The strategies that worked for the past few years may not be the best ones to get through the next cycle, with the gap between buying dirt and selling a home longer and more expensive to carry.

This is some of what we are hearing from land teams who have retooled and regrouped to survive and thrive during challenging times.

What land teams are telling us

A few things come up in almost every conversation right now.

Sellers are calling back. The owners who would not engage eighteen months ago are returning calls. Several teams have told us the quality of the conversation has changed more than the price has.

There is less competition for the deals that do pencil. Teams that grew into the last cycle are shrinking, and land budgets are getting scrutinized first because land is the largest check a builder writes and the one furthest from revenue.

And the cost of a bad deal has gone up. Not because deals got riskier, but because there are fewer of them. A parcel that would have been fine alongside twelve others in 2022 becomes the thing that defines a year when it is one of four.

The question changed from finding to choosing

Because in a market like this one, finding land and choosing the right land are different problems, and choosing the right land makes finding land even more urgent than in easy markets.

When volume is strong, finding is the constraint. You buy what you can get, you build it, and mistakes average out.

When volume is constrained, choosing is the constraint. You will do fewer deals, and each one carries more of the year. There is not as much alongside it to absorb a miss.

The most useful question right now is not how to find more land. It is how to know how to pursue and choose the right land, based on every possible option.

Building a pipeline of land opportunities vs. only looking for what you’d act on 

Holding a large book of land options in a slow market is expensive. You are paying to keep something you may not be able to close, and extensions are not cheap. Teams who over-optioned into the last downturn have told us what that cost them.

A pipeline is a different thing. An option costs money and obligates you. A pipeline of evaluated, understood, ready-to-move opportunities costs nothing until you act on one.

The distinction is evaluation speed. If you can look at a hundred parcels and know, with a defensible number, which four are worth pursuing, you do not need to tie up the other ninety-six. You need to know they exist, know what they yield, know who owns them, and be able to move when capital frees up.

That is the difference between having optionality and paying for it.

Build a short list. Pull from it when you are ready.

Build a large front end of options that work for you. Everything in your markets that pencils.

Then evaluate confidently, fast enough that the short list stays useful. What can go there, what it yields, what is capping it, who owns it. If that takes two weeks per parcel, the list is a liability. If it takes minutes, it is something you can pull from whenever capital appears.

When a deal does pencil, you are not starting research. You are choosing between options you already understand.

What this looks like in practice

The teams doing well right now are not spending more. Several are spending less.

Cheaper dirt, because seeing enough of the market makes it possible to know what is actually priced right rather than taking the first thing that clears the hurdle.

Lower price, because more of what they buy comes from off-market opportunities and direct owner conversations that aren’t competitive situations.

And more ground covered by the same people. This matters more now than it did over the last few years. This is setting these teams up to be successful and keep the coverage if the team gets smaller.

What we have seen before

Every cycle sorts companies. Teams that pull back entirely come out of it with limited pipeline and relationships, rebuilding both into a recovering market where everyone else is doing the same thing. Teams that remain active, buying selectively while the competition is quiet, come out holding ground they could not have afforded eighteen months earlier.

The teams that cover more ground this way today will be equipped to make better decisions while weathering this cycle and be better situated to accelerate into the next one.

Prophetic is The Operating System for Land Acquisition™. See what it looks like on a market you know. [Book a demo]