How to Win a Bidding War on Land

In land real estate, a great offer isn’t always enough to score the property of your dreams. That’s because in high-demand markets, especially those with limited acreage for sale, bidding wars aren’t just common, they’re a standard part of getting the deal done.

So how do you come out on top in a bidding war on land? We’re sharing our best tips for navigating a land bidding war below, including strategies to help your offer stand out for all the right reasons. 

What Causes Bidding Wars in the Land Market?

A bidding war occurs when two or more buyers want the same property and are willing to enhance their offers to get it. 

Bidding wars are seen most often in competitive land markets with rapid population growth. That being said, you can find yourself in a bidding war anywhere in the U.S. if a market is hot enough or a property is extra desirable.  

There are several reasons why land may spark a bidding war, including:

• Seller’s market (high demand, low supply)
• Property listed below market value
• Up-and-coming area with current or anticipated population growth
• Attractive/rare land features like scenic views or private shoreline
• Local growth in sectors requiring lots of land, such as industrial manufacturing or data storage and processing

As a land buyer, it makes sense to look for the best property at the best price – but you’re probably not the only one on the hunt. If you fail to nail down the deal right away, don’t fret: there are several things you can do to come out ahead in a land bidding war, starting with your initial offer. 

How to Avoid a Bidding War on Land

It’s usually easier to avoid a bidding war than win one. That happens with your initial offer, which should account for things like market, demand, and comparable pricing. Here’s how to get it right.

Do Your Research

Knowing what type of market you’re working with helps you avoid a bidding war by coming in strong right off the bat. Work with a trusted local land broker to get the full scoop on current and expected development and demand in the area – information that will definitely shape how you structure your offer and contingencies. Then follow their lead in terms of structuring your offer and settling on a bid amount.  

Add an Escalation Clause

An escalation clause has two benefits when it comes to land bidding wars: (1) it shows the seller you’re serious about the property and are willing to fight for it, and (2) it lets you compete with other buyers without a constant back-and-forth between you and your agent. There are risks, too, though, so evaluate all pros and cons before moving ahead. 

Sweeten the Deal

If you really don’t want to risk a bidding contest, consider putting a cherry on top of your offer by means of a seller-friendly add-on like a quick closing, option for seller rent-back, or waived appraisal. While they come with financial risk, they could be a smart move for standing out in a pile of otherwise attractive offers. 

How to Win a Bidding War When Buying Land

You made a great offer, you crossed your fingers, and you still found yourself in a bidding war. The next step then, is to hit the battleground, and you can do that in a few different ways:

• Increase your earnest money and down payment amount
• Change to an all-cash offer
• Write a personal letter
• Waive all contingencies

Increase Your Earnest Money and Down Payment Amount

A higher down payment or more earnest money suggests to a seller that a buyer is more qualified and more interested in a property than their competitors. And in the land market, where down payments of 35 to 50% are common and earnest money can account for 10% or more of the purchase price, that could mean putting down most of your offer up front and in cash. 

Change to an All-Cash Offer

Speaking of buying land with cash, a bidding war may necessitate that you forego financing to come out ahead. If that’s in the realm of financial possibility, great; however, it’s generally not recommended that you liquidate your assets for a real estate investment. While cash purchases on land can lead to winning offers and quicker closings, they also come with the risk of reduced liquidity and possible overpayment on a property. 

Write a Personal Letter

It’s easy to forget that there are real humans on either side of a land deal. A personalized letter acts as a reminder, showing the seller that not only are you passionate about buying their property, but you’re willing to go the extra mile to do it. Things you may want to consider in a personal letter include why you’re interested in the land, what plans you have for it, and any previous experience you have with the land type in question. Note that personal letters can backfire, so talk to your broker first to see if it’s a good idea.

Waive All Contingencies

Waiving contingencies – and we mean all contingencies – is a risky but potentially fruitful move in a land bidding war. It involves eliminating buyer protections around appraisals, financing, title, surveying, zoning approvals, and environmental testing, and could be the ticket to a winning strategy and successful bid. Like other bidding war strategies, though, there are risks, and it’s not always worth the potential pay-off.

Find Your Perfect Property with LandHub

Your dream property is out there, and you may not even have to battle a bidding war to get it. Start your search today on LandHub, with the option to easily search properties by location, price, acreage, and more.