Life changes – that’s undeniable.
For some, owning a piece of vacant land starts out as an investment. You may have approached a real estate agent to find a piece of land with a prime location that you could develop into a home for yourself, but then life changed, and so did your plans.
Or perhaps you took a look at market analysis presented by professionals in the real estate market and decided that buying vacant land now to sell later for a profit is a good idea.
There are even scenarios where people have bought vacant land based on a great first impression of the location and market only to change their mind later or have inherited a piece of land and now want to start the process of selling inherited land.
Whatever your reasons, selling land is not always a straightforward process, even if you have a realtor on your side. Buyers have due diligence on their part, and as the seller, you have to do certain things to guarantee a successful land sale. Having a land-selling checklist will help you get the most out of the process.
The Land Market & Why It’s Different
Selling a well-developed house in a competitive real estate market is a challenge. Selling a plot of dirt with no building can be even more challenging. It goes without saying that selling vacant land is different from selling a house.
Many people expect lot and land sales to be the same as selling existing homes when they are not. To prepare yourself to sell your vacant land, you should understand the differences between the residential real estate market and the vacant land market. Be aware of the following:
- Vacant land buyers differ from homebuyers – vacant land buyers have entirely different needs, desires, budgets, and aspirations. Homebuyers want to move into a home that’s ready for residence, complete with a new coat of paint and granite kitchen counters. On the other hand, vacant land buyers have the location, budget, and possible profits at the forefront of their minds.
- Selling vacant land requires different sales techniques – a home normally sells itself. It has a bathroom, a kitchen, and other aspects that make it visually possible for buyers to envision themselves enjoying the property or improving it. A homebuyer can attend an open house, walk through the home and make a decision. Buyers of vacant land must put a lot more imagination and plan into the process. Everything they envision for the property will be at an extra cost.
- The vacant land market is less active than the homebuyer’s market – there are fewer people looking for vacant land to buy. According to the Trading Economics website, the home sales market in the USA already sank by 7% at the start of 2022, which means that vacant land property declined too. As a result, vacant land sales typically require a bit more patience, and price point is a crucial factor.
Important Factors In Selling Vacant Land
While there are three main pieces of information required for selling vacant land, several additional pieces of information will make the sale go through more smoothly. At the very least, the three main pieces of must-have info you need to sell your vacant land include the unique property parcel number, the legal right to sell the land (and proof thereof), and a purchase and sale agreement.
Below, we look at some of the important factors in selling vacant land.
Property taxes on vacant land accrue daily. Unless you just settled your property taxes a day ago, there will be owed property taxes on your vacant land. When selling vacant land, the seller will be expected to settle any outstanding property tax before the sale is closed.
Property taxes on vacant land are calculated by taking the land and any structures on it into account. Tax assessors typically value the property every one to five years and charge the property owner an appropriate rate following a set of regulations set in place by the tax authority. Most assessors use the mill levy.
A Mill levy is a tax rate applied to your property value, with one mill representing one-tenth of one cent. For instance, if your property is assessed at $1,000, one mill would be the equivalent of $1. Each tax jurisdiction’s tax levy is calculated separately, and then all of them are added together to calculate the final mill rate for the region. More on property tax calculations and how they work can be found on the Investopedia website.
Property liens are legal claims on property that allow the holder of the lien to access the property and sell it if required or if the debts are not settled. A real estate attorney or title company can uncover liens against real estate by conducting title searches. Once the title to the land is confirmed legitimate, they will issue title insurance to protect the lender or purchaser from any claims or lawsuits, should an ownership dispute arise.
It is important to let prospective buyers know of any liens on the vacant land before the sale is processed. If they find out later, the sale may fall through as the lien is not attached to the individual owner but rather to the property. New buyers inherit liens on a property that they purchase. The most common liens found placed on vacant land include the following:
- Past-due medical bills
- Bank liens
- Mortgage liens
- Tax liens (IRS)
- Unpaid HOA liens (homeowners association)
It is important to determine the zoning (specific land use) situation for the vacant land you are selling. Sometimes zoning can be used to make vacant land more attractive to prospective buyers. For example, check if mobile homes or installing a septic system will be allowed on the property, how the surrounding area may be zoned in the future or if farm animals are permitted on the property. You can gather all the information you require by calling the area zoning or planning department of the area where your vacant land is situated.
A great example of zoning working in your favor is if the vacant land is located in an area with a beautiful view, where future development will be limited. Buyers have the peace of mind that the property won’t become lost between other developments blocking their view and detracting from the property’s charm.
Vacant land investors want to know what they are getting themselves into before shelling out any money. If there are any easements on the property, they need to know about it upfront. Vacant land surveys are graphic depictions of property. They determine the exact dimensions and elevations of a property. Surveyors determine if your deed description and physical measurements match up.
Surveys can minimize disputes regarding property boundaries and also serve as a good negotiation tool when selling vacant land. Surveys are a legal requirement before you can start construction on a vacant plot. The survey will cost you around $400 (correct at the time of publication). Another type of survey is soil testing which can help a buyer determine the soil quality. This is important for future building projects as poor soils can negatively impact construction.
Easements by Grant
Investopedia defines an easement as a scenario where one party can use your property (at a fee) for their uses. In most instances, easements originate from public utility companies so that they can run pipes across private property or erect telephone poles and similar. Some buyers may not want unsightly power lines or their property to be dug up in the future to run cables and pipes.
A Purchase and Sale Agreement
A purchase and sales agreement is the contract that is held between the seller and the buyer. This doesn’t have to be a complicated contract. It can be a simple one-page agreement. A purchase and sale agreement for vacant land should include the following:
- The buyer’s and seller’s personal contact information
- The property’s unique parcel number (this is issued by the county, city, or township government office)
- The agreed purchase price
- A precise determination of who is paying for each of the settlement and closing costs. These fees will be paid from the escrow account held by the title company.
Fines For City Code Violation
It’s essential to ensure that your property is well taken care of before you try to sell it. Unmaintained, unsafe vacant land can incur heavy consequences and unnecessary expenses. This is called a city code violation as the city will find vacant properties for:
- High grass
- Unsafe structures
- Unpermitted uses
- If you have any unresolved city code violations, it is best to settle them before the sale and provide proof to prospective buyers. In addition, a regular property clean-up and ensuring structures receive the necessary upgrades will help you avoid these costly fines!
Sell Your Vacant Land Hassle-Free
If you want to sell your vacant land but can’t find a fair offer or any serious land buyers on the market, then Land For Cash Money is your answer. For a fast, free, and no-obligation offer, simply follow the three simple steps below, and you will be well on your way to closing the deal on your vacant property
- Complete the online form
Submit your property for sale by completing the online form. Once we have your property information, we will review and compare it to similar property types and calculate a fair purchase price.
- Cash offer
Once the purchase price has been agreed upon, a purchase agreement will be sent to you via post or email to sign.
Upon receipt of your signed agreement, we will start the closing process and agree on the closing date of sale with you. After that, your funds can be paid by check or wire transfer into your bank account, whichever is most convenient for you!