PRACTICAL ADVICE FOR THE FIRST TIME LAND BUYER

Practical Advice For First Time Land Buyers

Who Should I Hire to Help Me Find the Land I Want?

TIP #1: FIND A BROKER OR AGENT WHO'S EXPERIENCED WITH LAND, RATHER THAN A RESIDENTIAL REALTOR.

A broker experienced with land sales will understand the vast differences between land-buying and home-buying. This person will know how to read aerial land maps and will know how to show the land, itself, to you.

Land agents] have four-wheel-drive vehicles and can both drive the land and walk it. Most ‘traditional’ residential Realtors do not do either."

TIP #2: HIRE A REAL ESTATE ATTORNEY

An attorney experienced with land sales in the region you're looking to buy land in will be able to guide you from making an offer with the right contingencies to ensuring there are no title clouds, zoning issues, or deed restrictions that would prohibit you from using the land the way you intend to.

It might cost as much as a few thousand dollars, which may seem like a lot of money, but it’s very little money.  

How Many Acres Do I Need?

TIP #1: FIRST, MAKE SURE YOU HAVE A CLEAR UNDERSTANDING OF THE SIZE OF AN ACRE.

Even folks who have lived in the country their whole life can struggle with just what an acre looks like. Compare an acre to everyday places you're more familiar with, such as a football field, which is roughly one acre.

TIP #2: DECIDE WHAT YOU WANT TO USE THE LAND FOR AND RESEARCH RECOMMENDED ACREAGE FOR THAT PARTICULAR LAND USE.

It's hard to find an expert who will recommend an exact number of acres to you, and there's a reason for that: it varies. A lot. You need to get very specific about your plans for the property and -- once you have prospective properties in mind -- find out how what portion of those properties can be used for your intended use. For example, if you're buying land for a house but part of that land is protected wetlands or in a flood zone, make sure there's adequate higher ground for your home.

How Do I Pay for a Land Purchase?

TIP #1: WORK WITH INSTITUTIONS THAT KNOW LAND

While many traditional banks will turn you away, lenders that know land -- such as farm credit institutions -- will be more likely to loan you the funds you need. These institutions were designed to make the land buying process easier, even in how you repay the loan.  If you would like the Rural KC Team to give you a few names of lenders that specialize in land purchases, please feel free to contact us.

Rural land lenders structure the payments based on the buyer. For example, if a farmer buys 100 acres to raise cows, they can collect the payments on a quarterly or annual basis depending on when the farmer receives his income from the cows. 

TIP #2: START SAVING MONEY -- AND IMPROVING YOUR CREDIT SCORE -- LONG BEFORE YOU BUY

Arguably the first step in the land buying process should be getting your finances in the best possible shape. A good credit score and a good cash reserve (to show you'll be able to repay the loan even if you have an unexpected change in cash flow) will give you a much better chance of securing the loan you need. Saving cash for your down payment is recommended, too. Buyers financing a rural land purchase are typically asked to provide a 20-25 percent down payment. 

How Can I Be Sure I'm Not Buying a "Bad" Property?

TIP #1: INVESTIGATE THE LAND'S HISTORY

The backstory of a property can be its biggest flaw, so find out how it's been used in the past -- and who owned it. Even a deed can be incorrect, so take the time to have a title search done before you finalize the deal. You may also want an environmental site assessment to ensure past use of the property won't impact your plans for it.  

TIP #2: MAKE SURE YOU CAN ACCESS IT

In land sales, access is even more important than "location, location, location." If you have no legal means to get to the land, it doesn't matter how fantastic it may be. The ideal access is public road frontage, which gives you the easiest way to reach your land. Second, best is a deeded easement, which specifically states in the property deed that you are able to cross the property to reach your land. 

What Kind of Insurance Will I Need on Vacant Land?

TIP #1: GET TITLE INSURANCE

While you won't need much insurance on raw land, title insurance is highly recommended. This insurance helps clear any questions about who owns the land before you buy it, determines whether there are any liens against it, and protects you from future claims.

It’s worth noting that title insurance doesn’t mean that title issues won’t arise (much like owning car insurance doesn’t guarantee you won’t have an accident). But it does offer you a layer of protection should an unexpected claim arise, and keep in mind that your fees for the title research and for the insurance itself may be negotiable. 

TIP #2: GET LIABILITY INSURANCE

Even without a structure on your land, liability insurance can protect you from a sticky situation.  When you have acreage, liability situations can arise.  People could be riding four-wheelers or hunting on your property. You might not even know they’re doing it, but you could still be held liable. If you have more than five acres of land, I would look into liability insurance.  

We hope this has helped answer some questions about buying land.  Whether you are a first-time buyer or a seasoned purchaser, call the Rural KC Team.  We are experts at selling land.  It's all we do!  913-837-0760 or 913-837-0411.