The Essential Checklist for Buying Land

Buying land has unique complexities. Use a land buying checklist to avoid leaving a single “rock” unturned. Follow the outline to simplify your process and help you make the best decision. 

Key Takeaways

• Clearly define why you want to buy land
• Set a budget and timeline to guide your decisions
• Research everything from land features to community factors
• Build a team of experts to help you understand all aspects of your vacant land purchase

Contents

Define Your Purpose and Timeline

Location Evaluation

Legal and Regulatory Due Diligence

Environmental Assessment

Infrastructure and Utilities

Financing a Land Purchase

Build a Expert Team

Offer and Negotiation Strategy

Closing Process

Technology Tools and Resources

Checklist for Buying Land

Frequently Asked Questions

Define Your Purpose and Timeline

Knowing why you want to buy land sets the direction for your search. Whether building a home, farming, starting a business, or investing, each purpose affects what kind of land you need.

It’s also important to think about your end goal. Do you plan to develop the land right away or hold onto it, hoping its value will increase? Your timeline will shape your approach and budget.

Primary Purpose Assessment

Ask yourself:

• What will you use the land for? (Home, farm, fun, investment, or business)
• How much land do you need?
• When will you use it? Building now or later affects your budget and timeline

The goal for the purchase helps you tweak the land buying checklist to suit your individual needs better. Someone buying to establish a homestead or farm needs to pay more attention to soil and water access than someone buying recreational land or holding for future development. Purpose changes how you find land to buy.

Investment Analysis 

Research is key if you’re buying land as an investment. Look at potential value increases by studying local market trends and growth patterns. Purchasing land on the outskirts of expanding metropolitan areas tends to have the greatest likelihood of appreciation gains.

Create a complete budget that includes more than just the purchase price and closing costs. Include costs for developing and maintaining the property, as well as ongoing costs like property taxes, insurance, and maintenance. A good financial plan helps you avoid surprise costs and considers how the land might be used for different purposes in the future.

If the property will generate income, such as with a farm or by leasing recreational land, calculate the capitalization rate to compare potential earnings against expenses. 

Develop an exit strategy. Whether you plan to develop, divide, or sell the land later, having a clear plan guides your investment choices toward better profits.

Location Evaluation

Location greatly affects a property’s value and potential. A good location optimizes growth potential, while a poor one may limit how the land can be used and its overall value. When purchasing land, look at its physical features, access, and the surrounding community.

Research past land uses to identify possible environmental problems that could affect the property’s value and usefulness. Vacant properties could be cultural sites, old factories that left behind contaminated waste, or polluted infill. Those near waterways or on slopes could have unstable land with erosion.

Geography and Physical Characteristics

Understanding the land’s physical layout is essential. Walk the property to check its slope, water drainage, and natural features. This helps you find the best building sites and spot potential problems with water buildup or wetlands.

Soil type is also important from a use and engineering standpoint. Test the soil to make sure it works for your plans. Expansive clay impacts agricultural work but could be unstable for homes or other structures. Difficult land conditions, like steep slopes or bedrock, may require special engineered foundations. 

When evaluating the property, check the local environmental risks like flooding, wildfires, and soil erosion. Some land could be in markets with a higher risk of sinkholes or high radon readings. All these elements impact its intended use. 

Climate factors like sunlight patterns, wind direction, and seasonal weather trends affect the suitability of the land for any agricultural plans.

Access and Proximity

Check that the parcel gives the owners legal and physical road access to the property. You want to avoid entry disputes. Access road conditions affect the property’s usability; if you can’t get construction equipment to develop the land to the site, that again impacts your use. In some cases, building a road may be cost-prohibitive.

Find out where power lines are located. Legal access to power lines matters for connecting utilities, especially if you plan to build or develop the land. Running power to a rural property increases costs the further from transmission lines you go.

Look at how close the property is to schools, medical facilities, shopping areas, and emergency services. Check commute times to work or other places you visit often. Adequate access to essential services boosts land value. For those buying land to build a custom home, being near the places you work, shop, and seek services may be a priority.

Look at neighboring properties to understand surrounding land uses that could affect your property’s value or enjoyment. That rural lot might be nice, but how would it be living near a shooting club or a power plant?

Community Factors

A land’s appeal and value go beyond its boundary lines. Families care about the quality of nearby schools, and it’s often an indicator of property value and growth. Check crime rates to gauge safety. Public services like road maintenance and snow removal affect accessibility and safety year-round.

To determine ongoing costs, review the tax situation, including county, city, and special district taxes. How often are taxes raised? Also, evaluate fire protection services, especially for rural properties with high wildfire risk.

Research upcoming commercial development and infrastructure improvements to see how they might affect land value. 

Legal and Regulatory Due Diligence

Thorough legal research prevents problems related to ownership, land use, and other deed restrictions. A current survey confirms boundaries, identifies easements, and detects any neighbor encroachments.

Zoning and Land Use Regulations

First, understand the property’s current zoning and research local zoning laws. These set limitations on the property regarding its use. Rural property could be classified as agricultural, residential agriculture, or perhaps earmarked for commercial development. Urban vacant land has even more possibilities that create building restrictions: mixed-use, single-family, or multi-family, as an example.

Confirm what activities and development are allowed under the current zoning. Check municipal plans that could affect future land use. Zoning regulations can be changed, but the process takes time and adds to the cost of ownership.

If you plan to split the property, learn about local subdivisions or municipal development rules. Check building codes and setback requirements to meet construction standards. When evaluating roads and hydrant locations, verify that they meet current regulations.

Restrictions and Encumbrances

Legal due diligence includes identifying deed restrictions, such as easements, liens, or other limits, that could affect building plans and access. For example, check for easements that let others access parts of your property, such as utility easements. Some lots may have conservation restrictions that protect historical or cultural sites or environmentally sensitive areas. 

Evaluate any right-of-way issues. Verify that all access roads are legally recognized and accurately marked to prevent future conflicts. Check the encumbrance certificate for legal claims against the property that could affect ownership. In some areas, you’ll need to guarantee access to others who may hold mineral or water rights to what’s under or around the land.

Buying vacant land in a developing subdivision or master-planned community? Review any homeowners’ association or developer rules.

Property Rights Verification

Well-defined property lines help meet zoning laws and prevent encroachments. A land survey defines property boundaries and potentially features like fencing or existing structures, setbacks, and easements. Even seemingly vacant land may have old structures, like septic systems or barns from former homesteads.

Do a complete title search to find any possible claims on the property. Government entities and some other contractors can put liens on properties for unpaid taxes or contracted work.

Find out if mineral rights come with the land or are held by others, which could affect future land use. Establish whether water rights include both surface and underground water sources. If the property has significant forested tracts, verify who owns timber rights.

For development projects in dense urban areas, understand air rights and any limits on building height or airspace use.

Environmental Assessment

Environmental assessments do check for potential contamination issues before buying land, but that’s not their only purpose. They also assess natural resources, testing the soil and water for their nutrients and composition. Some geographical regions have known environmental challenges, like a need to drill deep to access potable water or a higher risk of soil compaction and settling under weight. 

Testing determines if the land suits your purpose and prevents unexpected cleanup costs.

Site Contamination

Just because land is vacant doesn’t mean it hasn’t been used before. Tracts around the United States may have been former military testing sites or used in mining operations. Some are beside old EPA Superfund sites. 

Look at past activities on the property to find possible contamination sources. Get a Phase I environmental assessment for commercial vacant land, which examines previous land uses and environmental records.

If there are concerns about contaminants, do a Phase II evaluation with soil, air, or water tests to check for industrial chemicals. Look to federal regulations on what cleanup efforts will be needed and estimate costs if contamination is found.

Identifying potential environmental hazards from past land uses can reveal liabilities like cleanup requirements and restrictions due to endangered species.

Natural Resources and Hazards

Some vacant parcels have established hazards through their natural features. These environmental factors include wetlands, floodplains, and endangered species. Any of these could limit development. 

Get FEMA maps and elevation certificates with flood zone information. Check for established regional geological hazards like landslide risk, sinkholes, or unstable soil conditions. Determine wildfire risks by looking at local vegetation and determining the required defensible space rules.

Look for endangered or protected species on the land to understand ecological impacts. Some regulations restrict what can be done if an endangered animal or plant species is established on the property. Others may already carry a conservation easement.

Soil and Water Testing

Are you looking for land to raise livestock or establish a farm? Test the groundwater as part of the soil evaluation before buying land. The groundwater, soil, and bedrock conditions affect infrastructure and building costs.

Test soil samples for pesticide residues, heavy metals, or industrial chemicals that could pose safety risks based on your planned land use.

Building a home on a lot in a more rural area? Do a percolation test to see how well the ground absorbs liquids, which will determine whether it can support a septic system. Test the groundwater quality if the property has wells or surface water to confirm it meets health standards. Check for radon gas levels; you can’t detect this odorless, colorless gas.

What about ground stability? Use a soil boring to check load-bearing capacity and foundation needs. Conduct site evaluations to find potential geological challenges that might require blasting during construction or septic system installation.

Infrastructure and Utilities

When buying land, check the availability of essential services. Existing infrastructure and utilities affect land development potential and costs. Raw land is cheaper than vacant land because of the cost of establishing access and utilities. 

Knowing the current infrastructure and future utility expansion plans aids in finding land that meets the investment goals. Add to your land buying checklist: 

Land Access 

Find out who maintains roads that give year-round property access. Verify easements to establish the legal right to use private roads to reach the property. Make sure paths to the property can accommodate emergency vehicles and meet fire safety regulations, particularly when buying rural property.

The ideal road access is year-round, all-weather access. That means even with two feet of snow on the ground or a local creek flooding its banks, the property is still accessible. Building access roads adds to the cost. 

Besides what’s there, research potential road infrastructure improvements that might affect future conditions around your property.

Utility Availability

Find out how far away electrical service is, where power lines are located, and connection costs. Again, land with a power pole present will cost more than raw land with no electrical service, but the trade-off could be worth it.

Explore water options, including municipal systems, drilling a well, or water delivery. Look at sewer service, too. Review whether there are community connections and the connection costs.

Another thing to check is waste management. Property inside the city limits may have service, but those in suburbs or country towns either need to pay for private waste services or find other solutions for managing trash. 

Look into heating fuel options like natural gas or propane. Factor in the cost of adding a fuel tank or generator to the property, plus maintenance and refills. Make sure any fuel use complies with local laws. You may be interested in alternative energy options like solar, wind, or geothermal systems.

Our world relies heavily on telecommunications availability today. Access to high-speed internet and cell phone coverage now influences land costs, especially for people looking to build their dream home on a lot of their choice. 

Cost Estimation

Are you buying raw or minimally developed land? Get estimates for utility connection fees. Remember to check local impact fees when calculating total lot purchase costs.

Estimate costs for constructing infrastructure like roads, driveways, and bridges. Research typical utility service charges in the area to forecast monthly costs.

Include costs for backup solutions like generators, especially in remote areas. Determine expenses for legal compliance when installing utilities, including permits and inspections.

Financing a Land Purchase

Financing land purchases involves different complexities than home mortgages, requiring specific documents and zoning knowledge. Carefully assess your financial factors like financing, development funding, and ongoing expenses to make sure buying land is a sound investment. Accounting for all related costs is key to managing your investment. 

Land Financing

Shopping around and learning about the loan programs is a must on your land buying checklist. Find lenders who specialize in vacant land for the best financing options. To find the best fit, compare loan terms, including interest rates, down payment requirements, and loan length.

Calculate land acquisition costs, including closing costs, earnest money, and down payments, before starting any land search to check your financial position to buy land. Remember that land loans typically have stricter requirements than home loans, so expect thorough scrutiny during approval. Among these requirements will be:

• Higher downpayment
• Higher interest rates
• Shorter repayment terms
• Plans for land use
• Higher credit scores

More flexible terms could be an option through seller financing or rent-to-buy arrangements.

Development Financing

Research construction loans are designed for land development and building a custom home. Some mortgage lenders provide a loan to cover the land purchase and the construction cost. For others, doing so may require two separate loans. 

Look into agricultural or conservation programs with special funding for specific land uses. While most won’t help with the land purchase, some specialty loans and grants through the USDA can help with land development costs.

Research tax incentives and credits for certain land uses or improvements. They benefit buyers by reducing the cost of ownership and maintenance or by helping them start using the land in a specific way. For example, look to the USDA for grants and loans to fund organic farming or growing specialty crops. Other grants support building multi-family housing under specific conditions. There are federal, state, or local grants for particular land uses that reduce development costs.

Alternative financing

Other ways land buyers raise the funds to purchase land include using their existing home as leverage. A home equity loan or a home equity line of credit (HELOC) uses a buyer’s equity in their primary residence to provide funds that can be used to buy land. This strategy has pros and cons.

Some land buyers pool funds with other like-minded investors through joint partnerships or by establishing LLCs. Combining funds allows individuals to buy properties that they couldn’t on their own. Partnering with other land investors requires establishing written agreements and operating protocols.

Ongoing Costs

Research local property tax assessments and rates to estimate the tax burden. Some lands may get tax breaks if used for specific purposes, like farming. Texas is a prime example of a state with friendly property tax laws for agricultural land, but they do have ownership and use regulations to qualify.

Get insurance quotes for vacant land or use-specific coverage to protect your asset. Budget for maintenance needs like road repairs, septic pumping, and vegetation management.

Calculate the regular community organization expenses, including HOA fees or special district charges. Create a reserve fund for unexpected issues. Understanding these ongoing costs is essential for sound financial management of your land investment.

Build a Expert Team

Rely on a roster of professionals who provide specific skills and expertise in purchasing land. Your first thought is likely a real estate expert, and, indeed, their knowledge of the local area, its zoning land, and future development plans is valuable. But, as a land buyer, other partners can assist in making a smart purchase:

• Land surveyors
• Environmental surveyors
• Mortgage lenders specializing in land loans
• Civil engineers
• Real estate attorneys

Real Estate Experts

Hire a realtor specializing in land deals to help with your search and negotiations. Consult a real estate attorney experienced in land use to interpret local zoning rules and restrictions and review contracts for legal compliance. A knowledgeable attorney helps break down potential issues, particularly if you plan to apply for a zoning change or to subdivide a larger parcel.

Choose a reputable title company to conduct a thorough title search and provide title insurance. Hire a professional land surveyor to confirm property boundaries and identify existing land improvements. Hire a property tax consultant to assess valuations and handle potential appeals.

Technical Consultants

Soil engineers run soil testing and give foundation recommendations for construction suitability. Use an environmental consultant to evaluate wetlands, protected species, or suspected contamination.

Consult a water resource specialist about well placement and water rights. Get estimates from utility contractors for service extensions and infrastructure development, like roads and septic system installs. Consider partnering with a land planner or landscape architect for development concept planning.

Local Knowledge Resources

Get guidance on agricultural practices and land use from the county extension office. Contact the planning office for insights on zoning and development rules. These resources are vital to assessing subdivision potential, setbacks, road requirements, and environmental regulations affecting property use.

Talk with neighboring property owners to learn about community issues and local concerns. Discuss building conditions and cost estimates with local contractors. You never know what tidbits a local contractor might reveal regarding their work, like why you might want to add a culvert or what materials work best for underground water drainage. 

Offer and Negotiation Strategy

Successful negotiation requires thorough preparation and market understanding. Examining the property’s true value relative to current market conditions, planning your negotiation approach, and efficiently handling due diligence puts you in a good position to secure an excellent deal.

Market Value Analysis

Pull recent sales of similar properties as a reference for crafting a land offer. Are property values are rising or falling? That informs your land investment strategy, and if this parcel is a smart buy. Look at how long similar plots have been for sale to judge market trends and buyer interest. 

Calculate the cost per acre to compare pricing with nearby land parcels. Estimate the value of existing improvements like buildings and wells. Weigh the purchase price plus expenses like maintenance and property improvements to make the deal fair for you. 

Negotiation Preparation

Identify essential purchase requirements and plan for contingencies. Determine non-negotiable items that would make you walk away from negotiations. 

Understanding the seller’s motivations and current market conditions gives you the advantage when negotiating. Set your opening bid and maximum price while exploring creative alternatives beyond price, such as payment terms or closing timelines.

Due Diligence Period

Make a schedule to complete all property evaluations within the due diligence timeframe. That includes any environmental assessments and land surveys. Make a list of information needed from the seller to verify property details.

Schedule experts to visit the parcel during the contingency period to address any issues. Based on inspection findings, plan how to renegotiate. Follow the steps for terminating the agreement if necessary.

Closing Process

Managing the closing process is the final step in securing your land purchase. Depending on preferences and local laws, closings can happen in person or virtually. Work with all parties to prepare all documents and make financial arrangements to finalize your investment.

Before finalizing the purchase, do a thorough final walk-through to verify that the property’s condition meets expectations.

Document Preparation

Review the purchase agreement carefully to ensure all contract terms are clear and acceptable. Examine the title commitment, paying attention to exceptions and conditions, while checking for hidden liens.

Choose the best ownership form for your investment purposes, whether individual ownership or through legal entities like an LLC or trust.

Verify the accuracy of property lines and on-site improvements. Resolve any potential property boundary disputes before taking ownership.

Financial Arrangements

Arrange certified funds or wire transfers to complete the purchase. Meet all lender requirements for loan documentation to secure financing. Before closing, get adequate insurance coverage to protect against future hazards.

Double-check that property taxes are accurately assessed through tax prorations. Budget for recording fees. Purchase title insurance to protect against potential ownership disputes and unknown encumbrances.

Create an accurate closing statement by accounting for all credits, debits, and prorated charges.

Post-Closing Actions

File the deed promptly at the county recorder’s office to complete the ownership transfer. Set up any utilities under the new owner’s name for uninterrupted service. Notify the tax assessor about your address change to receive tax correspondence correctly.

Protect your property by marking boundaries and posting no-trespassing signs. 

Technology Tools and Resources

Modern technology has transformed the land buying process, allowing buyers to evaluate property characteristics and value remotely. Digital research tools, specialized software, and electronic documentation systems make the process more efficient while improving decision-making.

Digital Research Tools

Assess property features and boundaries using county and state geographic information systems (GIS mapping). Study property changes over time using Google Earth satellite imagery. Some smartphone apps are designed to evaluate and measure land to get detailed information about property size and features. 

Most counties now have tax records, deed data, and other property documentation online as public information. This establishes a chain of ownership and property history over its use and development.

Buying for agricultural purposes? Study climate reports and local weather patterns to understand environmental influences on the land. Access USDA soil databases and geological surveys.

Professional Software

Use visualization tools for land use planning to conceptualize and present property designs. Incorporate survey data using digital boundary information. These can show flood plains and fault lines.

Use water resource modeling tools for drainage and watershed management analysis. Assess potential energy generation with solar capacity calculators. GIS mapping technologies help buyers thoroughly investigate property lines, topography, and water features.

Documentation Systems

Create a digital document organization system to manage property records effectively. Property management software tracks maintenance work and costs when developing the land. Use expense tracking applications to monitor construction and holding costs.

Use project management tools to coordinate the schedules and activities of various experts. Integrate mapping technology to maintain updated digital property maps, including upgrades or changes. Digital documentation systems improve organization and access to vital property records.

Checklist for Buying Land

Following this detailed guide helps you handle the complexities of buying land. Remember that careful research, strategic planning, and expert guidance are essential for acquiring a valuable asset. Approach your property investment confidently and make your land ownership venture successful with the thorough research covered here. Apply it to start searching land for sale today.

Frequently Asked Questions

Why is defining the purpose of land use important?

Defining the purpose of land use directs your buying decisions, determining the size, location, and type of land needed for development and sustainability. The intended use guides the budget parameters and establishes a timeline for the land investment. Buying land for development is different from buying land to use for hunting.

How do I evaluate the location of the land?

When assessing land suitability, consider its geographic and physical features, access to amenities and services, and local factors like school district quality and crime levels. Again, the intended use helps narrow down the land. Someone looking to build a custom home that has kids likely wants to be near resources to support their growth and development. That’s not the same as trying to find a deal in a place where urban encroachment may boost its value ten years down the road.

What are the components of legal and regulatory due diligence?

Legal and regulatory due diligence involves confirming zoning regulations and land use rules, identifying any limitations or burdens, and verifying property rights. These elements matter for legal compliance and reducing real estate transaction risks.

How can technology tools and resources assist in buying land?

Technology tools improve the land buying process by using GIS mapping services and specialized software to simplify research and provide property information. For instance, the show borders, topographical features, and existing or prior structures on the lot. Some reveal a chain of ownership.