Too Weak to Defend Part 9 – A Bridge Too Far

Back to the block of land at Rydges Estate. We signed the contract in February and finally in August, the titles were issued. Settlement was 28 September 2009. We now owned the block.

Only, things had changed. We no longer wanted to build on this block.

My situation felt like the World War II story, “A Bridge Too Far.” In the story, the mission failed because they tried to take on one additional bridge. Maybe – like the story – I was trying to take on one too many property projects. I probably wouldn’t have bought this land had I known I was going to quit my JOB. (I’ve got an upcoming article that tells the story of quitting my JOB! Stay tuned.) We had enough property without it. And, Marieta and I didn’t feel up to going through another building project.

Also, the banks were not as accommodating as they were prior to the Global Financial Crisis (GFC), so access to money was not so easy for me. The banks love it when you have a JOB. Too bad I don’t share that same sentiment.

Now, prior to settlement, we could have asked for our deposit back and the developer would just resell the block for another $10,000. That seemed like a very non-elegant solution.

The challenge was to take this situation and see if we could make some money. Take what could be considered a mistake and turn it into a profit. Considering land prices had started to spiral up over the months, it didn’t seem too difficult.

My strategy was to wait until another block of land sold first. This would give me an idea of the market. But, it was a balancing act because I was using a chunk of our residential Line of Credit account to hold the property. I wanted to get this debt off the books sooner rather than later.  We were paying interest on this non-income producing debt.  I don’t like that.

We didn’t have to wait long. Soon after titles were issued, a block sold for $190,000. Wow! Now it was time to sell.

Who’s Your Agent?

I’ve always hired a sales agent to sell our properties. But, this time was different. I figured it’s a piece of dirt. And, dirt is in big demand in Alice Springs. Why not have a go a selling it myself? Then if for some reason I can’t sell the dirt, bring in a pro.

I called my conveyancer and asked what I needed to sell the property. She told me to just have the prospective buyer fill out an “Offer to Purchase” form and she’ll take it from there. She emailed me a blank form and I set off to sell the land. (If you’d like a copy, let me know and I’ll email it to you. Just request it from my daveivesblog.com “Contact Me” page)

Classified Ad

My first sales attempt was to place an ad in the local newspaper classified section. I set the asking price at $229,000. I based in on the local market. A block of land in Carmichael Estate was listed at $250,000, one on the golf course for $365,000 and a few others around town for between $215,000 and $225,000.

The response was lackluster at best. I was surprised. With the lack of available building blocks, I figured the phone would be ringing fast and furious. Maybe my asking price was too high. But, if that was the case, I thought folks would ring and at least make offers. But, that didn’t happen.

I had one guy walk out to the block and have a look. He seemed excited and had a plan to build. Never heard from him again.

It was a balancing act. I probably could have waited a few months and got the higher asking price, but I didn’t want to wait. I wanted to sell sooner, not later.

Sales Secret Number One: Put up a Sign

I waited a couple of weeks to see if the market would energize some more. Course, this doesn’t really make any sense since the market was very hot already.

Maybe the problem was my salesmanship. Maybe I should hand the block over to a real estate agent and let them sell it. I shot down that idea telling myself, “I’ll give it one more try. Put a sign up on the block and then let the market tell me what the price should be.”

How to Make a “For Sale” Sign

So, I went into the shed and found a small square black board. Have no idea where it came from but it looked like the perfect size for a “For Sale” sign. Not too big, not too small. I then took my black board down to the sign shop and asked them to print “FOR SALE” with my phone number underneath. White letters on a black background. That’s it.

I then scraped up an old metal star picket, the ones used for barbed wire fencing, and fastened the sign board to it with screws. I threw the sign in the back of the car and drove to the block. Took the sign out and pounded it into the ground facing the road. As I drove out I admired the sign sitting there proudly. I looked at it as a loyal friend, ready to tell the world the block is up for sale. Just call the number and it can be yours.

For some reason I felt this strategy would be successful. The sign just seemed to make sense. People would be driving in the new development to check it out. These same people would probably be looking for land. They would see how nice the development turned out and wish they’d bought a block. Then they’d see my little FOR SALE sign and think, “Here’s our chance!” It just felt right. And it was …

How Much Do You Want?

As soon as I got home the phone started ringing off the hook.

“How much do you want?” Was the question of the day.

My standard answer was something like, “I was hoping you’d tell me. Go ahead and make an offer.”

One guy told me straight away, “Ok, I’ll give you $190,000.” I got my first feel for the market. The guy didn’t even ask to call back. Just gave me the offer straight away. It was a starting point.

Most people told me, “I’ll have to get back with you.” I thought to myself, “Fine, take your time but I’ll bet it’ll be gone by the time you call back.”

Then the winning offer came in. “I’m standing here at the block right now. How much do you want for it?” The man said excitedly over the phone. I gave my standard answer.

“I’ll find out what the last one sold for and give you a little more. Call you right back.” He said quickly.

Less than five minutes later the phone rang. “The last one sold for $190,000, I’ll give you $193,000 cash. No waiting for the bank, no finance clause.” He told me what I wanted to hear.

But, I still didn’t jump. I waited over the weekend and then called him back on Monday.

“So, you’ll pay cash, no finance clause?” I asked him.

“Yup.”

“Well, let’s do the paperwork. When can you come by and put this offer in writing?”

“I can be at your place in ten minutes.”

The builder, his son, and I sat down at my kitchen table and filled out the “Offer to Purchase.” I then sent the completed form to my conveyancer. About three weeks later the sale went through and the money was sitting in our bank account.

My seeming “mistake” – my “bridge too far” – turned into a handy profit.

Story Continues …. Go on to Part 10