When it comes to selling land in West Texas, one of the most important things we are dealing with right now is managing seller expectations on time and price. As data centers, wind farms, and solar farms are being built around the area, many landowners are hoping to hit the lottery and sell for a price they never dreamed of getting. But most property owners will likely not be in the right area for those uses.
What About Data Centers?
Data centers are creating some incredible opportunities for landowners in our area, and we have been fortunate to work on some of those transactions. But one thing we have learned is that just because a data center is coming to your county, or even buying land nearby, doesn’t mean your property suddenly has the same value.
A $50 million land sale down the road doesn’t necessarily make your place worth $50 million, and sometimes it doesn’t change its value at all.
These buyers have very specific requirements. Access to large amounts of power is obviously important, but so are transmission infrastructure, fiber, water, access, location, and a number of other factors specific to each project. Sometimes a property checks those boxes and creates an opportunity far beyond traditional land value. Sometimes the property across the road doesn’t.
The key is understanding the difference before you set your expectations or make a decision about selling.
How Do We Know How to Price?
At Ekdahl Real Estate, we have developed tools and methods to assess your property in the current market and help you determine the right way to enter it. It is important to understand that it is best for both you and us to achieve the highest possible price in the shortest time.
What Happens When You Price Your Property Too High?
During the COVID-19 pandemic, buyers got used to paying the asking price or very close to it. Now, when buyers see a property that looks high, they just keep scrolling. We will know definitively the price is too high if we have lots of views and showings with no offers. That is the market speaking to us, and if we don’t listen, your property will continue to sit and become market-weary.
How Is the Market Right Now?
The Texas real estate market is slower than we would like it to be due to a lot of issues, including higher interest rates, food prices and misunderstood market signals. People are buying and selling, while other properties sit on the market for months. The data and energy sectors are definitely infusing capital into the market, but the big caveat is that the large landowners who are selling to the data and energy sectors are, by nature, very frugal. These new 1031 exchange buyers are looking for a deal like their granddad got 50 years ago and will not chase overpriced deals. The market is softer than we would like, but it is still moving.
What Is My Best Path Forward When Selling Land in West Texas?
If you are thinking about selling, hire the right agent, not the one who tells you what you want to hear. Right now, the market is very sensitive to pricing, so make sure you start out on the right foot with an agent who is confident in their understanding of the market. If you decide to have the property appraised, make sure your appraiser understands the market as well. Every county is different, and almost every county has four quadrants that are different as well.
Also, your friend, aunt, or brother-in-law who sells a house every two years or so is not the right person to market your property. Find a broker with actual experience who understands the land and knows how to market it. An MLS listing shouldn’t be enough effort for your single most valuable asset.
Summing It Up
Texas has a lot going on right now! We have trillion-dollar companies moving here to do business with us. Some people will hit the lottery and have the opportunity to sell at record highs. The rest of us have to abide by the market’s rules, and that’s OK, because the market is still moving. If you’re getting ready to sell, or if you’ve been approached about selling, call your local used ranch dealer and get sound advice before doing anything.
