Buying Land: Essential Steps to Take

Perhaps, the late President Franklin D. Roosevelt said it best about the true value of buying land. He mentioned that real estate is an amazing purchase because it cannot be lost, stolen or carried away. When managed properly, Roosevelt said real estate is the safest investment in the world.

So, you want to buy land. That’s an excellent idea, but there are important steps to follow throughout the process. Real estate and financial experts have solid advice you should consider before signing on the dotted line.

Location Does Matter

You’ve heard the phrase “location, location, location” many times before, and the old saying remains a valuable piece of advice today. You want to purchase land that caters to your specific needs. A real estate pro who specializes in land sales can guide you.

Is this plot of land the right size? How is the school system in the area rated? Is the land near the city’s or the town’s downtown, close to the highways and shopping? If construction is in its future, does the land have the right soil type, slope and more to sustain structures built upon it?

All these questions are key to finding a great piece of land available.

Do Your Research

When buying land, each detail has significance. Homework is essential before making an offer. For example, is the plot buildable, and what do the city, county and state zoning laws say about your parcel? Is the land zoned as business/industrial or residential, etc.?

Is your purchase economically feasible? Check out the property taxes on the plot you’re eyeing.

Determine if the land is available for key utility hookups, including water, sewer and electricity.

Property boundaries are also crucial when considering land purchase. You don’t want to guess, so having a document that confirms this data is the way to proceed. You may want to erect a fence or check if a neighbor is encroaching on your land. A professional surveyor can take the measurements to legally define your property’s boundaries.

Working with a realtor who specializes in land sales, can help assure you choose the right land for your needs. They have specialized knowledge of local issues and regulations and can help you assess if a property will meet your needs.

No Money Down? Don’t Do It!

Buying land can be a tremendous asset, but here’s the most important question to consider. Do you have enough money to purchase it?

Financial experts recommend against buying land with no money down. That’s extremely risky. Cash is your best bet, especially if you desire the plot as an investment. A down payment is advised if you want to build a house on the land.

If you’re interested in taking out a loan, the requirements differ from getting a home purchase mortgage. Lenders require a larger down payment for land loans. Also, there’s a higher default rate, so interest rates for land loans are typically higher than interest rates for home loans.

Present an Offer

You’ve found the perfect plot of land that suits your taste and secured a financial plan for the purchase. You’ve teamed up with a seasoned real estate professional or real estate lawyer to cover the bases. Now, you’re ready to make an offer.

The seller accepts the offer in a purchase agreement. This document outlines the transaction between the buyer and seller for a piece of land in exchange for a specified sales price. Other details will include the inspection period, closing date and any other contingencies or obligations that should be noted.

The seller will verify the funds have been received at the property closing. Then, the deed to the property will be signed over to the buyer. The deed acts as the title to the property proving the buyer’s ownership.

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