Buying land? Here’s what you should know. Lights, Camera, Action! Choosing the right land.
Confused about what to look for when buying land to build on?
You’ll need to find an area where zoning laws won’t keep you from buying the land for the investment property or home you want to build. Zoning rules set restrictions concerning things like the size of the buildings, and the kinds of businesses or residences that can be built. Also look into any homeowners associations with particular covenants and restrictions. It’s also a good idea to make sure that the land soil doesn’t prevent you from building, digging a well or getting electricity and natural gas. Will the land elevation be an obstacle? Are there any liens on the land or environmental problems that need solving? These are some of the questions you’ll need to answer before you can prepare to buy land. You will do all of this due diligence on the property after an offer has been accepted, and you have negotiated a period of time to do this research.
I typically like to allow about 30 to 60 days or more to do this. While it’s possible to build a house on a plot of land with the help of a real estate agent or broker, it can also be a big help to have someone on your side who specializes in working with vacant lots. A real estate professional can hold your hand through the entire process, and help minimize pickups. They can also help connect you with the right people to get that PERC test ordered and have the property surveyed. Which brings me to my next point. One important step to take is to have the land surveyed by a professional. This involves hiring someone to look at how accessible the land is, figure out its dimensions and find out whether anyone already has the right to use the property.
Getting a land mortgage
As mentioned earlier, experts often recommending purchasing land with cash, but if you don’t have enough savings to purchase a piece of land outright, you can get what’s called a land loan. The kind of land loan you’ll need will depend on the type of land you’re interested in buying. There’s financing available for raw land as well as improved land that has already seen some developments like installing sewage lines, for example. Raw land loans can be challenging to obtain. Developing raw land is expensive and difficult. So raw land loans are considered to be riskier than loans for improved land. You’ll often find these loans classified as commercial property loans. If you need one, you might have to make as much as a 50% down payment. Still, there are some lenders who let buyers put just 20% down. I believe Essex Bank is offering this, and you can find the link to their website in the description.
Anyone who needs raw land mortgage should be prepared to pay a high interest rate. In addition to looking at your credit and your background, your lender might want to see details about what you intend to do with the land. Your chances of getting approved for an improved property loan are significantly higher. But a land loan isn’t the only form of financing you’ll need. You will also likely need a construction loan in order to build your home. Okay, so how do you make an offer on a plot of land? Making an offer on land isn’t that different than making an offer on a home. When you’re ready to purchase a piece of land you’ll need to get with your realtor to make a written offer. You’ll approach the seller with the terms you’re willing to abide by along with all of the details related to the transaction such as the due diligence period where you’ll have the land surveyed, get your title work, get your PARCC test, et cetera.
After you make your initial offer, don’t forget that if you get a good realtor, they can negotiate the land price down. Your realtor should come prepared with research and data to back up whatever price you’re willing to pay. You can even ask the seller to pay some of your closing costs and include contingencies such as a close stage, so you can walk away from the deal if the land fails to pass inspections and tests.
Completing your land purchase agreement
In order to claim a portion of land as your own, you’ll need to officially close on the land purchase. To do so you’ll have to sign a Land Purchase Agreement. This agreement will specify how much you’re paying for the land and how much money you’re putting down. The seller will have to sign the agreement as well. The land contract you’ll sign will include everything that you and the seller agree to regarding the land purchase. Other documents you’ll have to review include; State-based real estate forms, a closing statement that highlights all of the costs that stem from the sale, and a deed that transfers the land title from the owner to you.
All right guys, so that was a ton of information. That’s why it’s so important to do your due diligence and make sure you hire an experienced realtor to help you with this process. Buying a piece of land isn’t simple, this is to ensure you’re complying with local zoning guidelines, and real estate laws. If you complete all of the necessary steps and make it to the closing table, you can buy the land you need for the home you’ve always wanted. If you are thinking about purchasing land in the Charlottesville area, I would love to help assist you with this process. Give me a call today, I make new videos every week, so be sure to subscribe to my channel. If you liked this video, be sure to give it a thumbs up. If you have any suggestions, drop it in the comments and I’ll add it to my next video. Thanks for watching. See you next time.