Carson Cronk is a land and investment specialist with Legend Partners in the Salt Lake City office. He specializes in the acquisition, disposition, and advisement of land transactions throughout Utah.
We’d been consistently stopping by a property over the last few months hoping to talk to a quiet, cold, farmer with the last large piece of developable land in a growing city just north of Salt Lake. He is quite challenging to find because he isn’t always on site and he refuses to give me his phone number… He has never really wanted to sell and has been planning to keep that land forever, however, it was May of 2022 so debt was cheap and buyers were constantly paying premiums for developable land, my Partner, John Taylor and I had an offer in hand at a number that we knew the farmer would agree to sell at and we was showing up at a time we knew he would be on site. The offer we had was a couple of million dollars more than most he had seen prior. However, he had one other offer in hand that was very similar in price but we knew my offer would be preferable because it had a year to close. This is normally not a preferable time frame since most sellers want a quick close but during my frequent visits, We had taken the time to ask him about his needs and find out how he would want the deal structured based on his timelines, motivations, and preferences. We knew he didn’t want a quick close because all he wanted was more time to stay on his land and we knew the buyers would love more time to close. When I knocked on the door, I could see him sitting inside as if he’d been waiting for me to arrive. I told him we had an offer for his land and that I’d love to represent him and his family in this sale. After some back and forth, he agreed to let me represent him and signed a single-party right-to-sale agreement. We presented the offer and he reviewed it in silence... At the end of that week, we were under contract.
So many brokers and buyers before me had tried to get this landowner to sell but we were the ones that he agreed to work with. That was back in May of 2022. Today, that deal is still under contract and is scheduled to close in May of 2026. I understand that 4 years to close is much longer than originally presented so allow me to elaborate… The buyers here are a well-known group who have developed much of the land in this area previously. They had actually bought land from this landowner's family in the past so the seller knew who they were and had some trust in their capabilities. During the initial year under contract, they have been trying to retrade and reduce the purchase price as the market has shifted and the cost of capital has gone up tremendously. (For reference, SOFR was at 0.78% in May 2022 when we originally went under contract, and by the end of 2022, the feds had performed 6 rate hikes and SOFR was up to 4.30%.) So I can’t blame them for asking, however, this seller has absolutely no interest in taking a smaller number. You have to remember, he didn’t really want to sell in the first place. In exchange for the bigger number, he has been willing to extend the contract out one year at a time for nonrefundable earnest money payments while the buyer waits for the market to improve, debt to get cheaper, and values to go back up. This is basically acting as a purchase option that costs much less than the carrying cost of the land. All the while, the landowner is happy to keep working on his land and taking in yearly earnest money checks.
This is a clear example of how most landowners who did not need to sell became sellers in 2022. They started seeing offers 20-30% greater than anything they had seen prior. However, the rebound of this trend has been rather difficult and pricing has been sticky because most landowners now think their land is still worth 20-30% over market value. Some landowners are coming to terms with today’s values but as it cools, I believe it is still going to take a little more time for sellers to back off their 2022 pricing expectations. Oftentimes before engaging with serious sellers about pricing expectations, we like to start by sitting down with the city and figuring out the highest and best use for the land. We also like to see if any previous applications for the land have been submitted to the city and see what has been approved or denied. Most importantly, we like to determine what the city’s staff and council have envisioned for future land use and get their appetite for different product types. Once you have a clear idea of what can and cannot be built on the land and how to get that development project approved, you can work backward and determine what most buyers can pay for the land in today’s market. Sellers often like to see this outlined for them and it helps them understand where these numbers are coming from and how they get determined.
When working and negotiating with landowners, you have to be able to understand what motivates them to sell... Are they price-driven? Are they all about timing? Is it purely emotional or are there outside forces making decisions for them? (Expiring water rights, legislature changes, death, divorce, etc.). You can always find terms you can use to help get the deal done and in a favorable way for both parties. Brokers and buyers also need to remember that when buying land, they are usually buying something very sentimental to that landowner. Brokers and buyers need to be conscientious about how they speak about the land, how they address the landowner and their family, and how they share their plans for what they plan to do with the land. My favorite reason that I absolutely love selling land is because I truly believe it is the last asset of commercial real estate that has an emotional component to the deal. For most landowners, the land has a value greater than the purchase price and that value is shown in years of farming, generations of ownership, or stories passed down from family members. As a broker or a buyer, if you can relate to the seller on an emotional level, your negotiations with them will be much easier to navigate and their motivations will be much easier to identify. I start by asking landowners questions about their lives, learning the story of their land and their family’s involvement, being genuinely curious about their motivations to sell and what their plans are afterward, determining whether they have any challenging expectations, and looking for solutions that work for both parties.
Every deal is unique and faces its own set of challenges so if you’re looking to buy or sell land, we can help you.
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Legend Partners is a commercial real estate brokerage with offices in Denver and Salt Lake City.
Forza Commercial is a commercial real estate firm in Salt Lake City focused on capital raising,
development, and property management.
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