Land acquisition or the buying of land is a complex real estate process. Before a homebuilder or developer purchases land, the company or buyer must be clear on its intended use. How land is zoned for use impacts whether the space can be used to build a residential community, a commercial retail center, high-rise office or mixed-use development. Before a builder or developer makes a land acquisition, there are multiple factors they must consider.
The land acquisition journey has a myriad of steps. Fortunately, using a CRM solution as a tool for navigating the process makes it a lot easier.
Before discussing how a CRM solution can help improve efficiencies, let’s examine the steps in the land acquisition process:
- Establishing its use: As previously mentioned, the buyer needs to determine the land’s use and intended purpose before the search begins. Having a clearly defined objective is the easiest step in the journey.
- Budget: Land acquisition is a significant investment and the down payment for financing is typically higher. It can range anywhere from 20-50 percent of the property’s sale price. For most homebuilders, it’s not their first rodeo so they know that talking with their construction team and discussing conversion costs and estimating what those costs could be are all factors to include in the actual budget.
- Searching for land: When hunting for the right piece of land, it’s smart to often enlist the help of a real estate professional or land broker, especially if this is your first time navigating the process. Conducting a search for online listings is also a good place to start. Whichever route you take, it is important to consider zoning issues, to understand the local landscape, and to determine that the space will work for its intended use.
- Due diligence: As a homebuilder or developer, the process of due diligence is generally very familiar, and if you enlist the help of a commercial broker, they can typically answer many of your questions and provide the information you need. To cover the bases here’s a list of the following areas that should be given serious consideration:
- Sewerage – will you have access to the city’s sewerage system, or are you required to install a septic tank?
- Water – does the property operate off the city’s water supply, or will a well need to be placed on the land? This is important as this consideration comes into play during the loan qualification process.
- Access – consider road access to the property and ask how easements might affect how the land is used. If access is restricted, are you willing to build a road? You need to be clear on how your construction team will get access.
- Utilities – will the local utility providers work with you to bring electricity, telephone service, and internet to your property? If so, what’s the fee and will that impact the budget?
- Environmental constraints – wetlands, potential toxic chemicals left from previous landowner’s usage, protected wildlife etc., all these factors require serious consideration, and you must also pay attention to zoning issues too. Make sure you are aware of the strict guidelines that may pertain to the land as these can greatly limit what you can do.
- Consult with an independent surveyor – whether or not the sellers include a survey of the property, it’s best to consult with your own independent surveyor to assess things like soil quality, topography and where you should build to avoid any pitfalls. This is paramount to you and your team when beginning construction.
- Making an offer – the rule of thumb is to start low and negotiate as you go when making an offer. Typically, land appreciates when it’s developed and most “raw land” properties can go for 85 percent of the original asking price, depending on the market and location.
- Finance – if you’re not in a position to purchase the land outright, you may consider enlisting investment partners or a traditional lender to finance the deal. If you are securing a loan, you may face a higher interest rate, and it’s not unusual to make a down payment as high as 20-50 percent. Your lender may also demand a detailed timeline for development. Whatever option you choose, it’s best to discuss all avenues of finance with a real estate attorney.
- Closing the land deal – once you’ve found a viable parcel of land and the landowner accepts your offer, everything gets finalized at the closing. During this phase, land contracts are signed, the deeds are transferred, and you receive a closing statement.
The challenge for home builders and developers – beyond finding and securing parcels for future communities – is retaining the key contacts and the history of a land purchase. For companies with in-house land acquisition teams, it is invaluable to retain the contact information of brokers and land sellers, as well as the details and phases of all the companies’ land acquisitions.
Larger home builders and developers that are doing multiple land deals within a year want to foster relationships with landowners and have the ability to track deals through each stage.
The Advantages of a CRM Land Acquisition Solution
ApostleTech offers specific expertise in CRM Solutions for companies in the homebuilding and construction industry. This experience prompted ApostleTech to identify and address the unique challenges companies face to retain contacts and land acquisition history. We recognize the importance of nurturing relationships, growing and retaining contacts to foster business growth efficiently and effectively. For companies with an in-house team purchasing land, capturing, and managing that data is invaluable.
8 Reasons Homebuilder Companies need a CRM for Land Acquisition processes
To better understand why, here are eight reasons a homebuilder and/or developer can benefit from an integrated CRM tool designed specifically for the land acquisition process:
- Work from a single workspace to track the property acquisition lifecycle, offering process, and related activities
- A 360-degree view of your contacts
- Generate reports and access dashboards to help team members focus their efforts more efficiently
- Allow seamless communications within the land acquisition tool
- Utilize strategic acquisition planning
- Keep tabs on your pipeline and stay on track with valuable insights
- Access fully automated time log records to allow the management team to review and analyze the land acquisition cycle and time the team spends nurturing opportunities
- Retain the history and key contacts within the company
ApostleTech has spent years developing a well-designed CRM specific to the homebuilding and construction sector. We’re constantly looking for ways to better manage the overall operations and customer journey, and data in real time. We’ve worked with many leading companies in the industry to help them build better customer and partner relationships. To request a demo and learn more about our solutions, contact us here.