Whether you are planning to buy land for investment, or for farming, or to build your new home to start a family, buying a piece of land for sale is different compared to purchasing a house. There are factors you need to consider when purchasing a piece of land just like buying a house. But you will realize that, although they have the same elements to consider, you will experience different challenges, especially if you are trying to buy a large piece of land.
One of the biggest problems when buying a piece of land is financing, especially if you are planning to buy a large piece of land. You need to know this before you get involved in the pursuit of property.
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What is the reason you want a raw piece of land?
Many people dream of building their home and buying a piece of land is the first step in achieving it. Most lots are being sold by the owner, not by the developer. The owner may have bought the piece of land for the same reason why you are buying the lot, they want an investment, or they are thinking of building their dream house, but they have never gotten around to it. Whatever the reason for buying a piece of land, it requires the same due diligence as buying your dream home. You need to know everything about the lot before you make a full commitment.
You need to make sure that the land is accessible, as well as having access to water, power and sewerage system. Some lots have access to these three, while other land needs you to set up electricity, water or sewage. These three are the most critical factor you need to consider before buying a lot. If you don’t have access to water, power or wastewater, you need to compute the cost of putting wells, septic tanks or power installation and see if it is worth it to buy the property.
(If you want to know more about property law in the United States, visit https://en.wikipedia.org/wiki/Property_law.)
If you are planning to buy a property for investment, make sure you are ready to pay a large amount of money for down payment. Most lending companies are reluctant to make a loan on lots unless you have a good development plan and performed all the requirements to see that plan will push through. Lenders are left to hold the bag on land deals when the original buyer can’t get their plan in action. When buying a lot for sale, owners will ask you to pay a down payment of at least 50%. But if you ask the help of a credit union or local bank, especially if you have good credit scores, you can buy the land for as little as 20% down payment.
Take, for example; if you are interested in a Little Rock real estate, agents will give you the option on how you can pay for it. They can refer you to the bank that they prefer. But the decision is still up to you whether you use their preferred bank or you use the bank or credit union of your choice. Real estate agents will now prepare every document that the bank or credit union needed to approve your loan. But if you don’t want to ask help from banks or credit unions, real estate companies can offer you an in-house loan but with a higher interest rate.
A real estate attorney is needed
When buying a property, whether it is a piece of land, a condominium unit, an apartment or a small house, having an attorney to check all the documents is fundamental. They can determine all the legal rights like water and mineral rights of the lot, the liens, easement issues, judgment, or any possible problems that will arise when buying a property. They can also help buyers with contingency plans for the land that you are planning to buy. Real estate lawyers can also determine if the homeowner’s association restricts the property for sale that you are planning to buy in that are, constrained by certain conditions restrictions, and covenants. It is a big issue if you are buying acreage or want to have animals inside the property and later finds out that it is not permitted in your community.