The Problem
Listing agents have an unfortunate tendency to describe land as “open space” in property descriptions. It’s usually not what you think it is.
Sad but true, for these agents, “open space” simply means there are no visible residential buildings currently on the land. Most won’t conduct even the most basic research into the property’s ownership and development potential because, surprise surprise, it’s not a duty of a real estate agent. Caveat emptor.
Over the years, I’ve seen it all. I’ve met people who discovered months or even years later that a major development is planned for the property next door. Say goodbye to those views and social trails, something they paid a premium to obtain. Or perhaps a new municipal building, library, or commercial project has been approved, something that will undoubtedly add traffic and has the potential to diminish quality of life in their neighborhood.
Were they informed? The answer is usually “no.”
The Buyers’ Side Perspective
We advise our buyers take “open space” in a listing with a grain of salt. If buying a property that is near “open space,” it is critically important to not just verify ownership of the land, but to check whether it's in fact legally protected from development. Ownership by an LLC is often a dead giveaway that it's not protected, but keep in mind that even ownership by a municipal entity like Boulder County or the City of Boulder, is not by itself indicative of protected status.
I’m not sure if you’ve noticed; building more housing is one of our city’s primary goals. And lots of it. In other words, even though the Planning Reserve is owned by Boulder, it is 100% intended to be developed. Good luck fighting that freight train.
What have listing agents had to say? Take the Orange Orchard neighborhood, for example. It’s located directly south east of the Planning Reserve. A review of listings over the past two years in this location, shows that nearly half used “open space” in their descriptions. HALF. How many buyers were misled?
It’s not just about open space, of course. It’s about traffic, density, and safety. The frustrating intersection of Jay Road and 28th Street has been the scene of many traffic accidents, some of which have claimed lives. It's likely to get worse once the Planning Reserve is developed and buyers deserve to know the truth about its nature. Simply put: it’s not open space.
When high density development will actually begin in the Planning Reserve is unclear, but when it does, it’s certain to be contentious. Given our intense need for housing in Boulder, and the stated purpose in the Comp Plan, it’s a near certainty that this land will be developed in the near future. It’s still “open space” as far as most listing agents are concerned.
To help our buyers avoid this situation, we advise our clients to consider the risk of future development. Legal ownership, conservation easements, and the intent of the acquisition all play into this evaluation. Just because it looks like “open space,” doesn’t mean that it’s protected. Even if there is a conservation easement in place, it still doesn’t mean protected from development or even from resource extraction like strip mining or fracking.There are no uniform codes or standards for conservation easements.
Questions to Ask
Who owns the property?
How well protected is the property from development?
Have you reviewed any easements?
Is it possible to engage in resource extraction on the property (i.e. forestry, mining, fracking)?
What are the potential impacts development to your property?
What value are you attributing to the open space component of the purchase?
Is the open space publicly accessible?
The Sell Side Perspective
To reduce liability, we advise our sellers to avoid using the term “open space” entirely unless they have documentation for the land’s protected status. There are also a myriad of more accurate, colorful, and far less cliche descriptions available. Even if the land has low risk of future development. It’s smart to avoid the term “open space” because most buyers believe it means protected.From a marketing perspective, a description of the experience and emotions that come from hiking on trails and enjoying views is a better approach than simply describing nearby land as “open space.”
Consider the following (real) listing description from a recent sale in the neighborhood: “...miles of trails, open space and multiple parks just steps out your front door in the peaceful and highly coveted Orange Orchard neighborhood.”
Now consider a similar alternative, but one without the liability of “open space:” “Fresh air and sunshine, miles of trails and tranquility await, steps from your front door in peaceful Orange Orchard.”
Trails and tranquility are there today, and even after development, some semblance of social trails are likely to remain. Perhaps they’ll even improve and legitimize connectivity to Boulder Valley Ranch. Or perhaps not.
The so called “open space.” It’s toast.
Caveat Emptor
Remember: there is no such thing as a risk-free real estate transaction. Careful due diligence and understanding of risk is critical for success. Liability is also an ever increasing risk for sellers and real estate professionals, on both the buy and sell sides of the deal.Here in Colorado, supporting a buyer’s due diligence is not a standard duty of a real estate agent to their clients. Believe it or not, most brokerages actually prohibit their real estate agents from conducting due diligence. Yet real estate professionals are at the center of the transaction, with experience far surpassing most buyers and sellers, and thus an enormous opportunity to advise their clients to successfully navigate these treacherous waters.
Most agents dance around due diligence. At House Einstein, we start talking about due diligence from the first day of our working relationship. It’s part of our mission: help buyers and sellers make smart real estate decisions.
If your agent isn’t supporting your due diligence as a buyer, or advising you on ways to effectively market your home with less liability as a seller, why did you hire them? What value are they providing, besides opening doors and driving you around? If you’re thinking about buying or selling, conduct your due diligence not just on the property, but on the agent who represents you.
Osman Parvez is the Founder and Employing Broker of House Einstein. Originally from the Finger Lakes region of New York, he lives in Boulder with his wife and their Labrador Retriever. He has been a Realtor since 2005.Osman is the primary author of the House Einstein blog with over 1,200 published articles about Boulder real estate. His work has also appeared in many other blogs about Boulder as well as mainstream newspapers, including the Wall Street Journal and Daily Camera. For more information, click HERE.
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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties. House Einstein strongly recommends conducting rigorous due diligence and obtaining professional advice before buying or selling real estate.
