My husband & I are looking at buying land that is for sale by owner (so no
real estate agent is involved).
If we make an offer what would you suggest the contingencies be with the deal? (Perk test, title insurance, survey...?)
Also who typically pays for these, the seller or the buyer?
Everything in real estate is negotiable...everything!
In a buyer’s real estate market the seller usually pays for everything.
As the market shifts to a sellers market, the negotiating power of the buyer shifts in favor of the seller.
A perk test, title insurance and survey are just a few of the contingencies I would want.
Other contingencies I would insist on (in no particular order) are;
• A guarantee it is a buildable site as evidenced by obtaining a building permit BEFORE paying for the land
• A guarantee of construction and/or permanent financing, or land financing*
• Potable water is guaranteed
• Assurance that my house design will fit the site to my satisfaction (need that survey)
• A soil analysis
• The location of the septic field and tank (and the well) as required by the local health /building inspection departments
• Everything else that’s on my Checklist for Buying Land
• As well as anything else you can think of or that concerns you
Land represents a healthy chunk of money in building a new house. The value of the land when the new home is finished usually represents 25% of the market value of the house and land together.
Don’t cut corners in the process of buying.
There is a lot of work involved in buying land.
Mistakes and omissions can and do occur, and rectification, if any, can be costly and/or time consuming.
I would not dream of buying a piece of land without professional help…not even a piece of land in a subdivision.
The use of a Real Estate Lawyer and/or a buyer’s agent (Realtor) to act as a facilitator and a source of recourse if things go bad is wise.
You don’t need but a couple of hours with an attorney to draw up and review a buy/sell agreement.
And, a (Realtor) buyer’s agent should be willing to work for you at a greatly reduced (negotiated) fee. In return for their fee, they should save you a bundle of time cutting through red tape and gathering information.
More importantly, a Realtor, through their access to their local MLS (Multiple Listing Service) can pull up comparable land sales and help you determine if you are getting a good deal.
Remember, I learned everything the hard way.
Here are some additional articles I have on www.byoh.com that you should find helpful:
• Land Surveys
• Land Surveying-Placement of Your Home
• Buying Land Tips - Soil Analysis
• Buying Land to Build On
• Is it a Buildable lot?
• Is it a Buildable lot? – Part 2
Best of luck,
* Since there are NO real mortgage financing, or loan guarantees, you should hold off paying the seller for the land until the actual closing of your mortgage or loan…EVEN IF YOU PAYING CASH FOR THE LAND!