Many people start out looking at property without a clear idea of what it is that they are actually looking for. If you will follow the process outlined below, the entire process should be easier, more systematic, and predictable. It will save you time, effort, and money to take a logical approach to the locating and buying process.
1. What are your goals in buying a property? Investment, income, recreation, hunting, peace of mind, or all that and more? This is the first question you should answer when you begin the process of looking for a property.
2. The next step is to find out what type of properties that are available and meet those goals.
3. Then you should figure out your budget and how you will fund your purchase. These two things must be done together. Both will vary some, based on the other. For more information on how to pay for your investment see this post, “Land Purchase Funding Options.”
4. Once you have these taken care of, you need to figure out where you would like this investment to be. This area can be very limited or very open. I would suggest leaning toward a more limited scope though. Too broad of a base will lead you to feeling a bit overwhelmed and under prepared.
5. Next you should visit the area. Spend a weekend in the part of the world you have selected and see if you like the area and if it meets your goals.
6. Now its finally time to start screening properties. The first thing I suggest is searching the Internet. Many of you are already at this point. Please, may I humbly ask you to go back, and complete steps 1-5 before going on. You may find it helpful to write down your findings from each of these steps. There are many search sites out there. Look around. This is very important to educating you about the current market in your chosen area.
7. Once you have done all of this, contact an agent. Find one that specializes in land transactions. Let the agent know what properties are of interest to you and why. Let him know the answers to the questions in the first 5 steps. A good agent can serve you best if he has a complete knowledge of your goals, budget, funding, needs, likes, and dislikes.
8. In step six, you should have prepared a list of many, many properties. Once you have made this list and given me the information in step 7, your agent can help you screen out some properties and screen in others.
9. Then schedule a time for first meeting with the agent. This is a time for you to look at potential properties and to get to know your agent. Looking at a few properties with you will help calibrate your agent as to what you like and dislike. It may change your mind about some things as well.
10. It may take several meetings to find a few potential candidates. Once you have looked at properties that you really like, narrow the list to two or three that meet your needs best. Please keep in mind that there is no “perfect” property. All properties have issues and the likelihood of you finding everything you want, exactly the way you want it, is very slim. Find those that fit the mold best.
11. Then look carefully at these properties. Spend time investigating these properties. Get a feel for what the property is and what it is about. Don’t forget to look around the area surrounding the property. Compare the property to the goals you set out in the first step. If it fits these goals, the location is right, and it is within your budget, then it is time to compare it to the others on your shortlist.
12. Rank the properties in order of your preference. Then figure out what each property is worth to you…regardless of the market, regardless of the listing price. Each property will have a personal value to you. A value that is consistent with how you will use the property. This might be more or less than the listing price. I would suggest that you go after those that you value more than the listing price, or at least the ones that are as close as possible.
13. Now is the time to really turn the top candidate inside out. Make doubly sure it is the best fit for you. Make sure there are no issues that you cannot live with. Ask any questions that you have left at this point. Understand the property. This is where you do most of your due-diligence. (making sure the property is suitable and what it appears to be)
14. Now you are ready to make an offer. Do this in writing in the form of an offer to purchase. The seller will take an offer more seriously if it is a written one. I cannot tell you what to offer. I can tell you that most buyers do not offer their top-dollar right off the bat. Most buyers expect a counteroffer from the seller. You should expect one too. Don’t let the offer process get to you emotionally. This is a business transaction and should be treated as such. The buyer and seller are both out to get the best deal for themselves. You should not blame a seller for trying to sell a property for everything that he can get out of it. That does not mean that you must meet the seller’s price though. Remember that not all negotiating is on price. There are many conditions, terms, and other things that can come into play. Do not overuse these things, but protect yourself as best you can as well. Your agent should give you some guidance here.
15. If you have an offer and acceptance, move on to step 16. If not, continue the offer process until you have reached an agreement or ruled the property out. You should not offer more than the property is worth to you, or you can justify logically. If you rule the property out in the offer process, go back to your list and start at step 13 with the 2nd property on your list.
16. Contract! Once you have an offer and acceptance you will have a written, binding agreement to purchase the property, as long as the terms and conditions outlined in the contract are met. Now you should begin doing anything that the contract requires you to do. Getting financing, a closing attorney, inspections, whatever the contract calls for. Again, a good agent will help you in this process.
17. Once all of the terms and conditions have been satisfied and you are ready to fund the transaction, it is time to close on the property. Your agent will work with you, the closing agent, the seller and anyone else to schedule a time or course of action to get the closing completed. We complete many transactions via overnight delivery services, fax, and email today.
18. Close on the property. Get the keys, transfer utilities, make sure you are properly insured. Find out how the property taxes are handled and make sure you have a good understanding of that process.
19. Enjoy your new land investment!
Again, this is a logical process to proceed through when buying a property. Many people are overwhelmed by the process but it need not be something that people fear or dread. Taken one step at a time, you will find the property that is right for you, at the right price for you. There are many of these steps that I will need to be there to help guide you through. No worries!…An agent who is experienced and specializes in land transactions has been there, done that! You should know, however, that every transaction is different. I learn new things every time. 10+ years of experience has taught me many of the pitfalls to avoid, and the easiest ways to get from the beginning of the process to your owning a piece of rural property.
This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of LANDTHINK. Use of this content without permission is a violation of federal copyright law. The articles, posts, comments, opinions and information provided by LANDTHINK are for informational and research purposes only and DOES NOT substitute or coincide with the advice of an attorney, accountant, real estate broker or any other licensed real estate professional. LANDTHINK strongly advises visitors and readers to seek their own professional guidance and advice related to buying, investing in or selling real estate.
This is an excellent summary of the land buying process. In my market, Tucson, Arizona, most of the current sales are Lender Owned or REO Properties which require additional due diligence. In many cases. neither the Lender or Listing Agent have relevant information about the asset they’re selling.In some instances they don’t even know where the property is located! This not only makes it quite a bit more difficlult to understand the property but can produce a transaction fraught with hazards. When buying this type of property, expect twists and turns before completing the purchase. And by all means, spend an inordinate amount of time during the due diigence phase.
Rick Sack, Homesite and Land Specialist, http://www.buytucsonlots.com.