“Buy land, they’re not making it anymore.” – Mark Twain
Are you interested in buying or selling your land? Do you want an investment, recreational piece of property, or maybe something you can build on now and in the future. A lot of the confusion with land deals with people who have bought and sold residential real estate. Land is NOT the same. It is generally “unimproved” and it is not regulated by the US Government like housing transactions. In fact, it is much like Commercial real estate with the “Buyer Beware” mentality.
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Due diligence means taking precautions and doing your homework on property before you make the purchase. This is up to the buyer. So what tends to happen is there is a longer inspection period with land than with houses. With a house, you can get an inspector over in a week, with land; you could be tied up for weeks dealing with lien searches, zoning and permits. So smart buyers give themselves time to research the land before putting down their earnest funds or at least a contingency of getting their funds back before the inspection contingency is over.
Note, this is the buyer’s responsibility to handle the due diligence to see if the property meets their needs, NOT the real estate agents.
In some cases, the seller may fill out a Vacant Land Seller Disclosure form, but in many cases, they don’t know much about the land. If the seller has relevant documents in their file such as a well report or survey, they will provide those too. The agent will tell you what they know about the land. The title company will provide a report so that you will know if title is clear.
But besides this, that is all you get. In fact, if you want a recent survey, it is up to the buyer to order and pay for one. For example, if the corners are unmarked, it is not the seller’s responsibility to mark the corners of the land unless you explicitly wrote a survey into your offer and the seller agreed to do it. It is not your Realtor’s responsibility to perform detailed research on building requirements. It is not the title company’s responsibility to plot easements on adjacent land unless you explicitly ask them to do that.
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It is in your best interest for you to do your own due diligence. The information you will receive will be more accurate and helpful if you get it straight from the information-provider, not filtered through a Realtor as an intermediary.
- Lot and Land Buyers are Different from Homebuyers – These groups of people have very different perspectives, desires and needs. Homebuyers usually want move-in-ready, with granite countertops. Land buyers, whether individuals or developers, are looking for the right location and an opportunity that lets them customize to fit their needs.
- Land Requires Different Sales Techniques – A home has a kitchen, bathrooms and a façade that can be visual and photogenic. You can hold an Open House for a home and walk a buyer through each room to help make the sale. Buyers can easily visualize themselves in – and fall in love with – the built home. It’s just not the same for vacant residential lots and land.
- Market for Land is Less Active – The market for existing homes is almost always more vibrant than the land market. There simply are fewer numbers of buyers for vacant land than consumers looking for homes. Start marketing a new home listing and a new lot listing when both are desirable and priced well, and you generally can expect fewer contacts about the new lot listing.
- Patience Required – Selling a lot or vacant land typically will take longer than a house. You have to be patient.
While we have noted that there are many differences when selling land, at the same time the concepts are similar to selling a home. You just need to tailor your strategy, tools and focus for selling this type of property.
Pricing land can be trickier when compared to pricing a home. Developed lots in communities may have a clear “market” price based on the recent sale of similar lots. Raw land, however, may have fewer “comparable” sales to use in determining your price. In addition, the price you ultimately can attract for a singular lot or undeveloped land can vary greatly depending on the buyer’s intended use of the property. For example, if a buyer feels that your acreage is appropriate for a high-end home development it likely will bring a higher price per acre than if a buyer only intends to build a single home on it.
Consider your own needs when pricing, and understand how pricing could impact buyers’ interest. When selling real estate, you sometimes have to choose between getting the highest price and possibly selling quicker. Plus, your pricing may be influenced if you need to sell for financial reasons. In addition to your own situation, pricing your property ultimately requires an understanding of the land market as a whole, why people are buying lots or land in that area and who these people are. A good real estate agent with land expertise can help greatly in this process.
The lending market for vacant lots and land still is difficult, so many buyers have trouble getting financing. You should have a larger pool of potential buyers if you are able to offer some type of owner carry or financing.