With most people today buying homes, there are others out there eying plots of land to build their dream house. With this, many wonder how the process of buying land with cash differs from a traditional real estate transaction. If you’ve never purchased land before and have the money to put down, Land Resellers has put together the following guide to help you get started.
Find Land For Sale
It isn’t always as easy as driving around to find the perfect plot of land. If you’re looking to purchase property but don’t have anything specific in mind, try doing an online search. LandResellers is a free online resource you can use to search for the most beautiful raw and undeveloped land, sprawling ranches, and custom home sites in the nation. If you need help sifting through all the possibilities, you can narrow your search to the type of land you're looking for, size, location, or price, all without creating an account.
Dig Into The Details
Don’t be in a hurry to purchase land without learning a little bit about it first. The last thing you want to do is rush into buying something you won’t be able to do anything with later. First, take the time to research the zoning laws of the local area. Zoning laws are the rules and regulations local governments put into place to control how land is developed.
For example, the most common zoning laws include:
- The type of buildings allowed: residential or commercial
- The size and height of buildings
- Location of utility lines
- And more...
Once you understand the zoning restrictions put in place on a plot of land, you should also figure out if there are any permit obligations for sewer, utilities, and road access you will have to attend to if you plan on building on the land.
Obtain A Proof Of Funds
If you plan on purchasing land with cash, it’s important to get a few documents in order. Sellers will most likely want to see proof of funds to know you can cover the land’s price and closing costs. A proof of funds is an official letterhead from a financial institution where your money is held. The date, name on the account, and balance of the funds should all be listed on this document.
Make A Written Offer
When it comes to real estate transactions, it’s important to put everything into writing because verbal agreements don't hold up in court. In this contract, you’ll want to include the price of land, it’s location, parcel number, and contingencies. Contingencies are actions that must be met for a contract to become binding. Once your offer is accepted, these contingencies must be provided, meaning if anything unsatisfactory turns up during an inspection, you can get out of the deal with your earnest money intact.
The most common land buying contingencies are:
- The passing of an environmental test
- The ability to get sewer and utility permits
- An up-to-date land survey
- Zoning regulations that meet your needs
Once your offer is accepted, you will need to obtain a Sales and Purchase Agreement. Both a written offer and SPA are legal, binding documents. In some states, these documents can be combined into one contract. However, it’s important to consult an attorney that specializes in land to read over all the paperwork to ensure everything is in good standing before you sign the dotted line.
Put Down A Deposit
When you make a cash offer on a plot of land, you’ll need to include earnest money. Earnest money is a deposit that goes into an escrow account to prove you are a serious buyer. For any reason that you walk away from the deal that isn’t listed under the contingencies listed above, the land seller gets to keep the earnest money.
Environmental Testing
When you purchase a plot of land, it’s important to have environmental testing done on the property. Why? You don’t want to purchase land with contaminated water or soil. Furthermore, you’ll want to make sure the land is stable enough to support the home or building your planning on building.
Obtain A Land Survey
To avoid any unwanted surprises, it’s important to have a land surveyor inspect the property you plan to purchase. Once you obtain a land survey, you’ll know the exact boundaries of the land. A land surveyor will also mark any areas that contain buried pipes. This will help you to understand how much land you are getting and how much of it is usable. For example, while you may be purchasing 50 acres, only 49.5 may be usable.
Double Check The Title
Just like a home or business, a lien can be placed on land for a wide variety of reasons. An example of a lien is back taxes. Before you purchase a plot of land, it’s essential to make sure it has a free and clear title. While a title search costs between $75 to $100, it’s worth the peace of mind knowing you won’t face any special assessments, restrictions, or easements on the property. You’ll also want to make sure no one else has rights to the property. These include timber rights, water rights, mineral rights, etc. The last thing you want is to wake up one morning to the sound of chainsaws cutting down all the trees on your property.
Tour The Land
Like a final walkthrough, you’ll want to tour the land you are buying on foot. This will help you to explore the property and understand its shape and size along with any findings from a land surveyor or title check. You wouldn’t buy a car blindfolded, so why wouldn’t you inspect the land personally as well?
Pay The Seller
Once you make sure everything is satisfactory, it’s time to pay the land seller. When it comes to purchasing land with cash, this is often done with a cashier’s check. Why? Personal checks aren’t acceptable when it comes to large amounts of money. A cashier’s check from a financial institution will help to alleviate any concerns of legitimacy.
Record The Deed
Once you’ve paid for the land, it’s important to record the deed at a local registry office or title company. The recorder will then index the deed for public record so it will be available for anyone to see. This deed will become your land's chain of title. If anyone were to look up your property, your name will show as its official owner.
The Takeaway
While buying land with cash can be an exciting process, it’s not something to be taken lightly. You should take the time to do your research and talk with experts to make sure you understand everything that comes along with any property. By using the tips mentioned above, you’ll feel good about closing on a piece of land by ensuring it’s everything you want it to be.
Need some help searching for land properties? Land Resellers can help. As an online marketplace designed for buying and selling land, we can help you search for specific land properties in different parts of the country that match your unique criteria and budget. With detail-rich listings, you can also view important information like land type, location, acreage, price, and other specifications. In addition, you can compare different properties using numerous filter options and side-by-side comparisons to find the ideal property you are looking for.