Wholesaling land

8 Replies

Hello all, I'm so in need of advice on wholesaling raw land. I trying to figure out how to protect my interest while trying to gather a survey, an appraisal and a cma so I can determine a sale price all before I can wright up a contract. Your advice would be so appreciated.   Thanks

Write up a contract that give you an inspection period for due diligence. Land takes a lot of due diligence so this is common. 

Originally posted by @R.Q. Hornbuckle Jr.:

Hello all, I'm so in need of advice on wholesaling raw land. I trying to figure out how to protect my interest while trying to gather a survey, an appraisal and a cma so I can determine a sale price all before I can wright up a contract. Your advice would be so appreciated.   Thanks

Having been in the Land Surveying & Civil Engineering field since 1986, I can tell you a Boundary Survey can be very expensive. It can also be under $250 depending on various details & size, etc.

Originally posted by @Ned Carey :

Write up a contract that give you an inspection period for due diligence. Land takes a lot of due diligence so this is common. 

 Ned, that almost implies weasel clauses. 

Raw land usually won't have much of an inspection period, there isn't anything to inspect unless you want an analysis of soils or other aspects, not customary with residential type lots or small parcels. 

A standard TREC contract already has assurances of area and content, more or less, if a survey show a significant difference, you're off the hook. Same with title matters.

Buying raw land is pretty much, what you see is what you get, it's obvious so that puts a weasel clause (like a non-existing partner approval) harder to play on.

Before contracting you need to know the market value of what you're looking at, you also want an assurance as to the area and content, address any easements or encumbrances or encroachments, such should be shown by a proper survey and if they exist you can address the value change at that time. This is done with any property, due diligence is more difficult with improvements. 

Unless you have a buyer in hand, wholesaling raw land is very risky as it is more often less marketable, it can take years to sell raw land. 

You really need more knowledge before running off with Dr. Land Flipper the guru. 

I suggest you go to the Assessor's Office and see the tax record as to the area. Then determine where the nearest survey monument is to get a bid on a survey if it's a meets and bounds description. If you're looking at a lot block legal description the survey should be much cheaper.      

The real question is will the title company insure the description? That is generally listed in Schedule BII of the exceptions of a Standard ALTA policy. A real buyer can have the survey done, his requirements will be the same as yours, so that risk/obligation is basically passed on if you assign a contract. :)

@Bill Gulley wrote

there isn't anything to inspect unless you want an analysis of soils or other aspects, not customary with residential type lots or small parcels. 

He didn't say it was a residential or small lot. And I am sure you well know that there is plenty of due diligence on land. The value of land depends on what you can do with it. Things like zoning restrictions, easements, protected wetlands, tree requirements, phase 1 & 2 environmental inspections, etc., can all greatly affect the value of land.

Originally posted by @Ned Carey :

@Bill Gulley wrote

there isn't anything to inspect unless you want an analysis of soils or other aspects, not customary with residential type lots or small parcels. 

He didn't say it was a residential or small lot. And I am sure you well know that there is plenty of due diligence on land. The value of land depends on what you can do with it. Things like zoning restrictions, easements, protected wetlands, tree requirements, phase 1 & 2 environmental inspections, etc., can all greatly affect the value of land.

 And it would be more effort if there were improvements, like a home on it or an office building. You're right, he didn't say, we have to guess and assume because he's new at this most likely. I assumed a small acreage, something like 3 to 5 acres in the country that is often found.  Might be 20 acres sine he's in Texas.

Forgot to mention mineral/oil rights which are not insured in Texas with title insurance or may not go with title. 

Point was, what you get is what you see, that puts a crimp on wholesaling as to the walk away free clauses.   You need to know what zoning is, wetland issues, applicable ordinances and your intended use before you contract. You also should have done these things, as you suggested, to find the value to make an offer. :) 

While there is definitely a step learning curve wholesaling land, it is a great niche because not many people know how to do it. I don't quite understand why wholesaling land would be more risky than wholesaling flips. The only risk is In my opinion, it's easier and more profitable than wholesaling flips. The key is to know exactly what builders are looking and to have long term relationships with them.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.