How to Buy Residential Land
Are you ready to locate your dream property?
Our experts at My Real Estate Expert are ready to assist you with locating and procuring your residential dream property. Unlike buying a home, an inexperienced buyer purchasing unimproved land would not know what to look for during the investigation process. The process of buying residential land can be complex that is why it is very important to hire an experienced MYRE, LLC. licensed sales associate.
What is residential unimproved land?
Residential unimproved land can be rural acreage or an unimproved, vacant lot in a new subdivision.
1. Location, Location, Location
When planning the location of your future unimproved land keep in mind the location of your job, schools, doctors, medical facilities, and other destinations.
2. Covenants, Conditions and Restrictions (CC&R’S)
When looking for real property to place your dream home, you will need to decide if you want to build in a restricted subdivision or an unrestricted subdivision.
- Restricted Subdivision: Deed Restrictions are normally put in place by the original developer, and are different for every subdivision or master planned community. It is normally enforced by a Home Owners Association (HOA) or Property Owners Association (POA). A restricted subdivision will enforce homeowners to comply with the deed restrictions to protect future property values. Restrictions can include size of the home, set back lines, how many homes on a lot, types of homes, rules about pets or other animals, care and upkeep of home, etc. HOA or POA fees can be charged monthly or annually to maintain roads, signs, beautification, club houses, pools and necessary improvements.
- Unrestricted Subdivision: An unrestricted subdivision will not have a HOA or POA. There will be no enforcement committee to assure property values or appearance of the surrounding area. An unrestricted subdivision may have restrictions placed on the property by the state, local city or township. This can be reviewed in the deed. You +1’d this publicly. A deed is a legal document to transfer the ownership of real property from one person to another.
Even if the land you are viewing is zoned residential, it is important to check the surrounding area to make sure it is not zoned differently. If the surrounding land is zoned commercial a building can be erected for industrial use, land zoned agricultural can put in a farm with a large number of livestock, and there are many other numerous examples. A buyer may verify future zoning at the planning and zoning department of the nearby City or County where the property is located.
A buyer will need to explore the services available in your appointed area. Is there water, sewer, telephone service, natural gas, and cable? In rural areas a buyer may have to employ the services of a water well company, install a septic system, contact the electric and telephone company to install services all for a fee. Other services that will require installation include satellite television and internet service.
5. Emergency Services
Make sure to investigate where the nearest fire department, emergency medical technicians, and fire hydrants are located if any are available.
6. Neighboring Property Owners
It is important to find out who will be your future neighbors? It doesn’t matter what size lot or acreage you will be buying. Your neighbor’s upkeep will impact your value even if you cannot see them from your property.
Who has access to your property? This can include: Utility Companies, Oil Company’s, Natural Gas Company’s, and deeded easements for access to neighboring properties. The location of any appointed easements will affect where you can build your home.
8. Home Placement
Exploring the property for a perfect location to build your home is very important. Observing set back lines and easements can create too long of a driveway and increase the cost. Driveways are expensive to build and continue to maintain. We feel it is very important to walk or use an ATV to preview the entire property when buying land.
9. Side Walks
When buying an unimproved property in a new subdivision it is important to find out if there will be sidewalks. The use of sidewalks can be important for they reduce the traffic danger for pedestrians.
10. Environmental Hazards
Property should be observed for any possible environmental hazards. These include: environmental hazards such as asbestos, formaldehyde, radon, lead-based paint, fuel or chemical storage tanks, and/or contaminated soil or water. A Phase I environmental study can be performed for a fee to assure buyer of no contamination on the property.
Conducting due diligence and ordering a survey through a reputable an experienced survey company is a very important step in purchasing your unimproved property. The survey can locate all of the property lines; it will show any encroachments and easements.
12. Flood Zone or Flood Way
Floodplain and floodway areas are designated by FEMA on the Flood Insurance Rate Maps (FIRMS). You can search the flood maps in your area using FEMA’s Map Service Center, or call FEMA to determine if your property is within a floodplain or floodway.
- What is a Flood Plain?
A flood plain is any area that is vulnerable to being flooded by water from any source. This is the area adjacent to any waterway that is subject to flooding when there is a significant run-off of water.
- What is a Flood Way?
It is a waterway of a river or any other water source that carries the deepest and fastest water downstream.
13. Title Company
When buying an unimproved property we recommend always closing through a reputable title company. The title company will make sure that there are no liens on the property and will conduct all of the research pertaining to present ownership. We also recommend using an escrow agent. The fees to the escrow agent are very minimal and they will make sure that both parties are abiding by the terms of the contract.
- Title insurance: Title insurance offers financial protection against title issues that could not be found in the public records, are inadvertently missed in the title search process, or those that may arise from deception or falsification. Unlike most forms of insurance which protect policyholders from future events, title insurance protects you against defects that could already exist.
- Title Policy: A Title policy is required by a lender and only covers the lender’s interest in a property.
A real estate appraisal is an unbiased estimate of the true value of a property. It is best conducted by a licensed, certified professional. Before obtaining a loan, a lender will order an appraisal of the property. The appraisal that will be required will be Market Value. An appraiser usually provides a written report on this value to his or her client and the report will be used as the basis for a mortgage loan. An appraisal can confirm whether the property is worth the amount you are paying.
15. Land Loan Financing
Financing for unimproved property is typically offered by traditional banks, credit unions, and mortgage companies. The size of the land, location, zoning, intended use, the availability of basic services, access, and any impediments to eventual construction will be a deciding factor for the lender.
The final step to unimproved property ownership is receiving a detailed HUD-1 settlement statement prepared by a reputable title company before closing. The closing statement will summarize all fees for the Buyer and Seller involved in the transaction. Property ownership will transfer from the Seller to the new Buyer at closing.
My Real Estate Expert, LLC.