- Developers, investors and landowners speak different languages -- learn them all.
- Good brokers add context to stop clients from getting bogged down by technical details.
- Treat your time as the most precious commodity you own.
During my career as a residential land broker, I was half-jokingly counseled by many veterans to quit while I was still young.
I was also shown the upside of land brokerage by one of those veterans: In my first year on the job, the lead broker in my office put a single deal worth $100 million into escrow.
He had been at it for almost 10 years and the market was hot that year — but when he started it took him three years to close his first land deal.
After more than two years on the job, through experience and observation, here are the skills and knowledge that I’ve found you need to be a successful residential land broker in a highly competitive market.
1. The ability to establish relationships
You’ll be dealing with highly sophisticated clientele in finance and homebuilding — as well as farmers, who may own land but know very little about development.
Knowing how to dress and behave in front of the wide range of people you’ll need to impress is no small task.
2. Finance, construction, development knowledge to bridge the gap between parties
Most landowners aren’t aware of the metrics — profit margin, return hurdles, return on investment (ROI) — that builders require to get money from their investment committee to buy a deal.
To close a deal, you’re going to have to communicate to your landowner, who knows very little about finance, why the builder’s investment profile matters.
This requires a precise understanding of finance, development and construction.
3. Applying market knowledge in project design
To get hired by developers, you’re going to need more than the ability to call builders.
The most successful land brokers double as marketing consultants. They stay up-to-date on specific market trends so they can tell their developer clients in which markets they should splurge on high-end architecture and in which markets they should dial it back.
Developers can only be experts in so many things; good land brokers learn the skills a developer lacks so they can become an indispensable part of the team.
4. Mental toughness
Real estate is a cyclical industry, and land is an inherently leveraged asset. This means that when things go bad for the home market, things go really bad for the land market.
In good times, full-time land brokers live off one to three deals a year. In bad times, competent brokers may make nothing. (The same broker who closed all those deals the year I came on also went eight months without a paycheck.)
The thing I underestimated most was the ability to stay sane and continue with countless calls, letters, emails and meetings resulting in no paycheck for month after month.
5. A top-notch B.S. detector
Real estate is infamous for its tendency to breed con artists and schemers. With the money at stake and the ability of anyone to call themselves a developer, this goes double for anyone in the building industry.
At best, they will waste your time — at worst, they will drag your name through the mud.
Land deals in supply-constrained markets are rare. Even the most successful broker in a hot market maxes out at around five deals a year.
Time is your most precious commodity, and the ability to root out time-wasters is paramount.
As with any real estate agent, you need to find your own style. I’ve met successful brokers who were deeply analytical and soft-spoken, while others were outspoken and relationship-driven. Some spent time cultivating a few solid relationships and others spread their net wide.
You’ll have to leverage your own strengths and find methods that make you successful. But developing these five skill sets are a great place to start.