If you’re considering buying raw land as an investment, there are several things to consider. For instance, the location of the property is critical to its value. It must be close to roads and have access to sewers, drinking water, natural gas, and electricity.
Purchasing raw land is considered a long-term, illiquid investment. It also takes time to sell quickly.
Real Estate Brokerages
Using a real estate agent to sell a property is an effective way to market a home. In addition to listing properties, agents provide buyer’s representation services, including negotiating contracts and helping buyers understand the mortgage process. They can also assist with property inspections and tax assessments. Many sellers report that they have a high degree of satisfaction with their real estate broker’s services.
However, no evidence exists that real estate brokers’ information advantage translates into higher selling prices. Several studies use two strategies to test this hypothesis, one comparing agents’ housing transactions with their clients. The other compares houses sold by agents and those sold by for-sale-by-owner (FSBO) listings. Both strategies show that real estate brokers’ information is not correlated with higher selling prices. In addition, land ownership offers significant financial savings, as maintenance costs are minimal and property taxes are generally lower than for built-up properties.
Online Land-For-Sale Sites
As land is a unique investment, it requires special attention to sell. Unlike real estate, raw land is not listed on a centralized database and requires more research to find potential buyers. This can be accomplished by utilizing specialized websites for selling land as a source. Often, raw land investors will find their best opportunities on such sites.
Online listings should highlight a property’s key features with videos, pictures, and detailed text. An overhead video using Drone Videos’ to showcase the property can help impress the potential buyer.
The listing should include important information like topographical surveys, utility estimates, renderings, and projected income calculations. Investors should also ensure that they are aware of any potential limitations on the land’s use and that the zoning is flexible.
A potential buyer should check the county tax records for any liens on the property. In addition, a prospective purchaser should always receive a preliminary title report before a purchase and sale transaction. This will help ensure that the seller can own and sell the land.
Land Contract Home Financing
Land contracts are an alternative to mortgages and can benefit buyers needing to meet conventional mortgage requirements. They can also help sellers who want to sell their property without the hassle of paying a large amount upfront. However, buyers should consider the pros and cons before entering a land contract. They should also consider consulting a real estate attorney before signing the agreement.
A land contract is also an excellent option for sellers who wish to reduce their tax liability. The seller pays taxes on the payments they receive each year instead of reporting the total sale price on their tax returns. This allows them to fill their lower tax brackets each year, reducing the total amount they pay in taxes over time.
However, the downside of land contracts is that they often make it easy for buyers to lose their investment. Many agreements have default clauses that allow a seller to forfeit the property if the buyer misses just one payment.
Subdivided Land for Sale
When you hear “subdivision of land,” you may immediately think about huge tracts of suburban-style housing developments. While this is one type of subdivision, there are many other ways to subdivide a plot of land for sale. The key is to do it legally and correctly.
A professional surveyor can help you with this process, but you should also check with local ordinances. They can tell you about any restrictions that might inhibit your subdivision plans. For example, many municipalities have minimum lot sizes and setback requirements, which can make the subdivision process impractical.
The homeowner and the real estate investor may gain from subdividing a big piece of property into many lots. It can potentially raise the property’s worth and boost flexibility and monetization. These benefits can be seen in residential or commercial applications. Buyers will find it easier to visualize what they can build on the land when selling.