Things to Consider When Selling Remote Alaska Property

Property values are established by Buyers, not necessarily Sellers. The seller’s ability to capture over-the-top irrational value not supported by comps or income is directly proportionate to the seller and or seller’s agent’s ability to convey the story and de-risk the investment. For example, one of our Alaska property listings has had over 2,000 visitors, and our video has been watched over 45,000 times with nearly 3,000 inquiries, yet not a single offer. The value proposition is not compelling enough for Buyers. The Seller has also been unwilling to present a posture to the market that would help a Buyer de-risk the investment. Sellers often try to place value on what they believe the “potential” presents to a buyer. For example, if a Seller is looking for a value three times that of the market value because the seller believes a Buyer “may” build a lodge in the future or may mine some gold and make money, that seller will need to de-risk the deal for the buyer to realize that type of premium. Smart Buyers and Buyers Agents know not to fall into that trap unless the site is truly a one-of-a-kind iconic offering and the seller understands de-risking the investment. Valuing Alaska’s remote properties is as much intuition and experience as it is analytical and comp sales driven. Divesting this type of asset is no longer simply an ad and a handful of pictures. Sellers should prepare for a marketing and sale process anywhere from 6-24 months. Just like attorneys, not all real estate Brokers and Brokerages are the same. Sellers may want to interview several firms and agents before deciding which is the best fit for them. Lastly, Sellers, you get what you pay for! With a probability curve at or near 50%, the right brokerage not only can bring buyers, but they know how to cultivate equity.

Here are a few things you will want to consider as a seller for a remote Alaska property

1. Collect as many “Nat Geo” high-resolution images and videos as possible. An agent cannot be expected to produce a library of images that capture grandeur and distinctive beauty from season to season in a 24-hour visit in mid-June/July.
2. A detailed FF&E list is essential, most buyers with the resources to write a check for a remote Alaska property realize they don’t know what they don’t know and need therefore, it is up to you as the Seller to inform the Buyer.
3. Sellers of commercial properties in Alaska are not required to fill out “Seller’s disclosures” as a condition of sale. Transparency is always appreciated by Buyers, and no one knows more about your land than you. Discuss with your attorney the possible downside of providing a seller’s disclosure to qualified buyers.
4. Succession is top of mind for virtually every Buyer who will look at the offering. Be prepared to answer the questions about who will succeed you and how it will take you as the seller to convey all the institutional knowledge about the property you have acquired over the last 10-20 years. Consider an owner’s manual or property guidebook with all useful information a Buyer would get at closing, with contact info for certain types of support, supplies, and repairs, as well as manuals and safety equipment. The most successful Alaska sellers understand the importance of de-risking the investment for the Buyer.
5. Picking the right broker can be a key to your success, not all brokers and brokerages are the same. Selecting a broker, in some respects, is more challenging than selecting an attorney. The right broker should be able to create value, and opportunity, reduce risk and confidently advise a seller. Buyers new to Alaska appreciate communicating with brokers who have some real-world experience and knowledge in Alaska. A broker whose remote Alaska experiences amount to fishing out of Ketchican and driving to Homer a few times may not be able to articulate the scale, scope, demands, and opportunity of owning a remote Alaska property. While it is not necessary for your Alaska broker to have eaten Muktuk as a qualifier to be your agent, Buyers’ confidence in your offering and you as the seller goes 2X when your broker knows Alaska.
6. Real Estate firms vary, and much like individual agents, there are many high-quality firms in Alaska. As a seller, one of the keys to your success is getting your offering in front of the right demographic with the right message. Things a Seller may consider when selecting a brokerage include the number of unique visitors per year their website generates and, as a subcategory, how many potential buyers look at their Alaska listings, the number of webpage visitors it takes to get a listing sold, how much experience the firm has evaluating and selling remote properties, and what presence do they have outside of Alaska.
7. Ask questions of the firm, such as how they market, what is their most effective marketing tool and how many of these types of properties they sell per year.
8. Be prepared to invest time in your agent and be prepared to invest time telling your story to multiple buyers. While on occasion, the first buyer that comes across your offering will take it site unseen (this is very rare), a more typical outcome is a 6-18 month sale cycle. Also, if you don’t already have a real estate attorney, do your research or ask your agent for recommendations. Selling remote income-producing properties with both real and personal property, especially if you’re selling corporation shares and or assets, is not simple.

Seller’s considerations when mulling a divesting event are the same as Buyers.

1. Objective – A Seller needs to determine their objective before deciding on representation, a “go-to-market value,” and timing. If the Seller has no concern for how long it will take to close and is focused on price alone then consider a brokerage who can be patient with you and is good at articulating the history and opportunity. If the Seller has a timeline in mind for selling and closing, consider things like seller financing, seller holdbacks, earn-outs, stepped equity drawdown, deed releases, and other approaches to de-risk the buyer’s investment. As a seller, you are likely familiar with and comfortable navigating the peril and isolation – do not assume all buyers will have the same level of comfort or day one confidence or the acumen to enjoy a seamless transition. Make a buyer comfortable and confident they can be successful, without exception it will be difficult getting to a meeting of the minds regarding value if the Buyer is not comfortable with the offering, the seller or the perceived risk.
2. Logistics – The typical Alaska remote property owner has flown in a 206 and landed on muddy dirt strips. The extreme has even landed in Super Cubs and gravel bars and riverbanks. Others have taken two-day trips up or down rivers in a flat bottom river boat with a 60hp outboard and ran aground a handful of times. Those experiences become somewhat routine for the Alaskan landowner. However, this may not be the case for your Buyer. Sellers may want to consider their logistics and create a contact and cost overview so a Buyer can evaluate.
3. Sustainability – Buyers do not want to invest in real estate that is essentially stripped of its resources. These resources can be anything from trees, minerals, wildlife, fish stocks, and even water in some cases. Recently events like King Salmon fishery closures, Yukon River Salmon runs down, Snow crab population decline, and massive forests have fires all add to the perception of risk for a buyer. While these natural disasters are viewed by many as the natural cycle of things, investors paying top dollar for Alaska offerings want to catch salmon next summer, hunt moose next fall, and gather firewood. For those of us in Alaska in the 80’s, we remember when salmon runs were so strong it seemed as if you could walk across the water on the backs of the pinks, reds, and silvers. Be objective and transparent as it relates to your offering and what a buyer should expect.
4. Why are you selling – in the first year of operation in Alaska, Fay Ranches has had close to 2,000 inquiries from around the world in our Alaska offerings alone. At one point or another during a discussion, a Buyer will ask, “why is the seller selling?” Sellers, whether selling because they are ready to pass on land to the next generation or retire, or you’re at the end of your investment time frame, every seller’s motivation to divest is unique, and in many ways, none of the Buyer’s business. Sellers should consider transparency as a means to help de-risk the investment unless the motive for selling puts the seller at a negotiating disadvantage. Buyers who brand themselves as “value” buyers are usually more interested to know if there is blood in the water than anything else.
5. Structures – Buyers’ expectations vary as with any real property anywhere in the world however, as it relates to the Alaska offerings, Buyers expect structures to be well kept, clean and absent what would clearly be considered differed maintenance. Buyers are generally accepting of the fact that these buildings are usually occupied for 4 months of the year, and the window to perform repairs and maintenance is very narrow. That said, what we have observed is that Buyers are willing to invest mid to high 7 figures with an expectation of a flushing toilet, warm shower, and reasonably well cared for structures. Pictures and video can tell a lot of the story, but the critical moment is the impression the Buyer gets when they walk through the door for the first time.
6. Access – Most Sellers of these remote properties enjoy an inherent degree of security due largely to the remote locations and difficulty accessing a property with anonymity. Buyers can not always come to tour your Lodge or property when it is most convenient for you and your operation. Take some time to communicate with your agent about the logistics and contingencies of getting a buyer to the property in sub-optimal conditions such as late fall pre-freeze up or late spring. A helicopter can be a reliable yet expensive option depending on weather and snow depth.