Before You Buy vacant Land In The U.S, Avoid These Mistakes

1. Hire a real estate agent

2. Run the Comps

3. Stay the heck away from Wetlands

4. Avoid flood zones

5. Ask the neighbors

6. Deed restriction

7. Owner disclosure

8. Mining right

9. Do a survey

10. Get a title policy

11. Walk the land

12. Airplane path

13. Will the land PERC?

14. City water

 

Buying a piece of land in the United States can have a significant impact on your life. But what I’m going to share with you could be applicable anywhere around the globe. Land is an asset you can invest in however, if you buy the wrong piece of land, you could be screwed doesn’t matter if you are a seasoned investor or a newbie. Most people hunt for cheap lands but in most cases, those lands could end up being expensive because they ignore to do a thorough due diligence because of the value they got it for. Cheap things in life are the most expensive ones in disguise. Here is a tip, never get emotionally attached to a deal until closing. Emotions make you ignore red flags stirring at you.

I should say that there are many factors to consider but I will focus on the most costly and prevailing ones in this checklist. Here is what you need to do before parting your hard-earned money on a property.

 

1. Hire a Real estate agent

It doesn’t matter where you are in the world real estate agents are gatekeepers to properties for sale or rent. There are about 2 million licensed real estate agents in the United States out of those agents there are 1.554,604 million realtors a 2% decline in the 2023 housing market downswing, report according to NAR 2024 report.  There any many agents and there are properties for sale. Are you thinking of buying and building your own home in a rural or suburban area? You may want to consider hiring a good real estate agent to source one for you or run comps for you so you don’t overpay and most importantly have your best interest. Even though real estate agents are familiar with a home they are selling when it comes to land, it is a different ball game. Although realtors are great to work with, some, not all of them may not have your best interest and won’t tell you all you need to know because of their commission. If the deal is not close they won’t get paid, it is just the realities of the game. So therefore, it doesn’t matter if an agent represents you, I will strongly recommend you also do your part of due diligence. You don’t want to be left in a precarious situation.

Read also:How to invest in real estate in the US as international investor

2. Run the comps

Unless you are buying all cash or you can convince the seller to do owner financing, you will have to use a traditional loan which means you will need a real estate appraiser or property valuer. By law you the lender have to order an appraisal for the property, not you the borrower. So what is property appraisal? It is the monetary assessment of the value of the property the appraiser thinks it is worth compared to the sold neighboring properties or sales comparable (comps). The last thing you want to do is make an offer to the seller for more than the property is appraised for. The moral of the story is to buy cheap – below market value. Another tip is to check for comps otherwise known as comparable property sales around the area so you don’t overpay.

3. Stay the heck away from Wetlands

You want to stay away at all costs in wetland areas if you want peace of mind. You have to do some research. I can’t stress that enough. Again as I mentioned in the beginning, be careful of cheap pieces of land – there could be hidden pitfalls you don’t know about until you take possession. A cheap land could be a nightmare and end up costing you more than you signed for. One good source to find this information is to check at Federal Emergency Management Association (FEMA) website for undesirable areas.

 

4. Avoid Flood Zone

I will encourage you to get a flood elevation certificate. It will tell you all you need to know about the flood of the property. Otherwise, you will end up spending a ton of money to reroute floodwaters around your property. In the certificate, there are different categories of flood zones such as A, B, C or X. A stands for highly prone to flood, and B represents prone to flooding but not as bad as A. The C represents very low flooding and X represents a safe zone. However, since everything goes piles and stilts, what is considered no flood zone today by FEMA may change for years to come. For example, if FEMA categorized your property as X, that doesn’t mean you are in safe haven forever. You can do all your inspections during the inspection period you have given the Purchase and Sales Agreement (PSA).

Back to the flood zone, if your property is in flood zone “A”, you are right on the water, so you are required to have flood insurance. A typical example is the State of Florida, it is mandatory for every homeowner to have flood insurance. But in flood zone B or C, you are not required to have flood insurance.  To get the quote for your flood insurance you will have to provide a flood elevation certificate and a survey.

5. Ask the neighbors

A little conversation could reveal more information about the land. You could discover hazardous material on the property. Will they be calling the cops on you or approaching you with guns?  Also here are some tips, you will also discover if your potential neighbors are welcoming. Some communities in small towns don’t like to associate with those from out of State. They are always cold even when you trying to be friendly, they will avoid you and in some cases deny you employment because you don’t belong there. By the way, I should say it is not only in the U.S. that this kind of folks exist but also in other parts of the world.

You may be about to buy the land the county took from a convict in prison and a frustrated family wants an act of revenge and make sure whoever buys it life becomes a living hell. Sometimes a stranger is a friend you have not met yet, a little conversation could save your life and money on the piece of land you are about to purchase. Do your research, I cannot express these strongly enough.

 

6. Deed restrictions

Lands are restricted to the type of structure or activities you can put up or do on the land. Some lands are meant for industrial purposes or commercial buildings not residential. In the Deed restrictive covenant, there is a bunch of information on that. It is a public record and you get a copy at the Register of Deeds Office in your county. A deed is who owns the property and a title is a legal instrument to a property and what you can or cannot do on the property.  In the document, there are restrictions on whether you can build single-family homes or a condominium and vice versa, how big your house can be, the color you can paint your house with, etc. I don’t think you want to purchase land only to notice you are restricted for the very purpose you bought it for.

Also, you could be restricted to the type of livestock you want to raise and breed on the property. For example, you can have a poultry farm but you can’t have a pig farm. Or you can have horses but you can’t raise chickens on that piece of land. Keep in mind there may be no Deed restriction on your acreage of land today but in years to come the authorities may restrict you on flimsy excuses. Land restrictions are a headache everywhere.

 

7. Owner Disclosure

If you are buying existing property in almost all states the law requires the seller to provide a disclosure document or in a purchase and sales agreement, but if buying bare land without going through this checklist before signing the dotted lines you will have no one to blame but yourself for what you signed for. Don’t be fooled, the seller won’t tell you all that you need to know about the property otherwise he won’t be able to sell it.

Most sellers won’t tell you their piece of land is land landlocked and the only way to hook up to city water is through a neighbor’s land. So what the heck is the term landlocked? It is the land that is locked and there is no way to access it without crossing another person’s property. The only way to cross legally is to sign a Servitude or an Easement (depending on your State) with the neighboring property owner to grant you access to your property through their property. The best time to agree to sign with your neighbor is before you close on the property. You can purchase a home site unseen but not a piece of land if you don’t want to lose your money.

Read also: Is Chinese loans a debt trap diplomacy in African countries?

 

8. Mining right

Check if any gold, oil, silver mining right or gas extraction right, or any other right has been sold to anyone over the piece of property you are about to purchase. Leave nothing to chance. If not don’t be surprised someone might just come and make a claim of your land. Here is the sad part, if you have a mortgage on the property, you will still be on the hook to pay it even after the property is taken from you. In addition to that, check if the land has natural beauty or has cultural significance to native people. Do research to know if there are old camps sites burials, or ancient artifacts under your piece of land or house. The First Nations People could come and claim your property and can’t do anything about it. You are informed at least in the post.

 

9. Do a survey

To avoid boundary disputes or encroachment on someone’s property, you have to do an independent survey. But if the seller has it recorded then you may have to use it. The survey is the site plan and indenture as called in some countries that shows the boundary line and legal description of the property. That way you know which is yours and which is your neighbor’s. Your survey will also show you areas where your land is in a flood zone. Another thing to consider is to have a phase one report conducted to make sure there are no environmental issues on the land. Also, check if there are any new plans approved on neighboring lands. For instance, if neighboring properties are approved to be used as dumps, you should “brace for the impact” of noisy trucks.

Read also: Increase of Foreign Buyers Drives U.S Home Prices High 

 

10. Get a Title policy

You should buy your title policy. It will save you money in lawsuits but like any insurance, you never know when you will need it. It is a one-time fee and less expensive but very important. It is a must-have. It is an insurance policy coverage to protect you and the property from any liens, back taxes, or encumbrances that are linked to the property whatsoever. Before you close on the deal, the closing Attorney will run a title search on the property to make sure it is free and clear of any of those I mentioned above. If you are financing using a bank loan the lender will require a lender’s title policy but keep in mind that it doesn’t cover you that is why you need your own title policy.

 

11. Walk the land

You will be surprised what you will find out if you walk on the land. As they say “buy land when it rains” is relevant anytime and anywhere in the world. Nature never hides its ugly part. If you inspect the parcel of land, especially after a heavy downpour you will discover areas prone to flooding, soggy areas, etc. Besides that, you could also discover hidden junkyards or untold stories about the previous owner. Leaving no stone unturned, you may also consider hiring an abstractor to ascertain if there were previous developments on the land such as a dumping site, cemetery, and all the unpleasant.

Read also:America’s wooden houses vs Ghana concrete and bricks buildings

12. Flight path

You have to check if the land falls on flight paths. Think of lots of noise all day and night over your roof. The worst part of living beneath the flight path or close to the airport is your exposure to residual jet fuel and health problems. Research shows that living with airplanes constantly thundering over your roof could lead to heart attack, according to the researcher Mathias Egger of the University of Bern Switzerland. Another team of researchers from Jagiellonian University Medical College in Krakow, Poland also found two two-fifths of those living in airplane noisy environments had high blood pressure. Another thing you want to find out is land close to railroads or industrial sites. This could be an unbearable noisy environment as well. If you are close to uncontrollable train crossing you know that could be a living hell.

 

13. Will the land PERC

Is the land connected to city sewer or do you have to put your own treatment plant or the septic tank? How far is your property from the local sewerage treatment plant? All of this you have to know in advance before committing to purchase. What is PERC (percolation) anyway? In simple terms, it is a procedure performed on your land to review water drainage in different soil types. In other words, will your soil absorb water into the ground or not? If the soil won’t absorb black water then you will have to use an alternative system with a leach field that should be added above grade. For example, the dosing systems, sound mounds, and eco-flows, which is more costly than putting a traditional septic tank on your property.

14. City water

Is the land connected to city water or not? If not that means you will have to drill your own borehole or well to get running water. For the sake of argument, let’s say you are buying for assumed you buying to build your home. You have to factor in the cost of connecting the utilities to your property, in some cases, the utility companies won’t bring it to you. Depending on what state you are in, if your water table is high it won’t cost you much versus states where you have to drill further through the rocks to hit water and that could be more expensive.  If you are buying for investment purposes to sell at a later date, connecting utilities and infrastructure also increases the land value. The end buyer wouldn’t have to spend months putting those hookups in place. By the way, if you buy land, off-grid without electricity you will be billed just because the electricity line runs through your property. Off-grid is not a hid-out from bills.

And there you have it. Was it helpful? Have you or someone in your network had an ugly land acquisition experience? Share with your network.