How To Buy Land for Sale Near Me To Cover All Contingencies and To Get the Best Deal

Land for Sale Near Me

If there are two caveats to remember when buying raw land, its “Proceed with Caution” and hire experts to help you.

Buying land is the first step in building that dream home you want, making an investment for later resale or launching a business, but the first step in buying land is to “proceed with caution” and to keep those three words at the forefront of all of your decision making.

 

Finding and discovering a piece of land that is for sale at a price you can afford or are willing to pay is only the first step in a long series of steps that you need to take. In you are looking to buy land for sale near you, go to Google and key in with quote marks, “land for sale near me,” or to get it more precise, “land for sale in Texas,” or “land for sale in San Antonio, TX.”

 

Drive around your neighborhood, area and region looking for land. It is amazing what you will find. It is like when you are thinking of getting a new car, perhaps you are enthralled with the Honda Civic Type R. The next thing you know, you start noticing the Honda Civic Type R in various colors around town. It is the same with looking for land. Suddenly, driving around you will see signs for land for sale or land for sale by owner.

 

Don’t limit yourself to a few drive-bys, go online to the major real estate websites like Zillow, key in land for sale in Arizona or land for sale in Tennessee—wherever you want to find land—and see what comes up. Contact local real estate companies as well, who may have a line on great land for sale in your area.

 

Read Craig’s List for local real estate listings to see what is available. We know of one entrepreneur who wanted to buy a piece of land on which to build a new home. In his area, land prices at the time ranged about $75,000 for a building lot. Older three-bedroom homes went for around $250,000. His thought was that if he hired subcontractors, but then did much of the unskilled or semi-skilled work himself, he could get a new house of his dreams and bring it in for under $250,000.

 

In driving around on one particular street, he passed a couple of houses that looked like they had been built in the 1920s with rather mature spruce trees in the yard. One of the houses was for sale for around $250,000. The house was set on a 100-foot wide yard about 20 feet off from the local road. A driveway near the property lot line ran up past the house and ended near a garage about 30 feet behind the house. Beyond the garage in the back was trees and a heavily wooded area. This made the man curious and he went down to the local town hall and looked up the zoning map for this street. It revealed that the lot size for houses in this area was a one-quarter acre requirement. But looking at this particular lot, the house was located, as mentioned in the front, but the lot extended back into the wooded area and encompassed almost an entire acre of land.

 

Our entrepreneur pondered the possibilities: what if he could buy this house, subdivide the land into a front lot with the house and two other lots. If he tore down the garage, he could extend the driveway well back in the property and then create an easement so that lot 2 and lot 3 would have rights to travel over the driveway that was on the land of the front house and lot 1.

 

That’s exactly what he did. He purchased the house for about $245,000; it was a slow market and the owner at the time was willing to come down a little on the price. Once he bought the house, he moved into it and began the subdivision process. It took him two years because his town like most towns tend to drag their feet on such matter. But he got the subdivision. He sold off the second lot to a local builder for $80,000, who built a rather lovely home on the lot. He took the $80,000 and used the money to begin his dream home on the third lot in the back. He still owned the front house and actually arranged for a home equity loan–$50,000–to finish off his dream home. He then put the front house on the market (at this point, it was 3-and-a-half years since he purchased it). With a greatly improved economy, he sold the front house for $300,000, which he used to pay off the mortgage on the house and the home equity line of credit. Three years and a lot of sweat equity, but the man came out of the deal with a new house nearly debt free. What did he do then, sit back and enjoy life in his new home? This gave him the idea for a great side business. He went looking for another home with additional land that could be subdivided. He sold his dream home on the back third lot and started the whole process all over again. The beauty of all of this is that if you buy that house with extra land, but the town absolutely refuses to subdivide it, you still have the option of putting it back on the market and selling it for market price with little lost but time. Or, if you have additional land, let’s say a one-acre plot in quarter-acre zoning, there is probably nothing stopping you from putting another structure on the large property and renting it either as an apartment or as an Air BnB.

 

Never buy land without help from experts. The first expert you will want to employ is a real estate broker who is knowledgeable about land in the area where you want to buy. A smart broker can direct you to land that is suitable for your goals and your budget. You need an attorney. You need to get a title search done. You need a land surveyor to survey the land. You many need a soils engineer to determine what is under the ground on the piece of land you want to buy. These experts can help steer you clear of land that could end your fledgling development career in ruin.

 

You need these experts to assist you in undertaking due diligence on this piece of land. Is there a clear title to this land? Are there any liens against it? Are there any easements? For example, has the prior owner sold an easement to the local power company to run power lines over the land? Do you want to build your dream house under high-voltage lines? What is going on nearby from the land or not far away? What is the elevation of the land above sea level? Is the land in a flood plain?

 

Our favorite question when we look at a piece of vacant land in an otherwise relatively built-up area is how come this land is vacant? Perhaps your town is one of those little historical areas that was founded in 1620 or 1760. Ask yourself, in all that time, why hasn’t anything been built on this land. Why is it vacant? Was there something built on it before? Was it an old gas station site that still has the old fuel tanks in the ground that now need to be removed before the land can be put to use?

 

Look at the topography and roads surrounding the land. Your property needs to have access to roads. If it is a landlocked piece of property, it is likely worthless, unless you are planning to enter and exit it by helicopter. If the land owners around the parcel have not and will not grant and easement across their land, the land you are looking at is quite useless.

 

Even when you have access, you need to consider the distance from roads. You may well have found your ideal land at the end of a dirt road half way up a mountain next to a trout stream. If you want to go off the grid and generate all of your own power, you are probably free to do so. If you can get a propane truck up your dirt road to refill the propane tank every so often, that will work to. But if you want to buy a piece of land even a small distance from a main road, you need to consider the cost of installing utility poles every 500 or 600 feet. The utility company will not install those for you free of charge. One of our editors found an 8-acre abandoned apple orchard in Orange County, New York years ago. The site was perfect with pond, grassy hillside, of course old apple trees and more. But as she looked at the site further and contacted the utility company, it would cost $600 per utility pole to bring power to the property, added thousands of dollars to the cost of the project. Regrettably, she had to walk away from the project.

 

Another item to check regarding utilities is utility easements. This wonderful little apple orchard mentioned above was accessed by a dirt road that ran through other properties. There was a legal easement in place that allowed that property owner to use the dirt road. But what this land did not have was a utility easement to bring in those multiple utility poles. Easements can be a sticky problem that you need to look at before you buy land. Make sure that your land parcel has direct access to water, sewage and power without going over someone else’s property.

 

We know of a single-home developer in a town in Virginia outside of Washington, D.C. who built a 100-home development, but in the process of subdividing the land, he not only created the various lots where the homes would be constructed, but he created a thin, long piece of land that ran the entire length of the subdivision and separated the subdivision from the access road. Indeed, he established easement to allow all residents access to the highway. But what he did was to bring in utilities from the street that passed over that strip of land in which he retained ownership after the entire subdivision was sold. Then what he did was to bill the subdivision for every kilowatt of electricity that passed over his strip of land.

 

Another critical problem to look at is the condition of the soil from the perspective is it virgin soil or is it fill. As we mentioned, in many, many areas of the country, most land is in use or has been in use. Now, obviously, there are huge areas of the country out west, in Vermont, New Hampshire and Maine that have probably never has a shovel stuck in the ground. But in areas like New York, New Jersey, Connecticut, and much of the Midwest, that land has been in use for some time. The land parcel you are seeking to buy may well have been in use in decades past. You just need to figure out what its use was. If the land has had a lot of fill added to it over the decades, you need to investigate it for contamination. Even if it is not contaminated, if you wish to build a house on that site, you may well have to remove a lot of the fill that is sitting there and then compact the ground so that it will support footings and a slab for your new home. Buying land is not a pastime for amateurs and if you are an amateur, you need experts along to back you up.

 

Is there anything going on around the site that would ruin its usefulness to you? Is the town building a sewage plant down the road. Will the land next to your prospective site be turned into a ball field in the future. You really need to understand not only the land you wish to purchase, but also the goings on around it.

 

The whole issue of getting an environmental assessment can and will prove costly if there is something in the land like old gas tanks, mercury contamination, oil contamination or other problems.

 

If you can’t afford a soils specialist to evaluate the land, you need to walk the land carefully, inspecting the whole area. Are there ditches and gullies on the property? Are there any old, rusted cans or barrels around them? Are there any odd configurations on the land that may be the remains of a house, or worse, a gas station?

 

If you suspect something about the land, you need to investigate historical records to see what was on the land. If you find something on the land, you need at that point to bring in a soils specialist or run don’t walk away from this land deal? If, for example, there are old gas tanks on the land or an old 1920s automobile garage where they just dumped all of the oil into the soil, the site will have to be environmentally remediated. If you still don’t want to kill the deal, you will need to make a deal with the current owner. Let’s say that the land for sale will cost $100,000, which is similarly priced to other land in the area of that size and location.  But the environmental remediation will cost $20,000 to bring in heavy equipment to dig up the old gas tanks and to remove petroleum polluted earth around them and then to bring in clean fill to the site. Either the current owner will have to eat $20,000 of the $100,000 that he wants to sell it to you for or he will have to clean up the site at his own expense at which point you will buy it for $100,000.

 

It is our experience in these matters that rather than take the lower price and clean it up yourself that you sign a contract for $100,000 contingent upon a proper clean-up of the site, signed off on by local authorities. What we have seen happen in these situations is that the current land owner knows more about what went on at the site than he is saying. For example, it may have been the site of an old gas station from the 1920s with old gas tanks that need to be removed. Or it could be the site of a major environmental problem where 40,000 gallons of automobile fuel was lost in the surrounding area. We know of another instance in New York State where land and an old building was for sale in a little town. The property was priced aggressively to sell. As one potential buyer did her due diligence, she was able to discover, before she committed to the deal that the drycleaner had lost a lot of the chemicals it used out into the soil and into the town’s water supply. The water supply? She did not want to be the owner of this property for any price and try to fix a town’s water supply plus the dirt under the building.

 

If you are a first-time land buyer or if you are seeking a parcel of land to build your dream house and you suspect something is wrong with the land, walk away before you get your money tied up in it. There are plenty of pieces of clean land around that you can buy. There is one thing you need to know about real estate deals if you have never done them: real estate investments are quite easy to get into, but can fearsome to get out of sometimes. If you own stocks or bonds, you can always go on the appropriate exchanges and sell the stocks or bonds instantly. When you are involved in real estate, you may have to hang on to that property for a long, long time and meanwhile you have taxes and insurance to pay and possible bank payments.

 

Buying the land. Depending on what you are doing with the land, banks may lend you money on it and they may not. If you are a big apartment developer, you will likely get a loan. There was an old joke in the apartment development industry years ago where the apartment developer found a large piece of land that he wanted to develop and sent his lawyer to the bank to arrange for financing. After the lawyer went to the bank, he returned to the developer’s office for a meeting. He told the developer that he had good news and bad news. The bank had approved the $1.5 million loan on the property, but they wanted $50 down! Cute story.

 

If the bank won’t give you the loan, you may be able to work out an arrangement for owner financing. This is where you make a certain down payment to the owner and then send him or her monthly payments. Let’s consider a piece of land that you will buy for $50,000. Perhaps the land has been on the market for a long time. Sometimes land can sit there for years before selling. Although the current owner might like to get all of his or her $50,000 today or tomorrow and be done with it, perhaps they would consider owner financing. In this case, working through attorneys, you might give the owner a $10,000 up front payment for the land and promise to send him $500 a month. If he does the deal, you own the land.

 

Then you go to your bank for a loan to build your house. At this point, the bank will not give you a mortgage, but they will possibly okay a construction loan for you. The construction loan is one where they will give you a certain amount of money as the construction on the house is completed. As the house reaches completion, they will furnish you with the last 10 percent or 20 percent. With that $50,000 piece of land, you probably will want to build a house so that the house and land – the total value – is around $250,000. You ask the bank for a $250,000 construction loan and build your house. You do a lot of work yourself and let’s say you keep all costs of construction at $200,000. As you finish the house, the bank gives you the final payment and converts the loan into let’s say a 30-year mortgage. At this point, you should have considerably extra free cash that you can now use to pay off the land owner all of the money you own him or her. This is a highly simplified version of owner financing, but it does give you the idea of what can be done. You need to always involved a lawyer in these transactions because, like Murphy’s Law, what can go wrong, will go wrong at the worst possible time.

 

But when it comes to smaller land buyers, like someone who wants to buy a parcel of raw land and build a house on it, chances are the bank will not loan you money on it. They want you to buy it outright. A rule of thumb to remember is that the cost of your land should be about 20 percent of the total cost of your new home. That is, if you are buying a piece of land for $50,000, then the entire cost of the new project should be $250,000. There is give and take in this pricing and it could range from 16 percent on the low end to 25 percent on the high end. If you have a modest budget for a new house, do not do something like buy a piece of land in a $250,000 land cost area and then put up a $250,000 house on the lot. As real estate agents like to say, real estate needs to find its highest and best use. If an area has land parcels selling for around $250,000, it requires a house in the $1 million range.

 

Know the zoning on the land and environmental restrictions before you sign on the dotted line. Some rural areas may have little or no zoning restrictions, but others are severely constrained with rules and regulations. If you want to build a single-family home on the land parcel that you will buy and it is in a suburban community, the zoning will tell you how far it needs to be set back from the road, the backyard and the side yards. What often happens that with narrow width lots is that will all of the setback requirements, you can only build a very small house. For example, let’s say you have a dream house that is being designed that would be 30 feet by 30 feet. But you find a great piece of property that is 150 feet wide and 50 feet deep. In this area of the town, the zoning requirements call for a 25 foot setback in the front and the 20 foot setback from the back lot line. This means you can only build a 15-foot wide house on this lot. So check out zoning carefully.

 

Depending on what you want to use the land for, you need to check out all other restrictions as well. Let’s say that you are a house painter by trade and run three crews during most weeks. Since you are out checking on the jobs and selling new jobs each day, you really don’t need an office somewhere. You can use a room in the new house you are building and the person you have keeping the books and answering the phone can come to your house and use it during the day. At night, you can park the three painting trucks with your logo and a lot of paint on them in your extra-large driveway. This is just the kind of scenario that you need to check out before you buy the land and start building your new home. This is just the type of situation where the neighbors will begin raising hell and complaining to the town board almost immediately after you move in. While it would be quite possible to run some businesses out of your house, like a website design business or another type of online business, when it comes to trucks and equipment, make sure you have a right under the current zoning laws to do so.

 

When you walk the land, do so with the seller and the seller’s broker? Ask as many direct questions as you can think of. People sometimes lie, but just as often they will tell you the truth about something if you ask them a direction question. The first question we always ask is: Is this land unbuildable for any reason that you know of? Ask both the seller and the seller’s agent this question. Ask about water, sewer, electric service to the property.

 

Ask about the site flooding or other issues with it. As we said, they may well lie, but then again, they may tell you the truth.

 

Is any portion of the land either designed wetlands or a floodplain. You need to know both today. We looked at a fabulous lot on a beautiful island off of Rhode Island several years ago. The first time we visited the land, we went down a dirt road about a quarter of a mile to the lot, which was about the size of a football field gently sloping down the hill. The front of the site where the dirt road ended was a grassy lawn are where a vacation house or second home could be built. Around the lawn area and down the sloping hill it was heavily wooded. It was a beautiful piece of property. As we stood there, we thought, why build the house up here on the lawn area…why not cut through the brush and woods and place it about 100 feet in the property for complete privacy?

 

Our second visit to the property with a rather crusty New England real estate broker named Joan  who we have retained was eye opening. We described to her how we could buy the land and either build a house up on the grassy lawn area, or cut a path through the woods and build it well below for complete privacy. Then she gave us a reality lesson. She said that extending down from the dirt road was an easement that ran along the property to the next building lot below. Any house that was built on the grassy area would be adjacent to cars and motorcycles traveling back and forth to the next property. What about cutting the path? Most of this land, she said, is designed at wetlands and there would be a $5,000 fine for cutting down any of the brush or trees to reach other portions of the property. Why would anyone want to own this property, we asked Joan. “Exactly,” she said. “That’s why it has been in the same family since the local government designated it as wetlands.”

 

Walking the dirt. There is nothing like walking the dirt of a property before you buy it and we don’t mean doing a drive by in your car or stopping for 10 minutes on a Sunday afternoon to get a quick tour. When we talk about kicking the dirt, we mean getting intimate with that piece of land. For most of us, owning a piece of land is a big investment in money and dreams and it needs to be treated that way. Walk the land many times before you buy it. If you can, actually pitch a tent on the property and have an overnight there. That is the best way to get the feel of the property and its surroundings. What is it like at night? What kind of noise is around it. This will give you a good sense of what it would be like to live there.

 

Finalizing the sale. This is where the professionals you have hired really come into play. Once you have set your sights on a parcel of land, sit down with your attorney. Depending on what part of the country you are buying land in, ask the attorney about water rights on your property and mineral rights. Answers to both questions can eye-opening. You need to go over all contingencies with your lawyer, such as time to get financing (if you are going that route), time to get insurance and time to get all of the inspections and surveys that you need. Sometimes you will be ready to go on buying a piece of land, but the land surveyor may be delayed on other jobs and not get to your job for weeks. These things are quite frustrating, but common and must be planned for. Your lawyer will fully clue you in on all of this.

 

Negotiating a deal. Any time you make an offer on a piece of land, home or used car, always start low. Don’t start so low that the seller thinks that you are a clown. If a piece of land is selling for $100,000, make an offer of $90,000 or $88,000. This gives you a case to determine how motivated the selling is to move the piece of land. Sometimes when a seller of something has not had a real offer for a long period of time, they may jump at the offer, saying that he will accept $88,000 on the land as long as he gets a contract and down payment within a few days and that the deal close quickly. Or he might say of the $88,000 offer you made, let’s split the difference at $94,000. If this happens, at that point, you know he is willing to accept $94,000, but how much lower would he be willing to go? You might ask, I can’t do $94,000, but would you take $91,000. At that point he might split the different a $92, 500.

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