Selling land, contract questions?

I’ve owned a piece of land for several years, and decided to sell it to pay off my debts right now… I needed to sell it really fast, but I’m really inexperienced with things like this. Well I looked up an RE agent in the yellow pages, and placed the land up for sale. An aquaintance of mine found out I was selling it, and wants to buy it, but says he wants to buy it if I were to sell it "by owner". He told me to look in my cotract with my agent to see how long the contract is for, and said that contracts are usually for 3 months or so. Well, I looked and the contract is for 1 year, plus an extension period of 180 days. So a total of 1.5 years. I looked at his rate, and its 8%! My friend said that that is way too high. Well, I need to sell the land really fast, because I need to pay off my debts that I’m behind on, and so far, my agent has not found any buyers (its been on market for over 1 month, and we priced it really low to sell it fast). Continued…
My questions are these:
1. Why would my friend want to buy "by owner" only? What are the advantages of that to him?
2. Is 8% a really high rate?
3. Is a 1.5 year contract normal, or is my agent doing something weird?

And most importantly, what are my options? If I were to sell the land by owner, and then later pay the agent what he is due, would there be any legal issues involved?

Thanks everyone!

3 Responses to “Selling land, contract questions?”

  1. Dawni Do Right Says:

    1). That is a long listing period. 3 – 6 months would be normal. I’ve never heard or rarely seen an automatic extension on a listing agreement. A purchase & sale contract yes, but not a listing agreement.

    You can give notice you wish to cancel it. The agent probably does not have than much invested this soon in the game.

    2). 8% is not high. Commission is negotiable. 10% is standard for vacant land in my area.

    3). I would also be leery of your friend only wanting to buy FSBO. He’s going to try & slip something by you & tell you it’s standard or customary.

    If you are priced fairly & low to sell fast, it’s in your "friend’s" best interest to use the service of an agent to assist him & implement feasibility contingencies.

    If there is timber on this land and you are willing to carry the contract, you will want a timber restriction clause that prevents anyone from harvesting timber until the contract is paid in full. (this may be his reason for insisting on buying FSBO only, or there may be some other factor that he’s looking at) (development potential?)

    I agree with the answer before mine. Tell your freind there are several interested parties and they are doing their feasibility studies in the next 2 weeks. See if that motivates him into making you an offer.

    If you do get a release from your listing, you should still have an attorney look over any offer. I just get a creepy feeling this friend is trying to shaft you or take advantage of something you are not aware of.

  2. Farmer John Says:

    If your friend wants to buy it, this is what you should do:

    Tear up your contract with your RE Agent. You have to get out of it to get him out of the loop. There should not be three people in the loop, only two.

    You’re friend just doesn’t want to pay a RE Agent for providing him no service. It’s like the agent getting something for nothing.

    But you HAVE to get out of the contract somehow.

    I don’t know if your agent is doing anything weird, but I think they are all weird. They’re just salesmen.

  3. Yadi Says:

    I thinks it’s wierd that your friend only wants to buy "by owner" when it’s you that is paying the commission. The only big reason I can think of is that when it boils down, He’s going to be paying that commission as well since it’s included in the price or maybe he’s not such a friend and thinks he might get a better deal with you not being represented. It’s great that you got a Realtor to stand up for you but if he/she a reasonable agent I think it’d be a good idea for you to talk with them. Tell them you have a possible client that might go for buying your property and because you’ll be eliminating the need for your agent to pay a buyers agent (another agent who brings in a buyer) which is usually half of the commission (in your case 4% )and he won’t have to spend anymore money on advertising, if he would consider lowering his commission. Make sure to have any changes on paper and have the listing agreement amended. I would also make sure your friend is a qualified buyer before going through all the trouble. An 8% commission is actually pretty general for land.