Selling water well – appraisals, brokers, negotiations, sale process and taxes, there are also many questions when selling water wells. Is now the right time for your sale? And if so, what is the most effective way to sell? Water is a scarce resource. Even though over 71% of our planets surface is water, there are fewer and fewer high-yield, clean water sources. Low supply, high demand: think not only of regional buyers, but also investment funds and yes, food companies. For this, you need a broker with an exclusive network. Water sources are not sold on real estate portals, but in the off market real estate sector, directly to investors of various kinds. This small guide is for those who are facing the sale for the first time. Whether you are a sole owner or a water cooperative, learn here about the matter of selling.
Plot & Source 2023: Target groups on sale
Water sources are a sought-after commodity, so that’s one advantage you have as a vendor.
Quality water as a raw material: marketing
Water is the raw material of the future. Already today, the scarcity of resources is so extreme that cities like Cape Town are without a steady water supply for weeks in summer. Countries in Europe and parts of the USA are also affected by water shortages. A good time to sell. Because at the same time, water is the ultimate food. Virtually every other form of food contains this basic ingredient. Water is available in every supermarket, every gas station, every restaurant.
Springs do not dry up. In contrast to other raw material sources, no matter whether iron ore, coal or crude oil, water sources regenerate relatively quickly through the mechanisms of nature. This also plays a role in the valuation, or value determination. But more about this later, in the example calculation.
Direct sale with us: flow rate information
You want to sell your source, discreetly and with expertise:
- Drinking water from 1 million liters / year – waiting list available
- Preferred: drinking water from 1 billion liters / year – waiting list available
- Purchase throughout Europe
- Purchase throughout USA
Valuation: Determine value
First of all: we cannot describe the value of a water spring with a simple formula. However, we want to give you an insight into how the property itself, but more importantly, the potential of the spring is valued, for those who have inherited such a water source and came into possession quite unexpectedly (said inheritance, divorce, donation and other design options).
Also important: The expert opinion is prepared by an expert. More about this in a moment.
Now to the question, how to calculate the value of a water source?
How to calculate the value of a water source?
For a first approximation of the evaluation, should be used, as a rule, the yield of the source, in conjunction with the quality.
Yield of the source + quality of soil / water + transport accessibility.
Of course, many more factors play a role, for example the famous location, location! Location always plays a role in the real estate industry, of course also here when it comes to transport links, i.e. infrastructure and proximity to sales markets.
Due to high demand: This is the ideal value (source to delivery [bottling to shipping at port]).
Calculation: Determine potential (offer price)
A high-yield source is of course always a good selling point. That is why capacity is also considered a central value factor.
If a water source in the calculation example yields 1.2 billion liters per year, these are calculated with 2 cents per liter, one moves already with a predictable turnover 3.6 million.
Annual potential + development
Annual potential as a basis:
- Annual yield: 1.2 billion
- Price per liter: 2.0 cents (max)
- Turnover: 3.6 million
A quite realistic offer price now would be 3.6 million. This can be justified by the current evidence of the production volumes, as well as the water quality and the forecast for the development of the area.
Offer price maximum: 3.6 million
Water source buyers: Creditworthiness, experience
States, investment funds, but also the big food giants are looking for good sources of water. So the timing is just right! Expertise in sales and an exclusive, international buyer network are important. Therefore here again the reference:
Who can you sell water sources to?
As previously mentioned, the circle of buyers of such a special object, extremely small. Firstly, you need to find the person who brings the necessary capital and at the same time has an interest in being able to have access to fresh water itself.
Off Market: Discreet, anonymous and direct
Therefore, the sale of such sources usually takes place through specialized brokers in off market area. Here only personal, these contacts are informed.
Advantages: Confirmation of financing is available, personal network, discretion and anonymity, fast process to KV and notary.
This task is not performed by traditional brokers, but by very specialized ones with direct access to family offices, investment funds and other institutions.
In this high price segment, even 5% fluctuation is a big gamble for you, the seller. If you go into the sale without expertise, you will probably be eaten up in the negotiations – simply put. Then we are no longer talking about 5%, but 10%, 15% or even 20%.
Selling procedure: broker, appraisal, negotiations
What is the procedure in the sale? The sales phase can best be compared with the sale of a plot of land.
When selling land, it is not the development that matters, but the possible development, i.e. the potential, as previously described in the valuation. At the same time, special investigations have a very special significance for buyers of water sources, for example, soil surveys.
But before we get to topics like soil surveys, you need to start with step 1.
Broadly speaking, the sale of a water source involves 3 phases: Preparation, “marketing” and the closing of the sale at the notary.
Step 1 is therefore the preparation in the sale. Step 2 is then the marketing phase of the source, although the word “marketing” should not be misunderstood here. After all, in 99% of cases you sell off market. Step 3 is then the sales processing.
Mistakes can be made in all three fields. The earlier a mistake is made in the process, the greater the impact. You are probably familiar with the famous quote about the “flapping of the butterfly’s wings”.
If you want to learn more about the subject of land sale, for example, because you have never dealt with the subject of sale of land, or land with sources, then here is the basic procedure, explained simply and in detail:
Taxes on sale
As a rule, we also always give you information here about the taxes incurred when selling real estate. For example, if you want to sell a typical condominium in Berlin. Already knew: Profits are tax-free if you have lived in the ETW yourself for 2 years… but it is not that simple with a water source!
The parameters for the sale of a water source are clearly more individual. Here it is no longer “just” about a plot of land of 1,000 square meters that lies fallow. Therefore, we would like to refer you to our general article on the subject.
If you need accurate tax information, contact us.