If you plan to build a house on land you buy, having an experienced buyer’s agent by your side is essential. Buying raw land brings unique issues that need to be addressed that aren’t present when purchasing an existing home.
A traditional land contract typically gives the buyer equitable title, but the seller retains legal ownership until the land is paid off. Learn more about this process here.
You’ll Receive a Quote
A land-buying company such as SellLand can assist you with finding the best piece of land for your needs. They will help you navigate the process of zoning regulations, topography, and other technical terms that may need help understanding. They will also be able to help you with financing options.
Remember that when purchasing land, it’s usually necessary to put a larger down payment than you would on a home. This is because lenders see vacant land as a higher-risk investment and require more upfront money to offset the lending risk.
You’ll also want to ensure that the land you purchase has easy access to utilities. You need to get to the property quickly to use it. Also, if the roads that lead to the land are private property, you’ll need to secure what’s known as an easement to use them.
You’ll Have a Meeting
Once you’ve chosen the land you want to buy, you’ll meet with a real estate agent or broker. They’ll explain the process of purchasing vacant land. They’ll also help you with property taxes, zoning regulations, and topography.
During this meeting, you’ll also ask questions about the land. This is a great time to discuss your goals for the land and whether it can be used for your vision. It’s also essential to get any critical information in writing. Verbal agreements or opinions carry less weight in land transactions than in house sales.
During this meeting, you’ll also be asked to sign a contract to buy the land. The agreement will include the price, contact information, and terms of sale. It may also include contingencies allowing you to back out of the deal if you can’t answer your questions satisfactorily. This protects your investment and ensures you can use the land as you intend.
You’ll Sign a Contract
A knowledgeable land-buying company can be invaluable as you evaluate and compare properties. They can help with the financial nitty-gritty of prices and offers, as well as other technical issues like soil conditions for buildings, access roads (or the legal right to use them), and zoning regulations.
They may not be as familiar with the details of vacant land and their limitations, though — remember that agents traditionally work for sellers and have a fiduciary obligation to act in the seller’s best interests. If they are not familiar with the pitfalls of land contracts, it’s worth seeking out one that is.
When negotiating a purchase, include a contingency stating that all inspection results must be “satisfactory” to the buyer “at the Buyer’s sole discretion.” This will give you an escape hatch if it turns out that the property isn’t what you want it to be or if you can’t qualify for a traditional mortgage.
You’ll Receive a Closing Statement
The closing process will include a written land purchase agreement highlighting everything you and the seller agreed to regarding the sale. It will also have a deed that transfers property ownership to you. The other documents you’ll review will be state-based real estate forms and a closing statement highlighting all the costs of the sale.
Land purchases can be an excellent option for those with less-than-stellar credit, especially if they want to avoid the strict mortgage underwriting standards required. However, they do come with some risks, and it’s best to have a good payment history and save for a hefty down payment.
Researching and working with specialists and experts is essential to ensure you comply with zoning laws and build on the right piece of land. This will help you avoid expensive issues in the future, like septic systems and other problems that can add up quickly.