Sell the lots yourself or list them, when the whole margin is the spread

Question

Third split I've worked on and I still handle the sales the same way, which is to say I list them with a local agent and pay the commission out of each closing. On a nine lot project last year that was somewhere north of thirty grand in total, on a margin that started at about $180k before carry.

So I've been running the other version. I'm the owner, I can sell my own property in my state without a license, my signs go up on the road, buyers call me. The lots are simple. There's no house to walk through, no inspection theater, just acreage with a corner pin and a septic approval letter in a folder.

What I keep coming back against is that the agent brought me four of the nine buyers directly, and two of those were relocation people who'd never have found a hand-painted sign on a county road. The MLS is a real distribution channel and I don't have a substitute for it. There are flat-fee MLS entry services, but then I'm still paying the buyer's side and doing the paperwork myself.

The counterargument is that rural lot buyers are mostly local, they drive the roads, and thirty grand of commission is a lot of money to spend on people who were going to find the property anyway.

If you've sold lots both ways I want to know which one actually moved them faster, not just which one cost less.

nataliehsu · Answer

The number that matters here isn't the thirty grand, it's the carry over the extra months. Keystone, if the agent moved nine lots in eight months and doing it yourself takes fourteen, you paid the difference in taxes, interest, and mowing, and you also had capital tied up that couldn't do the next deal. Six extra months of carry on a project that size gets close to what you spent on commission, and you did more work for it.

I've been poking around at where I actually fit in this business and lot sales keep coming up as the part people underestimate. A finished lot with a septic letter and a recorded plat sells itself to a buyer who already wants that parcel. Finding the buyer who doesn't know the parcel exists is the whole job, and four out of nine coming through the agent is a real answer to that question.

The flat-fee route seems like the honest middle to me, though I've never run it. You get the syndication out to the big portals, you still owe the buyer's agent whatever your market expects, and you eat the contract handling yourself. What that saves is maybe a third of your bill. Whether that's worth it depends on how much you enjoy answering phone calls about whether the well has been drilled.

Sell the lots yourself or list them, when the whole margin is the spread

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