5 Mistakes to Avoid When Buying Land

5 Mistakes to Avoid When Buying Land

5 Mistakes to Avoid When Buying Land

Caveat emptor should be your watchword when you’re looking to buy land as an investment or for a home. Caution is also in order even if the land is meant to be used for agricultural or industrial purposes. Little mistakes can cost you the land or render the land unfit for the intended purpose. Here are 5 mistakes to avoid when buying land.

  1. Failure to inspect the land

Regardless of how busy you may be, don’t ever fail to inspect the land before committing to buying it. Some have mistakenly bought land without physical inspection and checking through the documents only to get the shock of their lives after the payment is made. Therefore, to avoid this mistake, you must check for such things as access, topography, flood plainness, neighbors and what they do there, zoning and deed restrictions, history, and acreage issues among others, depending on how you intend to use the land.

  1. Sourcing for funds at the wrong place

If you have a very good credit standing, a conventional bank or credit union may be one of the numerous options available for you. If you’re looking to agriculture, the Farm Credit System (FCS) may be within your reach if you’re resident in the United States. Crowdfunding is now becoming a more popular source of funds recently. A great mistake usually made is when people just jump to a bank for a loan without considering the pros and cons vis-à-vis their circumstances.  

  1. Agreeing to high-interest rates

This is another one of 5 mistakes to avoid when buying land. While sourcing funds pay close attention to the interest rate. If it’s too high, it will increase the price of the land or eat into your profit. If you must look for a lender, don’t be desperate. Select the one with a low rate even if that takes more time and effort. Just a little percentage will add up to something big in the long run.

  1. Not getting the right insurance

Since land is an investment, it’s going to be a costly mistake to buy land without getting the right insurance policies to have your land protected. Types of policies you can take out include title insurance which protects the land from being registered in someone’s name. It also protects you from delinquent tax bills and unpaid mortgages from former owners, forged documents, hidden mortgages, easement problems, clerical errors, and claims from the children or spouses of previous owners. Depending on the use, you may also need crop insurance, general liability insurance, and property insurance among others.

 

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  1. Choosing the wrong agent

Perhaps the greatest of the 5 mistakes to avoid when buying land is working with the wrong agent. All mistakes above can be avoided only if you have the right type of agent. Never make the mistake of assuming that all agents have the same level of experience in all kinds of land transactions. While some may have little experience in some areas, many may never have done any land transaction.

 

Of course, these are not all of the pitfalls to avoid when buying land. What do you think? Have you had or learned about a nasty experience someone had while buying land? Please share with us in the comment section below.

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