So, you’re thinking about buying land and building a home? The first thing you should be thinking of before looking at land is “How do I choose a great real estate broker?”
Real estate agents commonly help people buy and sell homes. But, the expertise for buying and selling a home is very different from the knowledge and experience required to buy and sell land. A home is fully constructed and permitted. Critical area reports have been made and satisfied. The land has been excavated, trees cleared and all of the associated land development and building permits have been obtained, the home has been fully constructed and the occupancy permit finalized. It takes a limited amount of technical skill to sell a completed home. The buyer picks the home, conduct a home inspection is conducted, the loan is obtained and then you close the sale. Done deal. Next!
Advising a home buyer on land purchases is a completely different animal. Sure, any broker can “write the deal” but in reality, very few truly know what they are doing. As long as everything goes well, the purchase goes through. But, when things go awry is when many brokers get into trouble. There’s an old saying, ‟If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.” In real estate, this translates to the commission you pay will likely be vastly outweighed by the high costs of the mistakes made by an amateur. In addition to being a drain on your wallet, some mistakes may even require legal counsel to fix!
In our experience, we’ve found there are four categories of real estate brokers, based upon their levels of competence and self-awareness of their level of competence: Unconsciously Incompetent, Consciously Incompetent, Consciously Competent and Unconsciously Competent.
Level 1: Unconsciously Incompetent
Many brokers who sell single-family residential homes are simply unaware of what they don’t know. These brokers are Unconsciously Incompetent. Sure, their real estate license allows them to sell both homes and land.
If you find your self with an agent who seems to “know it all” and is willing to do anything for a paycheck, caveat emptor — or in other-words, buyer beware!
Level 2: Consciously Incompetent
Land is a very unique type of property. Land is heavily regulated. There are zoning, environmental, state and federal regulations that come into play. Depending on location, the Fish and Wildlife Service and/or the Army Corps of Engineers may also be required to give guidance.
Zoning and current use is different and provides additional considerations. Setbacks may be an issue. The soils may be unsuitable for the type of structure you want to build. Are there utilities available and is it feasible to bring them to the site? A broker who understands that they are in unfamiliar territory will likely refer you to a professional with the knowledge and skills to expertly handle the job. This broker is what we call Consciously Incompetent. They know they are in over their head and will likely pass on the job. This is the right thing for them to do, unless they have a seasoned mentor.
Level 3: Consciously Competent
The third type of broker has experience in land transactions and also understands that no one knows everything. It takes skillful research and diligent inquiries with the appropriate parties at each jurisdiction. An experienced broker may not know it all but will know where to look and who to ask to get the correct answers. This broker is considered Consciously Competent.
Level 4: Unconsciously Competent
The fourth category of broker is Unconsciously Competent. This broker has a high level of skill and experience in land transactions. They have listed, sold and consulted on many different types of land transactions. They very likely have also dabbled in building. They have made mistakes and have learned from those experiences.
The Unconsciously Competent brokers know the pitfalls of land transactions and how to mitigate risk. They have a team of engineers, geotechnical scientists, biologists, land use attorneys and home builders at their disposal to ask questions and get answers.
In your quest to choose a real estate agent, know that a Level 3 (Consciously Competent) broker is good and will probably do a fine job for you. But if you want the best, a Level 4 broker (Unconsciously Competent) is worth their weight in gold.