Many millennials are experiencing a change in their priorities. They may become the generation that has the greatest share of homeownership.
While everyone in your circle is interested in buying a house and you may be too, the building you are looking at isn’t a structure. It’s a piece of land. Every time you drive by it, you are flooded with ideas.
It begs the question: How can you buy land with cash? The goal is to make an offering on this prime piece of real estate. But where do you even begin?
Step 1 – Find the land you want to sell
You may not be able to see a perfect investment opportunity every day.
An online search is a good option if you’re certain you want to land but haven’t found the right property. LandWatch allows you to search for land for sale and rural properties online. LandWatch includes the following listed properties:
- Hunting land
- Farms for sale
- Ranches for Sale
- Places for development
Contact a realty agent to help you sort through all of the possible matches that meet your specific criteria. Many real estate agents specialize in land plots.
Step 2 – Get to the details
Don’t rush to grab the land before you know a lot about it. This isn’t 1889 Land Rush.
The zoning laws of the county are the first thing to examine. What is zoning law? They are regulations and rules that local governments use for controlling how property is developed.
If you plan to sell off lots of lands, you need to check if it is permitted to subdivide the property. This information will be available in the city and county government offices.
The most frequent restrictions that you will find for zoning are:
- The type of buildings allowed
- Only one type of business or allowed
- Dimensions and heights of buildings
- The location of utility lines
Once you know the restrictions for your plot of tulum lots for sale, make sure you check whether permits are included with it. Certain requirements must be followed if you plan to build any structures on the land. Permits might be required for the following:
- Sewer. To build on the land, you will need to check if there is enough sewer capacity. Private septic systems are a better option if the property lies far from the nearest sewer.
- Utilities. Permits are required for access to the electricity grid or public water hookup.
- Road accessibility. Many factors can affect the cost or legality of paving a road through the ground. Trees and other vegetation will need to be removed before the road can be built. The land may be near a conservation zone or contains endangered animals. Construction work can often be limited or even stopped.
William Barker said that the issue of usable land was a major concern. He is an Omaha-based real estate agent who has sold 72% fewer single-family homes than any other agent. “Does a river run through it?” Is there a lake, or a lot of trees? Trees can reduce the land’s value.
A single tree will cost you around $700. It is important to consider whether clearing trees will be necessary when you’re looking at land for sale or building. Clearing just a few trees is possible but you will need hundreds to cut down.
Step 3 – Get your financing in order
Because you intend to make a cash offer it is important to have a few documents.
First, the seller will need to see proof that funds exist. Sellers want proof of funds to show that they can cover the downpayment and closing costs. A letterhead from your institution should show proof of funds. All information should be included, including the date, name, and balance of funds.
The seller may also accept a bank account statement, a copy or balance from a money markets account, and an open equity line credit as evidence of funds.
Step 4: Write an offer to the seller
A verbal agreement in real estate transactions is invalid. Any details that might impact the value of the land you are interested in buying should be recorded in writing.
Bid Offer forms are the most common form of contract that is used to make an offering. You can view examples of a bid-offer form online.
In the contract, you will need to include the cost of the land, its location, parcel number, and any contingencies.
Most likely, you will still have questions about the land once you make your offer. You can use contingencies to help protect yourself. After your offer is accepted, it’s important to make sure you answer certain questions.
Contingencies mean that you can cancel the deal and get your earnest funds back if there’s anything wrong.
The most common reasons to buy land with cash are:
- An environmental test can be passed by the land.
- The land can be granted a permit for septic systems
- A current survey is available that shows exact boundaries and parcel size as well as any possible easements.
- Zoning regulations that meet buyer’s expectations
After you accept the offer, the next form that you might use is the sales and purchase agreement. Both forms are legal and binding.
You may combine these forms into one contract in some states. This can lead to you being bound to the seller’s terms. Even if you don’t have a real estate agent to assist you, make sure to do your research.
Step 5 – Deliver the deposit
When you make your cash offers, you will also include earnest funds.
Earnest money (typically a small sum of money) is paid into an escrow to show that you’re a serious buyer. If you withdraw from the deal for reasons not listed under the contingencies, it should demonstrate how important contingencies are to protect yourself. The seller retains the money.
Step 6: Get environmental tests done
Before you buy land, it is essential to conduct environmental testing.
You should check the soil for contamination. An environmental test can tell you whether there is earthquake damage or sinkhole potential.
Another thing to consider is the soil’s moisture. If you intend to build on the ground, make sure it is stable enough to support the structure.
Step 7 – Take a look at a survey
Chris Meinen, owner and operator of Smith & Oakes, Inc., states that “it’s important to have a Land Surveyor look at the parcel of land before you buy so you don’t run into any surprises.” He has more than 22 years of experience in this industry.
You will be able to identify the boundaries once a land survey has been completed. Surveyors mark corners of the land by using rebar, which is placed flush with the ground. Surveyors can also use monument markers (e.g. a wooden stake) to mark locations of underground pipes.
Meinen claims that a survey allows the buyer to accurately determine how much land is being purchased. “Some land is not usable because it has public roads rights-of-ways. 40 acres might only have 39.5 usable acres.
Step 8 – Go through the title
lien can also be placed on land, just as with a home.
Check that the land is in the clear title before you purchase it. It will cost between $75 and $100 to do a Title Search but is well worth it.
An effective way to find out if the property has any special restrictions, assessments, or easements is to do a title search. Sometimes, a third person can have the right or privilege to use a part of the property. This could be a utility firm that is authorized to install poles for electricity lines.
Step 9 – The final walkthrough
Even though you are not walking in any particular area like you would for a house, you should tour the land before buying.
It will allow you to see the property from the ground and will allow you to confirm the findings of a title check or land survey. You wouldn’t buy your house blindfolded. Why not inspect the land with your eyes?
Step 10 – Get ready for the payment
When everything passed inspection, it is time to make payment.
Cashier’s checks are probably the most common way to pay for a cash transaction. Personal checks aren’t accepted when large amounts of cash are being transferred. By having funds issued from a bank, a cashier’s check can help to ease any concerns regarding legitimacy.
Step 11 – The process for purchasing land with cash closes
After you have delivered the cashier’s checks, it’s time to finally get your hands on them.
You have the option to close at the registry where you will record your deed. Another option is to close at the title company.
A real estate agent is not necessary to assist you in this process. You may want to hire an attorney to review your contracts. In some states, the attorney might even file the deed.
It’s best to have a top-rated real estate agent for the duration of the transaction. A land-deals specialist real estate agent will know how best to protect your rights in a contract.