Any agent helped buy land in Colorado? What's the process?
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
I have a buyer under contract on a mountain property. The owner of two adjacent parcels is willing to sell them to my buyer. (He's offering them for $6,000 each, which seems like a good price.)
I'm not sure if I'll be involved in this part of the transaction or not, but if I am, I've never helped a buyer buy land before. A few questions:
-- What kind of fee do you charge? Does the seller pay that fee?
-- My buyers can buy with cash. Is that the best way to do it? If they wanted, can they get a loan for that?
-- Does the seller hire a title company?
-- Do my buyers need a survey/ILC?
-- Any other kind of inspection they should do?
-- What other information should they consider?
-- If they want to do it themselves, how easy is that? Is it just a bill of sale?
Thanks for any help!
-- What kind of fee do you charge? Does the seller pay that fee? Usually the seller pays, but the terms can be negotiated. One of my sellers requested that the buyers pay all closing costs and fees. He owned a beautiful land parcel in a desirable subdivision, and the buyers agreed and paid for all fees and closing costs in addition to the full list price.
-- My buyers can buy with cash. Is that the best way to do it? If they wanted, can they get a loan for that? Small local banks will often lend on land, but as @Anthony Taylor pointed out, even those banks may not be interested in these small loan amounts, and if they were interested, fees would likely be expensive. If your buyers can pay cash, I would go that route and call it done.
-- Does the seller hire a title company? It can be the seller or buyer, as specified in the contract, but usually the seller selects the title company and pays for the title insurance commitment.
-- Do my buyers need a survey/ILC? We always recommend a survey and/or flagging the lot corners, but some cash-strapped buyers may wish to skip it and hire a surveyor later when they are ready to build. If there are structures, fences, or propane tanks near the lot boundaries, I would urge the buyer to at least complete an ILC. It may seem crazy to think about someone being careless enough to actually build a structure or fence on their neighbor's land, but it happens.
-- Any other kind of inspection they should do? Water rights and mineral rights if important to the buyer and their goals for the property. Fun fact: As of this year, water rights and mineral rights are now separate inspection deadlines on the contract to buy and sell land in Colorado.
-- What other information should they consider? Association documents, which you are likely already familiar with since you are under contract on the neighboring property. Also look closely at the exceptions on the title commitment and pay attention to the type of deed listed in the last transfer. For example, a tax lien investor may end up with a land parcel and a treasurer's deed and wish to then sell that property, but the title may not be warranted with only a treasurer's deed. I'm not an attorney, and I would recommend that a buyer consult one in these circumstances. @Rodney Sumsmentioned utilities and easements, always something for a buyer to consider.
-- If they want to do it themselves, how easy is that? Is it just a bill of sale? If the two parties wish to proceed without broker representation, they could contact a local attorney who also works real estate transactions. The title company may have someone in house, but if not they can definitely recommend someone.
@James Carlson, please reach out if you have any other questions. I've learned a lot from listening to you and Erin on your podcast and would love to return the favor!
You can utilize a similar purchase agreement as you would for a home. I'm a part of the IRES MLS and they have a contract specific to land. I actually have a buyer under contract on a piece of land right now. Typically the seller would offer a fee but if they're doing this "off-market" they could just have an attorney write up a purchase agreement for them. Otherwise, you could offer to broker the deal for a set fee. Only specific lenders do land loans. They're typically 30% down, higher rates, and shorter terms. Not sure they'd have an appetite for such a small loan amount though. Not a bad idea to have a survey done though if there is no record of one recently. There's not really much need for any other inspections unless they plan on building on it. Just make sure they have a good understanding of the zoning and it's use. Hope I helped out a bit!
I have a buyer under contract on a mountain property. The owner of two adjacent parcels is willing to sell them to my buyer. (He's offering them for $6,000 each, which seems like a good price.)
I'm not sure if I'll be involved in this part of the transaction or not, but if I am, I've never helped a buyer buy land before. A few questions:
-- What kind of fee do you charge? Does the seller pay that fee?
-- My buyers can buy with cash. Is that the best way to do it? If they wanted, can they get a loan for that?
-- Does the seller hire a title company?
-- Do my buyers need a survey/ILC?
-- Any other kind of inspection they should do?
-- What other information should they consider?
-- If they want to do it themselves, how easy is that? Is it just a bill of sale?
Thanks for any help!
I haven't bought land but want to. Here's thoughts that come to my mind in addition to those you mentioned:
Title search and insurance in case there's any other claims to it or claims that don't present at time of search and sale
Making sure they've paid up on taxes
What the land is zoned for and if that's compatible with what the buyer wants to use it for
Restrictions on how the land is used and its appearance
If there are any easements for utilities, neighbors etc
If utilities can be put there and if so how far away are they? can septic tank be put in if needed
If there's any history of dumping/hazardous waste nearby
Is the land part of any associations
What the laws are regarding squatters and how they can take the land away
- We in Arizona utilize the Unrepresented Seller Compensation Agreement. Which basically informs the seller that they're going to have to pay you for the fact that you brought them a buyer. Typically you can charge whatever percentage you're used to.
- All my land deals I've done have been with cash. I know you can use a lender but it's definitely a niche program not everybody has.
- I believe the buyers agent will typically put the title company that they prefer on the purchase contract.
- You most likely will have to have a surveyor go out to the lot. This technically is your buyer's job but if you can recommend a surveyor then that'd be best!
- The only inspections would be if they wanted to hire someone to check the water connections and utilities if any. Other than that, it's really up to your buyer's own due diligence.
- Just make sure they look into the mineral rights of the land. They may own the land after they purchase it but they may not have ownership of the mineral rights. This could be vital if let's say they found rare minerals under their lot. Then they own the minerals and the rights to them.
- If they do it themselves, they could use a bill of sale I believe, it would just have to be recorded within the county. And the easiest way to do that is through a title company.
-- What kind of fee do you charge? Does the seller pay that fee? Usually the seller pays, but the terms can be negotiated. One of my sellers requested that the buyers pay all closing costs and fees. He owned a beautiful land parcel in a desirable subdivision, and the buyers agreed and paid for all fees and closing costs in addition to the full list price.
-- My buyers can buy with cash. Is that the best way to do it? If they wanted, can they get a loan for that? Small local banks will often lend on land, but as @Anthony Taylor pointed out, even those banks may not be interested in these small loan amounts, and if they were interested, fees would likely be expensive. If your buyers can pay cash, I would go that route and call it done.
-- Does the seller hire a title company? It can be the seller or buyer, as specified in the contract, but usually the seller selects the title company and pays for the title insurance commitment.
-- Do my buyers need a survey/ILC? We always recommend a survey and/or flagging the lot corners, but some cash-strapped buyers may wish to skip it and hire a surveyor later when they are ready to build. If there are structures, fences, or propane tanks near the lot boundaries, I would urge the buyer to at least complete an ILC. It may seem crazy to think about someone being careless enough to actually build a structure or fence on their neighbor's land, but it happens.
-- Any other kind of inspection they should do? Water rights and mineral rights if important to the buyer and their goals for the property. Fun fact: As of this year, water rights and mineral rights are now separate inspection deadlines on the contract to buy and sell land in Colorado.
-- What other information should they consider? Association documents, which you are likely already familiar with since you are under contract on the neighboring property. Also look closely at the exceptions on the title commitment and pay attention to the type of deed listed in the last transfer. For example, a tax lien investor may end up with a land parcel and a treasurer's deed and wish to then sell that property, but the title may not be warranted with only a treasurer's deed. I'm not an attorney, and I would recommend that a buyer consult one in these circumstances. @Rodney Sumsmentioned utilities and easements, always something for a buyer to consider.
-- If they want to do it themselves, how easy is that? Is it just a bill of sale? If the two parties wish to proceed without broker representation, they could contact a local attorney who also works real estate transactions. The title company may have someone in house, but if not they can definitely recommend someone.
@James Carlson, please reach out if you have any other questions. I've learned a lot from listening to you and Erin on your podcast and would love to return the favor!