Buying land involves four distinct phases. The longest and sometimes most difficult part for the buyer is finding the property that fits his needs. However, once a parcel or area is located, a lengthy process of identifying all the land's physical and legal characteristics and property rights still awaits. Only after this is completed should a buyer begin to value the desired property and make a bid or, ultimately, obtain financing and complete the transaction.
Buying undeveloped property is a bit different from buying a house, where attention focuses on the condition of the domicile. Land is set aside for several different purposes, and can be in any particular phase of development towards its ultimate disposition. Location will be a major determinant of the property's potential uses, so, to save time, buyers should have a clear vision of what they're looking for, whether it's seclusion in a remote, rural setting or something in a larger, more developed town. Such geographical choices will determine access to water and other utilities, define the importance of air, mineral, and hunting rights, and influence whether a house can be built on the property.
The formal process of buying land begins when the buyer and seller agree on a price, but by this time much work will have already occurred. Because valuing property involves knowledge of local markets and the attractiveness of particular features, a realtor familiar with the area and type of property should always be consulted. At least preliminary investigations into the deed restrictions on the property will take place. If everything is in order, the parties negotiate until a tentative agreement is reached, and a deposit of anywhere between $2000 and 10 percent of the purchase price is put down by the buyer.
Video of the Day
Before a lender will finance the purchase of property, he will be sure that a seller has the right to sell the property free and clear of any liens or encumbrances. This is usually done with the help of a local title company, but the lender may require the buyer obtain title insurance nonetheless. A Sale Contract will be drafted with either an unconditional offer, meaning the property is purchased as is, or a conditional offer predicated on reports from the title company, builders, engineers, or surveyors.
When the mortgage lender is satisfied that sufficient capital has been offered against the loan, and that the borrower qualifies to make the payments, the contract and loan documents are signed and executed. The process of buying land helps educate an inexperienced buyer of the steps to reselling the property in the area, and along the way should be contemplating the eventual resale of the property. No matter what their intentions, a buyer should always consider any aspect of the land that may be repellent to future buyers before signing a contract, as it could affect the value of the purchase and the price she is ultimately able to get down the road.