Buying land from an owner rather than a real estate agent is becoming more commonplace. The Internet has made it relatively easy to find quality property without requiring the once elusive connections of a real estate agent.
Reasons to Buy Land from the Owner
It is important to note that the law does not require you to use a real estate broker or agent to buy and sell land. Many people fall prey to this misconception, most likely because real estate agencies want you to believe they are necessary. Some people are looking for land for sale to build a house, for investment purposes, or to use as farmland in some capacity. These are the reasons why people buy land. The reasons people buy land with a sign stating, “for sale by owner” are often financially based.
Real estate agents take a sizeable commission from the sale of any land transaction. Agents charge anywhere from 2.5 percent to 7 percent. The fees from such transactions often includes a number of services such as documentation preparation, loan verification, and working directly with the owner or agent of the landowner. These services often add to the cost of the land so the owner receives full land value by the time all fees and closing costs have been recouped by the realtor. Today, the services of such agents are becoming less desirable by many landowners. Landowners have access to the same information, resources, and tools as realtors. This allows landowners to keep their selling prices at a reasonable published price.
Even though you are saving money, you should be mindful of a number of aspects. You will want to review the last land survey in great detail and acquire any environmentals studies that have been conducted on the land to ensure you are not purchasing land that was once used to dispose of toxic chemicals or other environmental hazards that would cost you thousands of dollars to clean up after the sale of the land. Ask for the tax ID of the land and you can find all of the information you need to evaluate the land properly.
You should obtain as much history about the land as possible such as how many owners and for how long, information pertaining to local laws and statutes, and speak with the neighbors. You should also inquire about the utilities available on the land, whether or not the property has a water source, inquire about owner financing, and ask about any structures that may be on the property.
If you choose to buy a for sale by owner piece of land, do your due diligence. You may save money in the end; however, you must be thorough in your research to ensure you do not end up spending thousands of dollars more once you acquire the land.