Land Buying Tips Preparing for the Closing

Land Buying Tips Preparing for the Closing

You’ve found a piece of land and you’re ready to buy. What can you expect at closing? Depending on the circumstances, buying land can be very different than buying real estate. In many cases, the process is much quicker. If you’re investing in land, it’s important to properly prepare for the closing ahead of time to make the process as smooth and painless as possible.

The Difference Between a Land and Real Estate Closing

Land sales are generally simpler than real estate sales. If there are no structures or property improvements, there are no utilities to pro rate, no mortgage insurance to worry about and no termite policies to buy. In most cases, the owner does not have a mortgage on the property, so there’s no need to worry about title research and mortgage release either. The entire process can be streamlined and simplified.

That being said, land laws will vary from state to state, and there are some things that buyers should be aware of ahead of time.

Get Your Financing in Order

You should have your financing in order well before the closing. If you’re buying with cash, the process will be much smoother and quicker. If you’re financing the purchase, make sure that you’re pre-approved as soon as possible.

Decide on Your Title Ahead of Time

Before you make an offer, decide how you will take title on the land. Will you be purchasing as an LLC, a trust or as spouses?

If you plan on purchasing as an LLC or trust, it’s a good idea to have these set up before the closing to make the process simple and smooth.

Don’t Be Rigid About the Closing Date

If you can be flexible about the closing date, you’ll stand a better chance of the sale going through. Ideally, both you and the sellers will be flexible about the closing date to make the sale happen as quickly as possible.

Know the Closing Costs

Closing costs are not included in the purchase price of the property. When it comes to buying land, closing costs aren’t quite as high as when buying real estate. They may include document stamps, deed recording and other various fees. Fees will vary by state, so do some research ahead of time to find out what these fees are. Typically, however, closing costs are about 1% of the purchase price for a simple land sale.

Come Prepared

It’s important to come to the closing prepared. Make sure that your documentation is in order as well as your contact information. This will help prevent delays and other obstacles that might prevent the sale from going through as planned.

Preparing for the closing can make the transaction smooth and painless. The good news is that the entire closing process is much simpler and quicker when buying land than when buying real estate. With less red tape and fewer obstacles to overcome, buyers with cash on hand can purchase and close on a land purchase very quickly.

Categories: Articles / News