are lots any different for wholesaling?

Question

I wholesaled or flipped a few homes but I have 2 lots under contract and I may already have a buyer? What is different from selling lots vs houses? Normally I would do a title search on a property and then use that title company to close while having my buyer buy their title insurance. These lots are only going for about $5000 per lot , I am thinking title insurance may be a waste of money...

I know that of course the buyer will want to look at wether a home is buildable which it looks like that won't be a problem because this in a gated community with homes nearby. What advise could someone here provide? Thanks!

Martin CS · Answer

Thanks to all for your help. I spoke to my Realtor and he made me aware that lots have their own P&S contract as well. I feel much more confident going forward with this. Thanks BP!

Ibrahim Hughes · Answer

I've wholesaled both and the differences I noticed were:

1) You'll want to get a survey so that you know exactly where the property begins and ends.

2) In NJ (and the northeast in general) there are issues with underground storage tanks (UST's) that were used from the 30's going forward when many homes were converted from coal heat. Now that many homes here are heated by gas, there is a concern that the previous owner failed to remove or decommission (fill with sand) the ust (underground oil tank) leaving a leaking UST that is contaminating the soil. Could be $100k or more in cleanup.

3) For lots where homes may have previously existed you will want to make sure that it wasn't the municipality that demolished the property and stuck the owner with the over-inflated bill.

Some or all of these issues may not be relevant to properties exsiting inside of gate communities. And btw, if I'm on title, like everyone else in the chain of title I want insurance. Hope this helps.

Dion DePaoli · Answer

Title insurance on a small transaction is small, it is also always worth it.

Rich Weese · Answer

I like what Sam said. I actually have seen a couple "leftover" lots that are not buildable. Check them out. If all the lots are under 10K, probably ok. Rich

Sam Sagor · Answer

If they are ridiculously cheap you want to find out if zoning allows for actually building on the lots. Yes it's probable but gated communities are exactly where you run into stricter rules. Call the subdivision and ask, and I think you want to call city planning for asking about the zoning. Doing due diligence now will save your buyers headaches. For reputation purposes I'd make the phone calls.

Not sure about title insurance. It could become very important when these things have homes on them so it might be worth it. Maybe you'd want to charge more for these services depending the actual hours / fees you have to put into it. Can somebody else weigh in on this one?