The client’s family had owned land at the edge of an urban area for several generations, but lived out-of-state and were burdened by the need to keep the land leased to a local farmer. The municipality routinely made demands on the family regarding weed control, utility easements, and other issues, and the family concluded they would be better off selling the land. While this was a rational business decision, emotions centered on the family’s long ownership.
Living almost a thousand miles away, they were not interested in taking a role in the development of the property. We looked at the property and observed that development probably would not generate a significant return on the time and cost of going through the zoning and engineering process leading to ultimate development. Considerations included the slow pace of development in the area, the relatively modest quality of nearby development, a difficult utility situation, soil problems, and limited access.
A local broker/developer dominated the market. He had previously signed a contract to purchase the property but then repeatedly came back to renegotiate the price downward until the family finally refused further negotiations with him. Other actions on his part raised questions about his trustworthiness. His behavior unfortunately led the family to distrust the broader brokerage community. Rutledge Company was asked to assist with selling the property.
Although Rutledge Company holds an Illinois real estate license, the location of the property suggested that a local broker should be retained to market the land. We identified several brokers that we felt would represent the family with integrity and competence and scheduled interviews with them in the office of the family’s attorney. We then participated with the client and their attorney in interviewing the brokers and assisted in the selection of one to market the land.
The chosen broker offered a listing agreement that unreasonably favored the broker, and we suggested several modifications to more fairly balance the agreement. The family’s attorney incorporated these recommendations in modifying the agreement, and it was signed.
Importantly, the family had agreed to pay a consulting fee to Rutledge Company rather than require the broker to share the sale commission. We respect the need for brokers to be paid fairly for their work. This eased negotiations with the broker.
We anticipated a slow summer and were not surprised when the ensuing months brought little action. As the family traveled, we regularly checked in with the broker for updates and relayed the status to the family. As the months ticked by, they became frustrated with the lack of buyer interest. But as the year drew to a close, a low offer for only part of the land appeared. This was not acceptable to the family, but we recommended going back to the prospect to try to improve the offer.
In a few days, working through the broker, we were able to convince the buyer to make an offer for the entire property at a significantly improved price.
Again working through the client’s attorney, we assisted in negotiating a sale contract that protected the selling family from material future liability. Because the buyer was under pressure to close quickly to comply with 1031 requirements and because the family openly shared information and documentation about the property, the sale was closed quickly and smoothly. The family had cash and did not need to worry about the property anymore.
Several factors led to the success of this assignment. The client was committed to selling at a fair price and was prepared to act responsively and intelligently. The broker performed with integrity. The family’s attorney acted efficiently and with the family’s objectives clearly in focus.
Rutledge Company LLC
License No. 481.000176
John K Rutledge, Managing Broker
License No. 471.004599