There are several benefits to buying land through private sales. These benefits include lower maintenance costs, saving time, and shorter due diligence periods.
Paying with Cash
When purchasing real estate through a private sale of land, paying cash is an excellent way to save money. Some prospective purchasers find this alternative more tempting than finance deals. Before you spend money, there are a few procedures to follow.
First, you must create a budget for the purchase. You can do this by determining the costs associated with your mortgage. If you are paying cash, you may also need to liquidate some of your assets.
It would be best if you also established a long-term capital investment plan. It will help you to plan your cash flow and make financing more manageable.
After you’ve established your budget, you can start looking for land. A local Realtor or an online land sales platform will help you find the property you want.
Making an offer is the following stage. Typically, buyers will make a downpayment of 20 to 50% of the price of the land. This amount shows the seller that the buyer is serious about the purchase.
Shortening the due-diligence Period
A due-diligence period is often used to describe the period between the time you place your offer and the time you close. It may vary depending on your location, the type of transaction, and other factors. The parties usually agree to the length of the period. It can be as short as 30 days, or it can be as long as sixty.
In a nutshell, the due-diligence period is a requirement for land purchases. During this period, the buyer can perform any inspections to ensure the property is in good standing. However, the seller will be required to repair any defects discovered.
Some states have specific laws that promote the use of the due-diligence period. For example, Kentucky law mandates that a municipal lien search be done before closing. Additionally, the state’s zoning regulations must be considered if you plan to use the land for commercial purposes.
Another tidbit that should be considered is the actual cost of the due diligence fee. Usually, the price is refunded to the buyer at the close of the transaction.
Saving Money in the Long Run
When you’re looking to buy land, you might wonder how to save money in the long run. It can take time to provide a solution to this. There are several factors to consider. First, consider whether you want to buy land by itself or buy it along with other real estate. Land by itself may be worth less than land already built on it. Land value can increase with other assets, like a house or commercial building. But if you’re buying land with other property, you’ll likely need to spend a lot of money to buy the other property.
If you don’t have the funds to purchase the other property, you can still save money in the long run by buying land without it. Buying the raw land first can mean you don’t have to wait for a builder to complete your project. In addition, you can close an all-cash deal in a short amount of time.