While maybe not as different as you might expect, buying land does differ quite a bit from a more traditional real estate transaction.
It’s more important than ever to do your research, dot all the i’s and cross those t’s. Just like in a regular residential real estate transaction, you have to work out what you can afford, gain financing (probably) and negotiate a price.
But, the stakes are much larger. Not just due to the literal, larger scale of the purchase, but also because of the complexity of buying land and the number of factors at play.
That’s where we come in! Join us on this guide to buying land in Kentucky, created just for you!
Before You Buy
Work out your budget. Buying land is expensive and it’s important to be realistic.
The ultimate cost of purchasing land doesn’t stop and start with the land itself, it’s important to have some idea of what you plan to do with the land, what the cost of hooking up utilities will be and what possible fees and permits will likely be required.
Also, it important to find out how accessible the land you plan to buy is. Are there roads leading to the property, or are you going require an easement on someone else's land to access the land?
If you have a general idea of where you plan to buy, it’s probably worth visiting the local county zoning and planning office. They’ll be able to tell you what the long-term plans are for the area and what the surrounding lands are zoned for.
Finding the Best Land
You are, of course, free to go through the land purchasing process yourself, but don’t be afraid to lean on the experience and local knowledge of a real estate agent. They'll have a pretty firm grasp of what’s available in the market currently, what the going rates are as well as what’s set to come on the market.
Again, you’ll want to have a pretty clear idea of what you are looking for and what you plan to do with the land. Are you going to want land with a house on it already, or do you plan to build something yourself.
This will all factor into what you can afford.
Choosing the Right Land
So, you’ve zeroed on a plot of land that’s caught your fancy, now what?
Now, the real homework begins. Start by assessing whether the psychical characteristics of the land will suit your needs. Aside from touring the property yourself, there a number of tools at your disposal as you assess the land.
Again, the county zoning and planning office will be able to tell you about any pending zoning changes or long-term development plans for the area. You’ll also want to review the property history to see if there are any environmental issues or liens affecting the property.
Lastly, you’ll want to find out if any restrictions are in place for the land use and also what the property taxes are like.
Borrowing to Buy Land
Financing isn’t quite as easy to come by for larger purchases of land, unlike a residential real estate purchase.
Oftentimes, it’s the seller themselves that can offer financing as many lenders do not. It might be worth looking to local banks or credit unions to gain access to financing.
Once you’ve found a willing lender, the type of land itself will factor into the terms of your mortgage, mortgage rate as well as the amount of the down payment.
Land typically comes in one of two forms: raw land or improved.
Due the perceived risk and added cost of developing raw land, this type usually comes with higher rates as well as a larger required down payment, typically between 20% and 50%.
Making an Offer
The making of the actual offer doesn’t differ significantly from a residential real estate transaction. As noted above, the stakes just tend to be higher with more at play.
It’s especially important to go into this negotiation with as much research and information about the land as possible. There’s a lot to negotiate.
Do yourself a favor though, hire a real estate agent. Unlike more typical real estate transactions, only about 8% of land sales are completed without representation. This isn’t too surprising considering the stakes and the number of factors at play.
Don’t go it alone!
Are you interested in making a land purchase in the Lexington, KY area? Please get in touch with Hill or Regan Parker online or call 859-608-8039 today!