Step 1 – Make preliminary determinations such as how much land you will need, what you will be building, and generally where you want to buy. It is possible to find “cheap” land anywhere in the country. You need to create a list of criteria that you want your land to have in order to narrow your search radius.
Step 2 – Define what “cheap” means to you. Generally, “cheap” means less that the market rate for a similar property. If you are an individual looking for a quarter plot of land to park a mobile home on, “cheap” might mean a few hundred dollars. On the other hand, if you are looking for hundreds of acres to build a farm on or a prime lot to build a retail complex in a well-trafficked area, “cheap” might take on an entirely new meaning. Defining your expectations before you being your search will help you to find the most reasonably priced property for your budget. But take a look at the going rates for vacant land to make sure that your expectations are reasonable.
Step 3 – Search for “cheap” land. The first logical place to start is with a traditional real-estate agent. Present your real-estate agent with your land criteria and budget and see if she can find some options for you that are “cheap”. Also look in your local paper for land and foreclosure sales. Not all people use a real-estate agent to sell their property. In fact, buying from a private seller might increase your odds of getting land “cheap”–these sellers might be more willing to lower their price because they will not have to pay an agent’s commission when the land sells. You can also find “sheriff” and “foreclosure” sales in the “Legal Notice” section of any newspaper. Usually, these properties will sell at a rate that is significantly less than their market value.
Another factor to consider, aside from the purchase price of the land, is the local property tax. A $500 piece of land that is located in a township or city with high property taxes might cost you significantly more over time than a piece of land that costs $15,000 in a town with low property taxes. Property taxes are dictated at the city or township level, and the only way to compare rates is to contact the city or town to ask. A good rule of thumb for finding areas with low property tax is to look for “senior citizen” or “retirement” communities. Retired people generally congregate in areas with low property-tax rates because many of them are living on fixed incomes. Having a large senior-citizen voting population in an area increases the odds that city officials will keep rates low.
Purchasing Cheap Land
Step 1 – Make an offer once you have located a desirable and reasonably priced piece of property. Most buyers should make an initial offer that is roughly 5 to10 percent lower than the asking price of the land. The seller will either accept your offer, come back with a counter offer or refuse to negotiate. It will be up to you to decide how much you are willing to spend on the property. If negotiations fall apart and you are unable to reach an agreement, you may need to move on and consider other properties. If either your offer is accepted or you decide to accept an offer made by the seller, you can move forward with the land-sale process.
Step 2 – Have the property inspected by a licensed inspector or geologist. An inspector will be able to tell you whether the land that you are considering buying is suitable for your intended building plans. If the land in on a flood plain or is the soil is unstable, you may not want to move forward with sale. Additionally, if you need to take out a mortgage to purchase the land, your mortgage lender will require such an inspection. If the property does not pass or is not worth the asking price due to deficiencies, you may not get your mortgage.
Step 3 – Close on the property. This process entails signing a land-sale contract and providing the seller with payment. Always have a licensed attorney who focuses on real-estate matters review your land-sale contract. An attorney will be able to explain any warranties (or lack of warranties) that are included in the contract as well as specific contractual terms that may not be beneficial to your interests.