Question on For Sale By Owner issues

[greenacresusa]

We're looking at buying land in the Mo/Ar Ozark region. We're torn between using a Real Estate agent or buying from a land owner directly (For Sale by Owner). If we go the route of buying from an owner what kinds of issues do we have to watch out for?

We'll be using a good local title company to do deed/title searches to make sure the land is clear and free. Also if the land is not surveyed we want the owner to have it done or if we do it have them reduce the price of the land accordingly. We're not comfortable if the land is in the county court house as a plot without having a survey.

But what else should we be looking out for? Also what are your feelings on the issue of Realtor vs F.S.B.O. ?

BTW what we're looking for is app 40+ acres with year round water (creek or spring) in the Ozarks. So if anybody has any leads....

Thanks.

[Mike in Ohio]

The first issue for purchasing FSBO is that you will need to draw up a contract (or review and modify the contract provided by the seller). You can use a generic boilerplate contract but remember that it is just that...generic.

What contingincies do you want stipulated for the purchase?
What happens for failure to perform on the part of the seller or buyer?
When does posession transfer?
How long is allowed for closing?
How many days before closing is the titlework to be provided to you?
Who pays which pieces of the settlement costs (your Title company can help you on this).
I would stipulate that the seller provide an ALTA title insurance policy.

Just a few thoughts.

Mike

[Maura]

Buying through an agency doesn't really protect you any more than buying directly from the owner. If the owner doesn't state any problems to the realtor, the realtor is not liable when you discover a problem. Talking to neighbors will help you, at least to find out if the neighbors are friendly. Go to the sherrif's office and ask if there are problems in the area you are looking in. You may discover an old dump, rattlesnakes, or even that the area is full of meth labs.

You are covering yourself pretty will by have a title search done. Do your own research to find out the difference between different types of deeds and the best way to have a contract written. If you are putting up good faith money, make sure you can get it back by stating that you can back out if an inspection shows anything you don't like. Then have it inspected.

[Siryet]

Always have a Lawyer involved when working with FSBO. The lawyer/Title company will investigate throughly. WATCH OUT FOR UNDECLARED EASEMENTS!

[MaryNY]

1. Get a local lawyer -- preferably not related to the seller in any way whatsoever!

2. Be sure the "owner" isn't a realtor in disguise -- for example, put the property in a relative's name in order to get around the rule that says if you are a realtor and you own it and you are selling it, you HAVE to tell the buyer -- at least that's the way it is here.

3. Get a lawyer -- see above!

4. Get a home inspection -- if nothing else, a home inspector would find those rattlesnakes someone else mentioned, or maybe 17 old uncovered wells on the place that your kids could fall in, or something structural you would never have thought of, or any number of things you would be glad to know ahead of time, even if you would buy the place anyway.

5. Get a lawyer -- see above!

6. Either you or your lawyer (did I mention you should get one? LOL) should check the local records to be sure that someone doesn't have a right of way across the land, that there aren't any old dedicated roads across it, or that no one has an option to harvest lumber off it, or that it isn't under some kind of contract or Federal land use thing that would keep you from either using the land or using it for the purpose you intend -- like you can't keep pigs, etc.

7. Get lawyer -- see above.

8. Either you or your lawyer (see above!) should check to be sure that there are no covenants that run with the land -- this is some restrictions that are put on land by a prior owner that are recorded in the county clerk's office and can restrict what happens on the land forever -- for instance, restrictions can say that you can't have cats, or maybe dogs, or maybe only one of each or one or the other; that all buildings have to be a certain square footage, or built of certain materials only; that all buildings have to be painted a certain color; that no buildings may be torn down (this happened to Carla Emery -- it's in her book), and many more strange things that folks have attached to thier land in days gone by.

9. Get a lawyer -- see above.

10. Make absolutely positive that you have water rights and good water if you have a well for household use; and that you have access to good water to water cattle, or irrigate crops or whatever you are going to do there. Make sure the well is entirely on your land; make sure you don't share it with anyone; make sure you don't have to pay anyone else for the water -- except if you have public water available. If there is a septic system, check that to see that it meets current standards, etc. etc.

That's probably not everything -- just a few things off the top of my head -- now you know why I said . . . get a lawyer. hehe I work for a clutch of those critters, so I know no one likes to deal with them and some of them charge too much for what they do, but buying land/a house/a home and then finding out you've got problems that make it impossible for you to stay there, you can't sell it, but you have to keep on paying on the mortgage anyway, can cost you a whole lot more!! Unless you're really familiar with dealing in real estate, using a realtor probably wouldn't hurt either!

Good luck!

MaryNY

[Ramblin Wreck]

Actually, I prefer to buy directly from the owner, but the advice above about retaining counsel is wise, especially if you are unfamiliar with the laws of a given state. The fees should not run more than a few hundred dollars, and the peace of mind would be priceless.

[Wildtim]

Are you currently in the area in wich you are looking to buy? If so you will probably be able to do as well as a hired agent. If you are dealing over a distance it might be better to hire a person in that area who understands the locality and the particulars of the area, thats what a buyers agent is for.

[Karen]

Just as a side note, you mentioned about wanting the seller to pay for a survey. The buyer generally is the one who pays for the survey when purchasing property. The survey would be part of your closing costs. The only customary time a seller would pay is if the seller would want a survey in order to get a more accurate appraisal of the property prior to selling in order to speed up lending issues when a buyer is found.

[Scott in Florida Panhandl]

Clearly, legally stated mineral, oil and gas rights.

[big rockpile]

Maura wrote:

You may discover an old dump, rattlesnakes, or even that the area is full of meth labs.


Well that leaves out Mo. Ozarks.I haven't owned a place yet that didn't have Rattlesnakes or Meth Labs in the area.

big rockpile

[MaryNY]

Originally Posted by Scott in Florida Panhandl

Clearly, legally stated mineral, oil and gas rights.

Drat! I knew I forgot something!! LOL But absolutely correct! In some states, you can't buy ALL your own land -- ownign all of it including mineral rights is generally called "in fee simple", which is generally defined as owning your land from the highest heavens to the center of the earth -- including all mineral, oil and gas rights. I know for a fact that in Maryland you only own the top foot or so of dirt and the state retains the right to all minerals, etc. ever found on the property (wonder how they deal with cemeteries - must dig deeper in there?!). Imagine how you'd feel about an oil well in your front yard? your veggie patch? your orchard?!

Also, be sure in states which have generous amounts of minerals in the ground (coal, etc.) that some prior owner hasn't sold the rights or an option to explore the area to someone you know nothing about.

MaryNY

[greenacresusa]

Thanks to all for those great thoughts and advise from everybody!! I'm printing this string off so I have it with me when we go to look at the land for sure!! And having a good area lawyer to go over the papers sounds like good advise.

We've put ads in some of the local papers and have gotten some responces on land so far (some good / some not so good). But sure will feel great to get out there in person!!!

In the meantime any and all advise is welcomed as well as leads

[Alice In TX/MO]

Properties in the Missouri area that I am familiar with are sold as 'more or less' acreage. No surveys. Just isn't done. Survey cost would be QUITE high, and a selling land owner isn't going to pay it. There will be others who will buy the land without the survey, so if you insist, you won't be the buyer.

[Wildtim]

Buying and unsurveyed plot? I've got this nice city lot for sale! it's 100 acres give or take 99 or so. Or is this something else?

[Alice In TX/MO]

Yup, that's the way it's done. You look at the county maps, walk the fenceline, etc. The county plats are pretty accurate.

I was stunned at first, too. You get used to it.

[Hoop]

You are overlooking the most important thing......ACCESS. Without access you can enter/exit only by helicopter.

Shared road access should be avoided if possible UNLESS EVERYTHING is spelled out and written in stone. Questions such as who pays for gravel, snowplowing, culverts, grading, and even blacktopping should have written answers. Will costs be equally shared? What about nonpayment by those sharing your road? What is the standard for determining when repairs to the shared road will proceed?
Make certain you understand all facets of what a shared road entails. You may think the road should be suitable for a Buick sedan with year around access while all others think access in fall with a 4x4 truck with 36" mudders is just fine.

You certainly don't need a lawyer.

Make certain the property exchange is via warranty deed. Any deed restrictions will be spelled out on the deed.

Its customary for the seller to pay closing costs. Generally, closing takes place at the office of a title company or a lawyer.

As far as a survey goes, its standard practice for the BUYER to pay for it when its a parcel such as an undeveloped 40 acre parcel. Realistically, what difference does it make if the property line is a few feet one way or another. As long as their is access, who cares. You can have someone "run a line" for a couple of hundred or have the full blown survey for upwards of $3000.

[greenacresusa]

Thanks for the info on the county map/plats. Up here, even years ago (before they got even more picky) you couldn't get away without having it surveyed. Does take getting used to though not having a survey.

And agreed on the shared usage of the access to the property. We currently are down a right of way shared by three houses and it's a pain in the butt!! Works well when you have good neighbors but changes when they move out and idiots move in. We have vowed no matter how good the property we're looking at is, we will only buy it if we can have direct acess to the road or we are the only ones with a right of way (no roads going across our property please!).

[ozarkcat]

Get a disclosure sheet. We really got burned on a property we purchased in TN, but because there was no disclosure sheet, couldn't do a thing about it. Basically it ended up that we told the owner that we were looking for a property to do organic farming, and he showed us a parcel with an old farmhouse, a huge pole barn, and a mobile home on it. He stated that it was liveable and would be perfect for organic farming. Fast forward to us getting the plumbing hooked up - the supposed septic tank hook-up was actually a couple pipes stuck in the ground (couldn't tell 'til it started raining), the toilets leaked so badly we couldn't use them, and (also couldn't tell 'til it started raining) he'd bulldozed a ton of hydraulic fluid, 2-cycle engine oil and bar & chain oil containers (most of them leaking) under the surface.

By the way, if you're shopping for land around Nashville or Clarksville, Tennessee, don't buy ANYTHING from Ernie Ellis or Ellis & Watts - that's who sold us this supposed "perfect" property.

[greenacresusa]

I talked to a real estate lawyer friend and he told me what I've been told here, that out west (well....west of here) they use the county office plats instead of surveys. Also he recommened that I use a settlement company that is either owned by a lawyer or has a lawyer on staff to make sure that the title/deed is clean and clear. Also that if we have any doubts on the settlement company to check with the state insurance board to be sure that no complaints have been filed against the company.

Good to have friends in the know, both around home and on this forum

[Bear]

I say also get a lawyer and let him handle it, even if you're buying from a realtor, make sure . Back in 1993 I bought a cabin way up in the mts. that had about a 1,000 right of way into the property. When I asked the realtor questions about the property everything was yeah, yeah , yeah everything is good. I was alot more naive then, and after searching for the perfect camp for almost 8 years I just bought it. Last year I sold it to a friend of the guy who had the property below and adjoining mine. The buyer was a good guy and had his lawyer handle the transaction, which he was footing the bill for. About a month later he calls me and says the lawyer found a BIG problem. According to the wording in the deed the only ingress or egress was allowed to gasline personnel or the owner of OGM rights to my property, nothing was stated about the owner. I was landlocked! What made it worse was that my right of way was smack in the middle of the bondary line of the guy below me and International Paper Lands. Probably was this way since 1910 when the cabin was built, but now there was a problem. To make a long story short, and alot of grief and stress on both partys, the lawyer got things straightened out after another 7 months! GET A LAWYER!