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Common Land Questions and Answers

Lots for Sale in Corpus Christi

Q – Should I Buy Land Falling in Value

A- It’s better to buy now than when the price was a lot higher. But is it going to fall further? That’s never an easy question to answer. If you want to buy the land for investment purposes, buying a lot with decreasing value doesn’t sound like a good idea, unless you have reason to believe that the trend is about to reverse and the price will go back up. Is your time horizon a few years or a few decades?

                In general, vacant (undeveloped) land values are more volatile than house prices, so buying vacant land is inherently more risky than buying a ready-to-build lot or a house.If you want to buy land to build a house that you plan to live in for many years, then the decreasing value might be less of a concern.

However,

I would still be cautious and would want to know why the value has been falling. Is this a trend for the surrounding area or just this lot or neighborhood? Are there issues that are driving the price down that you are not aware of? A new highway or industrial park planned nearby? A toxic waste site discovered nearby? Is it in a newly designated flood zone? Problems with zoning or with the regional economy? Has a perc-test been completed? Is there potable water?

What do you find attractive about the land?

Once you understand the cause of the falling land value,  you can better judge whether buying the lot would make financial sense for you. Maybe consider paying an independent appraiser a few hundred dollars for a professional opinion. Appraisal is part art, part science, but an experienced appraiser has a lot more insight into pricing trends than the average buyer.

If you plan to borrow money for the purchase, be aware that many banks are reluctant to lend on vacant land, especially larger parcels which can be difficult to appraise or resell. Banks are much more comfortable lending on fully developed lots in a subdivision which are ready to build on.

Q – Should Land Seller Disclose Subdivision Plat?

A – Before making an offer, it’s absolutely reasonable to get a full description of the property, as well as a copy of any protective covenants that go beyond the standard zoning regulations that apply to this district. Setbacks, lot coverage, and driveway placement are typically governed by zoning, but rules within the subdivision may be more restrictive.

In general

Any numbered lot in a subdivision should have a plat map that shows the approximate boundaries and dimensions, along with any easements, roadways, flood plains, and other survey details. Most plat maps are recorded with the county registry of deeds and are public records. Protective covenants and HOA rules may also be recorded, but should be provided by the seller.

You can get most of this information from the town or county registry, but the fact that the developer does not want to provide it sounds like a red flag to me. It doesn’t necessarily mean he is hiding anything, but it may reflect an attitude of someone you’d rather not do business with going forward.

 

Depending on how the deal is structured, you may have continued dealings with the developer for some time and need to rely on his performance to provide roads and other infrastructure. He may have the power of design review over what you build. Or it may be the sort of deal where you buy the land and never deal with the developer again. Best to understand these issues before proceeding.

 

Click HERE for 10 step check list for buying rural property.

 

 

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