempts to Sell Land for 3 Years

Bob S.
Member since 2018 · 35 posts · 12 votes

hello! haven't posted in a long time so please be gentle...

my wife and i purchased a piece of land 3 years ago to build on (for ourselves). instead of building, and due to the madness of "covid" times, we ended up buying a house instead.

we've been attempting to sell our land for 3 years now and have had 5 contractual offers. 2 of the buyers ducked out during attorney review for valid reasons (the land is near a landfill that's defunct), 2 because "they didn't know building was so expensive" (come on, do your research), and 1 recent offer backed out three days before closing!

i'm wondering if we're "doing something wrong" here. we have a strong RE agent and attorney team. they do everything they can; maximum exposure, covering our a**ses, etc... and deals keep falling through.

it's a very nice (subjective, i know) piece of land (1 acre) in residential chicagoland.

does anybody have any tips to get it sold? we have until spring of 2025 until our balloon loan either has to be refinanced or paid off (we got this loan because we intended to build, of course) and now i feel like it's a ticking time bomb.

we conducted "clean and satisfactory" (no issues whatsoever to build) soil and foundation tests and provided those to every buyer. it seemed (not quite sure here) like they backed out once they reviewed the tests - yet there is nothing negative in them. we will not be providing these tests moving forward (as we had to do them ourselves and feel that each buyer should do their due diligence moving forward!) and modified our listing to remove these offerings.

thoughts anybody? help! TIA :)

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
2y

Partner with a builder and split the final sales price based on value difference before and after the building

Lower the price enough to not lose the property when the balloon comes due?

Sell your current home and build on the land?

Build a new primary with the preferred financing and turn your old property in to a rental?

Put it on an auction site starting at your loan balance?

Option 1&2 are obviously easiest/quickest. Everything else is an attempt to lose less money. 

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    2y

    @Bob S. Well, it’s all about local demand/market and price. I Would continue to include any tests you’ve done, since you’ve said they were satisfactory…it just adds a level of assurance to a buyer. On lots where the owner has had tests done, I just included in the agent link in mls so everyone has them upfront.

    2Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y

    Land is always a pain in the *** to sell. But even with that, I can typically get land sold in under a year. Bad luck? Possibly. But Id say the agent needs to do a better job of screening the buyers. 

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    Partner with a builder and split the final sales price based on value difference before and after the building

    Lower the price enough to not lose the property when the balloon comes due?

    Sell your current home and build on the land?

    Build a new primary with the preferred financing and turn your old property in to a rental?

    Put it on an auction site starting at your loan balance?

    Option 1&2 are obviously easiest/quickest. Everything else is an attempt to lose less money. 

    5Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Bob Sislow

    Are there development fees to build on the property? For example in and around DC some jurisdictions charge insane fees for new builds ($40k school impact fee) and have very challenging code requirements (sprinkler systems in homes..)

    Anything crazy like that?

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  • Bob S.
    OP
    Member since 2018 · 35 posts · 12 votes
    2y

    @Chris Seveney - no development fees or special assessments.

    0Reply
  • Bob S.
    OP
    Member since 2018 · 35 posts · 12 votes
    2y

    @Russell Brazil - what can he do to screen the buyers better? Buyers have been presenting cash offers with proof of assets etc.

    What else would you screen to prevent this from happening?

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @Bob S.:

    @Russell Brazil - what can he do to screen the buyers better? Buyers have been presenting cash offers with proof of assets etc.

    What else would you screen to prevent this from happening?


     Something seems off then and maybe what is in that report you may think is not a big deal but everyone else does. What was in the report that had people shying away?

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  • Bob S.
    OP
    Member since 2018 · 35 posts · 12 votes
    2y
    Quote from @Chris Seveney:
    Quote from @Bob S.:

    @Russell Brazil - what can he do to screen the buyers better? Buyers have been presenting cash offers with proof of assets etc.

    What else would you screen to prevent this from happening?


     Something seems off then and maybe what is in that report you may think is not a big deal but everyone else does. What was in the report that had people shying away?


     no idea, that's what puzzles me. either way, i'm inclined to keep the posting as-is and not offer the tests.

    0Reply
  • Bob S.
    OP
    Member since 2018 · 35 posts · 12 votes
    2y
    Quote from @Bill B.:

    Partner with a builder and split the final sales price based on value difference before and after the building

    Lower the price enough to not lose the property when the balloon comes due?

    Sell your current home and build on the land?

    Build a new primary with the preferred financing and turn your old property in to a rental?

    Put it on an auction site starting at your loan balance?

    Option 1&2 are obviously easiest/quickest. Everything else is an attempt to lose less money. 


     Bill - can you explain this?

    Lower the price enough to not lose the property when the balloon comes due?

    I'm not sure what this means. Do you just mean lower the price over and over again until it sells before the "balloon bursts?"

    Thanks for the other ideas. We pondered the builder idea.

    Auction may be a last-ditch.

    Our current primary home is in even a better location and a better house than we could've afforded to have built at the time. We don't want to move back to that area.

    Thanks again.

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    Yes, if you have zero desire to build or live there and can’t find a builder to partner with. I’d rather break even or even lose a little today than have that lender ask for a big pile of money in 15-16 months when the balloon comes due. (Plus the interest and heartache you’ll save.)

    You could wait a few months until snow starts to melt, school’s about to let out and builders are getting ready to start going wild. But don’t wait until they’ve already found other deals and made other plans. 

    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @Bob S.:
    Quote from @Chris Seveney:
    Quote from @Bob S.:

    @Russell Brazil - what can he do to screen the buyers better? Buyers have been presenting cash offers with proof of assets etc.

    What else would you screen to prevent this from happening?


     Something seems off then and maybe what is in that report you may think is not a big deal but everyone else does. What was in the report that had people shying away?


     no idea, that's what puzzles me. either way, i'm inclined to keep the posting as-is and not offer the tests.


     have you called the company that did the report and asked what are concerns that someone may have? 

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  • Bob S.
    OP
    Member since 2018 · 35 posts · 12 votes
    2y
    Quote from @Bill B.:

    Yes, if you have zero desire to build or live there and can’t find a builder to partner with. I’d rather break even or even lose a little today than have that lender ask for a big pile of money in 15-16 months when the balloon comes due. (Plus the interest and heartache you’ll save.)

    You could wait a few months until snow starts to melt, school’s about to let out and builders are getting ready to start going wild. But don’t wait until they’ve already found other deals and made other plans. 

    good idea - and agreed; our most important goal is to get rid of the monthly payment!

    0Reply
  • Bob S.
    OP
    Member since 2018 · 35 posts · 12 votes
    2y

     have you called the company that did the report and asked what are concerns that someone may have? 

    good idea - we will do so and see if anything comes up that we didn't discuss during our build.

    back in the day when the tests were done, nothing was apparent from the engineers or tests themselves that indicated we couldn't build. i'm not sure what anybody else would find (if anything).

    we are suspecting that most buyers thus far may think "wow, this sh*t just got real" when they see the reports and have a minor panic attack and back out. i'm trying see how i'd feel in their shoes. it's surprising how many folks do not research the ins and outs of the home building process before making an offer...

    0Reply
  • Ed O.
    Investor · Statewide, MO · Member since 2011 · 815 posts · 425 votes
    2y

    There's no nice way of saying this. 3 years on the market - 5 contractual offers - are you indicating you've been under contract 5 times? 

    You don't have a strong agent based on what your indicating here. Time to change listing agents to one that will do their job and not take contracts from iffy buyers ready to run away. 

    0Reply
  • Mike Smith
    Boise, ID · Member since 2018 · 203 posts · 188 votes
    2y

    Land is much more difficult to sell. Make sure it's listed in the MLS and have your agent (or yourself) contact all the small volume custom builders in the area. Large builders don't want to invest much time in a single site.

    My opinion, if it hasn't sold in three years, it's not priced competatively with the open market. If it's listed in the MLS enough people have seen it and decided not to buy for some reason. That reason is most likely price.

    I would recommend linking all the reports you have in the MLS and shortening the due diligence period if falling out contracts have hurt your marketing effort.

    1Reply
  • Steve HodgdonPro Member
    Investor · Novato, CA · Member since 2015 · 433 posts · 321 votes
    2y

    I like the idea of partnering with an EXPERIENCED licensed builder. I've bought and sold 120 vacant properties during Covid and currently continue. We pivoted from houses (DUH) out of fear that the world was ending. Wrong again!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Chris Seveney:
    Quote from @Bob S.:
    Quote from @Chris Seveney:
    Quote from @Bob S.:

    @Russell Brazil - what can he do to screen the buyers better? Buyers have been presenting cash offers with proof of assets etc.

    What else would you screen to prevent this from happening?


     Something seems off then and maybe what is in that report you may think is not a big deal but everyone else does. What was in the report that had people shying away?


     no idea, that's what puzzles me. either way, i'm inclined to keep the posting as-is and not offer the tests.


     have you called the company that did the report and asked what are concerns that someone may have? 


    Chris I think your on the right track I bet there is something in those reports that is causing this issue .. It may not be a big deal to the current owner but it seems that it is to another buyer. And of course price usually is the issue if its priced right things sell  priced to high they sit at least for single family parcel.  then you have market conditions were in much of the US you can buy existing homes for less than you can build new ones for and I know this is true in many parts of Chicago land.
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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    2y

    @Bob S. you probably don't want to hear this, but this is most likely a pricing issue. Me and my team sell a lot of houses in the Chicago area, particularly in the western suburbs. Housing is relatively expensive, but not to the point where it makes sense for most folks to build unless you are in a primo neighborhood. We see a lot of building in areas like Western Springs or Hinsdale, but not so much in towns that are the next rung down. 

    I would think long and hard about the holding costs here and also about the mental fatigue. Maybe a price reduction gets it done. 

    1Reply
  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    2y

    Landfills make me think: odor, smoke, noise, bugs, and water supply contamination.

    Construction on top of landfill: additional costs, abnormal settling, off gassing, heavy metals, and surface leaching if a capping fails. You have no idea what is under there or how they treated the top cap.

    Who would want to have a garden on top of lead and old batteries?

    No report guarantees safety. This is why all three backed out. Cut the price in half and take a big loss. Talk to your CPA about how to structure this as a failed investment or something to offset your w-2 income. I would not partner with someone to build, too much liability if the house sinks or gas blows...

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Caroline Gerardo:

    Landfills make me think: odor, smoke, noise, bugs, and water supply contamination.

    Construction on top of landfill: additional costs, abnormal settling, off gassing, heavy metals, and surface leaching if a capping fails. You have no idea what is under there or how they treated the top cap.

    Who would want to have a garden on top of lead and old batteries?

    No report guarantees safety. This is why all three backed out. Cut the price in half and take a big loss. Talk to your CPA about how to structure this as a failed investment or something to offset your w-2 income. I would not partner with someone to build, too much liability if the house sinks or gas blows...


    I dont think he said the land fill is under his parcel. its just close by. Fairly certain one could not get a building permit for SFR if there was a landfill below it. But agreed even close to it is going to have some major push back from buyers..
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  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    2y

    @Jay Hinrichs Lots of publicly traded builders put homes right on landfills. (worked for one) eeek.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Caroline Gerardo:

    @Jay Hinrichs Lots of publicly traded builders put homes right on landfills. (worked for one) eeek.


    Geesh  OK then.. not me 
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  • Jack Schwartz
    Member since 2023 · 111 posts · 35 votes
    2y
    Quote from @Bill B.:

    Partner with a builder and split the final sales price based on value difference before and after the building

    Lower the price enough to not lose the property when the balloon comes due?

    Sell your current home and build on the land?

    Build a new primary with the preferred financing and turn your old property in to a rental?

    Put it on an auction site starting at your loan balance?

    Option 1&2 are obviously easiest/quickest. Everything else is an attempt to lose less money. 

    Yes! Partner with a builder and split the profits,

    0Reply
  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    2y

    There must be comparably priced buildable lots available in the general area that are not right next to a landfill.

    Or more expensive lots that are affordable and buildable that are not right next to a landfill.

    Landfills and those enormous overhead electrical wire distribution towers both carry risks in many people's minds.

    Selling a three year old car full of rust holes is going to be a lot harder than a car from Florida with no rust even if the Florida car costs more.

    It's not something someone can fix-this worry they would have about soil contamination affecting themselves and their family and their pets.

    Is it zoned for things such as a filling station, or a strip Mall, or medical dental, or a church. Something besides primary living space for human beings?

    But even in those instances there is still this black cloud that causes potential worry in the buyer's mind. Because you said the reports are clear-so in reality-the risk seems contained at this time. So it must be worry that is jumping up and causing cold feet.

    Just my 2 cents.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @Jay Hinrichs:
    Quote from @Caroline Gerardo:

    Landfills make me think: odor, smoke, noise, bugs, and water supply contamination.

    Construction on top of landfill: additional costs, abnormal settling, off gassing, heavy metals, and surface leaching if a capping fails. You have no idea what is under there or how they treated the top cap.

    Who would want to have a garden on top of lead and old batteries?

    No report guarantees safety. This is why all three backed out. Cut the price in half and take a big loss. Talk to your CPA about how to structure this as a failed investment or something to offset your w-2 income. I would not partner with someone to build, too much liability if the house sinks or gas blows...


    I dont think he said the land fill is under his parcel. its just close by. Fairly certain one could not get a building permit for SFR if there was a landfill below it. But agreed even close to it is going to have some major push back from buyers..

     I worked for a developer redeveloping a super fund site with housing.. Yep... Thankfully it never got developed when I was working there

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