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Real Estate Tips
Saturday, January 25, 2025

How To Buy Land: A Step-By-Step Guide

Thinking about purchasing a piece of land? Whether you’re planning to build your dream home, start a farm, or invest, buying land can be a rewarding experience. But don’t grab your shovel just yet—this isn’t as simple as house shopping. The process isn’t the same as buying a house. With the right planning, though, you can turn that empty plot into endless possibilities!

Here’s everything you need to know to confidently tackle the land-buying process, avoid common pitfalls, and make a smart investment. 

A grassy field with scattered trees under a blue sky with clouds offers inspiration for those wondering how to purchase land. On the right, a graphic with hexagonal patterns and a logo featuring "ez" inside a hexagon completes the scene.

What’s Inside

What to Do Before Buying Land

Financing a Land Purchase

Finding Land Listings

Working with a Land Agent

Touring Land in Person

Making an Offer

Overcoming Common Challenges

What to Do Before Buying Land 

Don’t jump into buying land without a clear idea of what you’re getting into. Once you’ve bought it, that dirt isn’t going anywhere. Nail down the pieces of the puzzle before you launch a land search. 

1. Research Local Land Prices 

Begin by scouting local land prices in your chosen area. Check real estate trends and compare prices for similar tracts. Seeing the potential properties on the market will help you set a realistic budget and spot a fair deal when you see one. 

2. Evaluate Your Financial Situation 

Land purchases often require a significant down payment and other upfront costs. Take a close look at your finances. Can you comfortably afford the costs of the land and any upcoming expenses like utilities, land development, or property taxes? 

3. Know Your Purpose 

Why are you buying the land? If you plan to build a custom home, research zoning regulations and building codes. Zoning rules can prohibit what you do on a parcel of land. Want to start a farm? Learn about soil quality and water access. Clearly defining your goal will guide other crucial decisions. 

4. Consider Development Costs 

Unimproved land is a total blank slate. But if you’re buying that land for development, then you’ll be on the hook for some additional expenses. Even if it’s recreational land, you may decide you want some amenities on-site for when you are there.

  • Need power? Budget for adding a utility pole. And if it’s a rural property, you could be on the hook for installing a new line.
  • Planning to live on the property? You may need a well and septic system. More urban lots of land may need sewer lines installed.
  • Considering a shopping mall or cattle ranch? Actually, pause and call an expert for that one. These lots have specific zoning restrictions, land values, and considerations for real estate investors.

Knowing these costs in advance will prevent unpleasant surprises after the sale. 

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Financing a Land Purchase 

You’ve done your research. You’ve got your dream plot of land. Now, how will you pay for it? The financing process differs slightly from purchasing a house. 

Understand Land Loans 

Land loans don’t follow the same playbook as a conventional mortgage. Down payments are higher, and interest rates can be less favorable. That’s because lenders see undeveloped land as riskier investments. 

Types of Land Loans 

There are a few financing options you’ll want to explore depending on the type of property you’re purchasing. 

  • Raw Land Loans (for land without improvements like utilities or roads) 
  • Unimproved Land Loans (for land with some existing infrastructure, like public road access) 
  • Improved Land: has all existing utilities and is ready to build.
  • Construction-to-permanent loans are another option if you’re planning to build and are considering a lot for sale in a planned subdivision.

Speak with lenders experienced in land transactions—they’ll guide you toward the best loan for your specific needs. 

Different Lenders

Not all financial institutions work with land loans. Working with a local lender is your best shot at finding a land loan program, especially in more rural areas. Other options are owner financing, U.S. Department of Agriculture (USDA) loans, or credit unions.

Plan for More Money Down 

Don’t be surprised when you’re asked for a down payment of 20% or more. Unlike with a house mortgage, lenders see vacant land as offering less collateral, and they need to mitigate their risks. They do that by having you, the borrower, put more funds into the land. Raw land may require 35% or more down.

Interest Rate Sticker Shock

Land loan interest rates usually run higher than a traditional mortgage. To give you an idea, a fixed-rate 30-year home loan had a national average rate of 6.82% in December 2024. However, land loans were going for 7.25-8.3%. That’s reflective of the risk lenders see in these loan options. Different repayment periods are also common, 15-year or 20-year loans being typical.

Different Qualifications

To mitigate their risk, lenders will want to see you are a financially strong borrower. Many land loan options require a minimum credit score of 700. The lending institution may also want detailed plans on your land use and development intentions.

Finding Land Listings 

Time for the fun (and occasionally frustrating) part—searching for that perfect piece of land! 

1. Search the Real Estate Market 

Beyond traditional real estate platforms, consider specialized land-listing platforms and local real estate offices. Often, regional websites or offices have better insights into available parcels, especially in rural areas. 

2. Leverage Online Tools 

Google Earth or government GIS maps can give you an idea of property boundaries and terrain. Use these tools to narrow down your options and determine whether touring these properties is worthwhile. 

Working with a Land Agent 

If you’re buying large tracts or dealing with farms, ranches, or undeveloped plots, having a land real estate agent can be a game-changer. 

1. Why You Need a Land Agent 

Land agents specialize in the quirks and complexities of buying land. They help land buyers determine the true value of a property, negotiate with sellers, and address thorny issues like zoning and water rights. They’re especially helpful in states with extensive farmland, like Texas, Oklahoma, or Wyoming. 

2. Finding the Right Agent 

Look for real estate agents who specialize in rural or large-tract sales. Ask about their experience with specific property types and issues such as mineral rights and road easements. Ask how many land contracts they have closed.

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Touring Land in Person 

It may be tempting to rely solely on online photos, maps, or satellite views, but don’t skip the on-site inspection. Land, after all, isn’t always what it seems in the pictures. 

1. Why You Should Visit the Property 

Seeing the parcel in person reveals critical details digital tools can miss. Are there accessibility issues? Is the terrain what you expected? Are there pesky environmental concerns like flooding or soil erosion? 

2. Test Its Suitability 

Pay attention to noise levels, nearby developments, and anything else that could affect your intended plans. If you plan to build, this is the time to ask contractors or developers to visit with you. 

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Making an Offer 

Once you’ve found “the one,” it’s time to start negotiating. Follow these steps to protect your investment. 

1. Set the Right Purchase Price 

Compare similar properties to determine whether the seller is asking a fair price. Don’t hesitate to negotiate—especially if the land requires substantial improvements. 

2. Outline Contingencies 

Protect yourself by including contingencies in your offer. Common ones include the right to back out if the land fails an environmental assessment or if zoning prevents your intended use. 

3. Order a Land Survey 

Hire a professional surveyor to ensure property boundaries are accurate. Never rely solely on the seller’s claims or outdated records—precision matters. Especially on large tracts, property lines can easily be subject to dispute. A current survey defines the borders so you know exactly what you’re getting.

4. Conduct Due Diligence 

Dig deeper into the property by conducting environmental tests, soil testing, and water testing. Depending on the property type, you may also want to confirm mineral rights or verify access easements.  Don’t assume you have access to water or roads that you see.

Running a title search is important for buying land. A title company will dig fully into the land ownership records to verify there are no errors in the transfer of ownership and past subdivisions of the tract. You want a clean title for your peace of mind.

Overcoming Common Challenges 

Every land purchase is unique, but here are some obstacles you might encounter—and how to overcome them. 

  • Buildability: Not all land is suitable for building. Check topography, soil conditions, and any required permits. 
  • Surface vs. Mineral Rights: Be crystal clear on what rights you’re purchasing—just the surface or everything underground too? If there is mineral extraction on the tract of land, you are obligated to give that mineral rights owner access to the land.
  • Accessibility: Ensure there’s legal access to the property via a road or easement.  No or limited access could hamper your land use plans.
  • Zoning Regulations: Confirm zoning laws align with your intended use. Missteps here could turn your dream farm into a costly mistake. 
  • Property Taxes: Research property taxes in your area to avoid nasty surprises. 

Final Thoughts 

Buying land is an exciting but intricate process, requiring more research and careful planning than the average property purchase. From understanding financing to tackling zoning, every step matters. 

Remember, you don’t have to tackle this independently. Whether it’s finding land agents or asking experts to review surveys, building a knowledgeable support team can make all the difference. 

And once you’ve secured your land? The sky’s the limit on how you bring your vision to life. 

Start exploring your dream land today!

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Preston Guyton