Monday December 18th 2017

Join Us On

join the IRREIA linked in group

The Case for Land Intelligence

Gore Bolton

The problem and need

One day, a client of ours called and asked us to help with his new deal.  Like most calls of this sort, it started with excitement and much anticipation.  We quickly scheduled a meeting and I told him to “bring all his stuff” and I would have my staff “scour the records” for information about the property he had just put under contract.

We met within several days and had a good understanding of what the issues are with the property, and the things we need to investigate as part of his due diligence.  He calls me a week later, and now he has 83 days left in his feasibility period.

At this point, our client had a decision to make; this deal was not huge by real estate development standards. It was a modest, yet very profitable deal for a local market.  The current owner of the property had gotten preliminary approval from the county to develop 60 lots on the property.  In that jurisdiction, like most, there are three basic steps of approvals, the preliminary plan, the construction and engineering plans, and the final record plats.  That process on average took almost 18 months, before you could even put a shovel in the ground.  So, here is the problem.  How do you close on a deal with all of the best information, so that you make an intelligent choice and avoid a foolish decision?

We proposed to this client that we try something new that we had been working on for the past several years to prototype a faster answer.  We told him we thought it would bring better information faster at a lower cost.  He agreed.

The solution

LandFAXTM, the most comprehensive property feasibility report available nationwide.  At this point in the story.  It should be noted that enough time has passed that we could have done a LandFAXTM by now and avoided all of the time wasted above.

We told our client that we had developed patent pending technology that sorts and aligns all of the geographic information for real estate, so that we can easily overlay information and sort and organize the data.  Then with our proprietary analytic software, we could run development analytics to create feasibility reports.

He was impressed, and it got better.

We also told him that this could all be done in less than 24 hours on average, and that the cost to him would be about 80% less than what he traditionally paid for these services from our firm.  He shook his head in disbelief.  So now, we were not only going to solve his problem, but we were going to do it faster, cheaper and with more precision and accuracy, thereby lowering his risk?  He forgot he was in a civil engineer’s office for a moment.  We were happy about that.

So, we agreed to meet 26 hours later, that way he would have a couple of hours to read the report before we met.

The meeting

Our client was so pleased to be able to understand more and more about this deal, faster and faster, he actually said, “now what?”, and our answer, we now strategize a way to get to the closing table on our terms.

There were problems with the property that the LandFAXTM report uncovered.  First, the wetlands shown on the “approved preliminary plan” were not taken from the most recent data available on the internet, second, the zoning category used on the site for the approval actually allowed for cluster provisions, by right, and last but not least, the names on the approved plans for the owner did not match who signed his real estate contract.

WOW, our client is now 80 days away from the end of his feasibility period, and his list of problems that need to be solved are growing.

Normally at this stage of the game, the contract purchaser has a decision to stop or to do the deal.  In this case, our client decided to meet with the contract seller and rework the deal.

The reworked deal

We supported our client in his revised deal.  First, he was able to renegotiate the timeframe for the feasibility period to address the wetland issue and revise the preliminary plan.  Second, he was able to negotiate a reduced price due to the work we did.  As a matter of fact, the seller and his attorney appreciated the fact that our client shared the LandFAXTM report and they felt our client was up front, honest and dealt with problems quickly, and that gave them the faith that settlement would actually happen.  And, the seller’s attorney was able to cleanse the title of past ownership.  The sellers were actually the heirs of an estate, and the deeds of transfer when the grantor died had been held in escrow, and they were all amazed that neither the government nor their civil engineer ever noticed that the names didn’t match the tax records.  That was an honest oversight, but there is a reason you always make sure the person signing a contract has the legal authority to do so.

The revised plan

With a new contract that allowed for everyone’s needs, we filed a revised plan that value engineered the project to the cluster provision.  Our client was able to ensure that the lot sizes met the builder’s dimensional requirements.  We were also able to reconfigure the lots to add five lots and shorten the roads in order to lower the construction cost by $400,000.  So we minimized risk, added revenue and lowered expenses.  Not bad for a few thousand bucks…

That is the power of the LandFAXTM report!  Look at projects the right way, quickly and efficiently.  Get more deals done and screen out the bad ones early.

Contact us today! You can be a client too, and you can do it all over the internet, no travel required !