Buying property that is not currently for sale..Part II

[Awnry Abe]

Not wanting to hijack the original thread. But I am already at the next step of the first poster's scenario.

For the record, I just walked up and asked "what would you think about selling me your land?" and I got a receptive reply. I didn't have any $'s in mind, and I don't think he did either, so we both parted ways with a general understanding that the topic is open for discussion.

I am gun-shy for two reasons:

1) valuation--or at least a method of determining a starting point for the negotiations. I think I can just answer this question myself by doing a little digging. But more importantly:

2) legalities--I really, literally, don't know how to proceed from a sales record stand point. Is it as easy as selling a box of old socks on Craigslist? Or is this the reason that real estate agents exist? I sure would hate for one to get involved if it were not necessary. And up to this point, it hasn't been.

What is the next step when two parties have reached a "gentlemen's agreement" on terms?

[fordy]

.............Visit the tax office and check for any Unpaid tax liens on the property . Next , visit the court house and research the title looking for deed restrictions , right of ways , buried pipelines , etc . , fordy

[TnAndy]

The next step is write up a sales contract. It can be quite simple ( you can probably find them on the net )....basically:

I (your name) offer to buy from (their name) the following property: ( insert the property address ) for (insert $$ amount), subject to the following conditions:

1. (Their name) can deliver a good deed, free and clear of any liens, claims, or encumberences against the property. ( Although as Fordy said, I would have already been to the tax office and the registrar of deeds office to do my own title search..you might find the IRS has a big ole lien on the place, for example.....or they still owe a bank for the property.....all kinds of things. People will tell you lots of tales....but the courthouse is where the official last word stands )

2. List any inspections of buildings/septic (including perk test if no existing septic), water test on well, anything else you want inspected/tested/verified.

3. Current survey if you want/need one. Decide who pays for it.

4. Any financing terms if you're not buying outright. IF getting a bank loan, this contract is subject to your ability to get one, otherwise canceled if you can't, and deposit returned. You'll then take this sales contract to the bank, and they will take over the process from there. Owner financing terms/conditions if they are providing it. IF there is financing involved, I really would recommend getting a land attorney involved, as it complicates the buying of the box of socks.

You're probably going to want to involve one anyway as you SHOULD buy title insurance for yourself ( in case long lost cousin Bubba comes out of the woodwork 10 years down the road and claims he didn't get his share of the inheritance when the land sold back in 1954 )...and the attorney will do a title search/opinion and set up the title insurance policy for you.

5. Closing date

6. Deposit. (Earnest money) I'd put something down, even a hundred bucks, just to bind up this sales contract good and tight. Owner might change his mind. He might get a better offer. All kinds of things happen, and if you have a good, binding contract, with money having changed hands, you're in a strong position to enforce it IF you want to. Include conditions under which the deposit would be returned to you ( Seller can't deliver good deed, you can't get bank financing, etc )

The SELLER may also want to included any restrictions on the property they want to impose. For example: No mobile homes to be place on property. No business use of the property. Etc. As a buyer, I certainly wouldn't bring it up, but if they do, this should also be listed as part of the agreement to buy, as they will most likely put it in the deed when they sell it to you.....so IF they mention it, get it in writing up front so there are no surprises at closing.

[Belfrybat]

Your Title Office should have all the paperwork you need, and at least around here, they take care of everything for a very modest fee. Much cheaper than getting a realtor.

[Rosepath]

We did that once (asked a neighbor if a parcel he owned might be for sale). We spent a few discussions on it, never mentioning price, walked the land, liked it a lot, everything seemed a go. When we finally got down to getting him to name a price, we were astounded to learn how very valuable this particular (non-tillable) property was, in his eyes. Or else it had solid gold bedrock, or oil, none of which were in evidence.
We passed on the property. Sometimes the owner is willing to sell because there are dollar signs in their eyes and they are living in the "buy land, they aren't making it anymore" marketing camp.

[simi-steading]

Your best bet is hire a real estate attorney... they will take care of all the paperwork for you. They can have the title searched and make sure everything is in order. If you hire the attorney, they will be looking out for your best interest in the deal..

Yes, you can go about it yourself, BUT, if you don't know all the laws and legalities of a property sale, you could find yourself out a WHOLE lot more money than an attorney will cost..

[Darren]

Check out www.zillow.com . For some properties they have previous sale prices, current owner, and possibly assessed value. You can check nearby locations to get an idea of recent sales. If you have an address, the locations I've viewed go straight to the property and include photos. That should give you an idea of the value of the property.

[Alice In TX/MO]

I have bought property (houses and land) using just a good title company. You don't need a realtor, attorney, or anyone else. Just a title company. They do this all the time.

[Wolf mom]

Many good suggestions. And good for you in having the courage to ask.

Realty companies like Realty Executives, ReMax, some Century 21 and others are what is called 100% companies - meaning the realtors get 100% of their fee. The offices charge overhead, the realtor pays advertising, sign placement etc. Other companies are not - they get a set percentage of the realtor's fee.
Why am I telling you this?
Because you can negotiate the realtor's commission. If there were a "set fee" for all realtors, it would be considered collusion. The 100%ers are more willing to negotiate a fee. Since you found the seller, I'd go for 1/2 the total commission.

If you know a realtor, ask him to "guide" you through a sale, but not represent you, then offer him $$ for doing it. Or ask him to be a buyer's realtor - then he'll represent you, but you'll have to put it in the contract. Keep in mind that may scare the seller away. I'd keep it out of the contract.
Ask for "sold comparables" in the specific area. Yes, Zillow and other sites are good places to get comps. Read up on everything. If you have title companies doing closes in your state, they can help with some things. If you live in a state that uses attorneys to close, I understand they represent the lender, not the seller or buyer. (maybe wrong here, as AZ uses title companies) You can hire a real estate atty as was written, but make sure he is well versed in RE, not just an atty that does multiple things.

Do not write a contract until you know what to cover in the contract. especially if this is a "good ol' boy" that's maybe done a lot of selling before. You do need to protect yourself. It can get expensive later after you've bought the property. Research old threads here on HT as there have been many threads about buying land & what to put in a contract.

There's many pros & con's about writing a land contract. Many here have, and it's all worked out fine. I was a full-time realtor for over 13 years, I would never do that. Research it yourself.

Reread Tnandy's post. Wise words. I will say that usually a complete survey is not needed, just someone to find and flag corner posts. Much cheaper and will save issues later. Many threads here have been written about encroaching neighbors.

Remember, everything in a contract is negotiable. You may begin by putting in something small that you're willing to give up in exchange for something else. In order to do this, you should have knowledge of the area in order to counter objections. Make your goal twofold, to buy the property and to have a win-win situation.

[simi-steading]

Originally Posted by Wolf mom

If you know a realtor, ask him to "guide" you through a sale, but not represent you, then offer him $$ for doing it.

Not sure about all states, but at least here in VA, that's not legal.. We've got a good friend that is a Realtor, and she couldn't give us any advice without risking her license... (but she did give us some info)

[greenacresusa]

We bought some more land adjacent to our land last year. We knew the owner was wanting to sell a very large amount of acreage (128 acres) but after a lot of emailing back and forth we were able to get them to part with just 40 acres. After we agreed to a price a simple sales agreement was typed up and signed. Then we had a local title company do the title search, provide title insurance and all of the other paperwork. Didn't cost a lot and the former owner and we are very happy! We'd do it all over again the same way.

[Awnry Abe]

Alright! Awesome feedback! 'Likes' for all...

[Doug Hodges]

I agree with getting a realtor or broker and negotiating a fee. They get paid for this and know exactly everything that is needed. It's so much easier for someone else to do all the necessary paperwork.

[Yvonne's hubby]

If you are very familiar with real estate law there is really no need to get a realtor involved..... kinda like hiring a doctor when you are injured. If you are not familiar.. I recommend getting a realtor involved. They will be more than happy to "direct traffic" through the sale and make it a positive experience. There are a great many things that can turn your dream into a nightmare. Yes they will expect to be paid a fee for the service provided... just like your barber... auto mechanic, doctor, or lawyer. In spite of what many will tell you it is wise to utilize a good realtors talents.... required? Naw people successfully by and sell real estate all the time, just like some people represent themselves in court and/or doctor themselves all the time. Others don't have such good results.