Buying land is not much different from buying a home. Land purchases have been on the increase across the country in recent years. More people are looking for off-grid properties as a way to gain financial freedom, or just a land for weekend getaways. With real estate prices and mortgage interest rates above the norm for many buyers today, some buyers are looking for alternatives to the traditional means of homeownership.
Even though buying land is of lower cost compared to buying a home, it is much more difficult to get financing to buy raw land.
Below, I will outline the steps involved in buying land.
Step 1: Hire a Real Estate Agent
Real estate agents can be an invaluable resource when buying land. Agents will have access to various databases on land listed for sale. In Metro Atlanta, most agents have access to the GAMLS and FMLS services. Agents will be able to search and sign you up to receive properties as they are listed to those services.
Step 2: Tour the Property
After you have identified a land parcel that interests you, it is very important that you tour that land to make sure that it will meet your expected use plans. Try to visit the property during different weather patterns to see how the land drains.
Step 3: Chat With the Neighbors
This is a step that is often overlooked by potential buyers. It is always a good idea to get a history of the land. The people who are living close to the land may even know more about the land than the person that owns the land, so speaking to neighbors who may have information about the land that interests you may yield valuable information.
Step 4: Get Your Financing in Order
Think about how you will finance the property. There are options available when it comes to buying land. Are you going to be paying cash for your land? If you will be paying cash, you may not be concerned about the other financing options.
There are financing options available for buying land: some of these financing options include- USDA loans, Construction-to-permanent (CP) loan, owner financing, and Lot Loans.
Step 5: Submit an Offer
Your real estate agent will guide you in structuring your offer to make sure that your interests are protected. This may include things such as setting up a due diligence period that is long enough to allow you all the time that is needed to gather the relevant information about the property to make a sound decision.
Step 6: Hire a Closing Attorney
In Georgia, real estate attorneys are responsible for carrying out real estate closings. These attorneys will be responsible for the transaction. If you are getting the property financed, the attorney is basically working for the bank. That means that protecting the interests of the bank is their primary objective. The attorney will get a title search done, and you will be charged for title insurance to protect the bank’s interests. You will want to buy title insurance to protect your own interests.
Step 7: Carry out Due Diligence
Give yourself adequate time to carry out research on the property. This is the most important step in the property buying process. First, you have to determine how you are going to use the property. Do you want a property that has certain restrictions or no restrictions at all?. Do you plan to build on the property? Will you need a septic system? Do you need certain utilities? The more amenities you are going to need, the more time you will need to check into the feasibility of all of those. If the seller wants to save time, they will offer an up to date survey and soil test. If you are to get those done during your due diligence, you will need a lot of time, and therefore will have to request a longer due diligence period.
Things to consider during the due diligence period when buying land:
i. No Assumptions:
Ask questions and do the necessary research to make sure that all your questions are answered. After you have bought the property, there is no going back. For example, if you see a trailer next door, that does not mean that you will be permitted to have a trailer there permanently. If you see a house next door, that does not mean that you will be permitted to build a house on your land, or even guarantee that your land is buildable.
Ii. Zoning Laws:
Make sure that the property’s current zoning and restrictions will accommodate the buyer’s intended use of the property. For example, if the property is zoned residential, you may not be granted a permit to build a chicken farm.
iii. Title Insurance:
Everyone should buy title insurance. For the amount of money that you will pay, the peace of mind is definitely worth it. This purchase is optional, but highly recommended.
iv. Access to Utilities
If you plan to use utilities on your property, you want to make sure that you will be able to get utilities to your property. You will want to contact the various utility providers and tell them about your plans. For example, if you do not have access to water from the city, you may have to dig a well, get water from a stream or devise a way to capture and store water.
Check to find out if there are any easements that may restrict how you can use your property. For example, is there a power line running across your property? This could mean that the power company may need unrestricted access to service their lines and poles. Do your neighbors need to drive through your property to get to their property?
vi. Required Building Setbacks
After discovering the dimensions of the lot that you are interested in purchasing, get in touch with the local planning authority to find out the setback requirements for various structures and intended land uses to make sure that those restrictions can accommodate your intended use of the land.
vii. Meet the Neighbors
Buyers often overlook how the neighbors are using their land. If your neighbors have a pig farm next door and they are close enough, you may have to deal with the smells emitting from their property. Can you use your property knowing that potentially unpleasant smells are coming from your neighbors?
viii. Costs to Develop the Land
If you are not going to be developing the land yourself, you should seriously consider getting bids to develop the land to the point where you will at least be able to get access to the land and building sites. You could use this information to negotiate an asking price for the property or a more favorable price.
Step 8. Close Escrow
Now that you have done the hard work and carried out the necessary due diligence, it is time to take possession of the property. In Georgia, real estate attorneys are in-charge of real estate closings. You may want to consider purchasing additional liability insurance for your newly acquired land.