I’m as guilty as anyone for saying you can’t lose money buying land. Although it’s mostly true , like anything else out there you can lose money if you make these mistakes. I’m going to point out what you cannot overlook when buying land or you will be one of the dopes who found a way to lose money buying land. Let’s go…..
When we are looking at buying property it’s easy to get excited and start dreaming of what we’re going to do with the land. We have all kinds of ideas about where to build , how to improve the place and all the fun that lies ahead. When we get excited like that and lose sight of the real important stuff we are setting ourselves up for a disaster. Get excited and have all those thoughts and dreams , then buckle down and pay attention or you’re going to set yourself up for disaster. Here’s what you MUST know before you buy land.
1) SURVEY BEFORE PURCHASE: You can look around at listings and find many parcels that are interesting , many you will want to see. How many do you think have a recent survey? Based on years of buying/selling land I can tell you right now there might be 5% that have been surveyed in the last 5 years. I can’t imagine how many times I’ve signed a contract to buy someone’s land , had it surveyed (before I closed) and found out the acreage was not what was advertised. This is not the exception , it’s closer to the rule. If you’re looking at land that is listed with a local broker or is a “for sale by owner” deal you can pretty much bet no survey has been done recently. You’ll hear ” we always went by that fence line “, or “that tree “, “that hedge row “etc but none of that matters. All that matters is a new survey and you better get one before you close. The survey is the responsibility of the seller so demand it’s done. If the seller refuses to pay for the survey then move on to the next property. If you don’t then I can guarantee the neighboring properties will be surveyed at some point in the future and you may find out you don’t own what you think you owned. If that happens, you lose and have no recourse. Don’t let it happen to you.
2) NO WARRANTY DEED: There are many forms of deeds offered in the world and not all are created equal. A warranty deed is the top of the heap and if you aren’t getting one with the property you want to buy then you better find out why. Not to say anything less than a warranty deed should scare you off but you need to know why the deed isn’t warranted. Your lawyer will find out and you must know this before you fork over your money. FYI if someone wants to sell you a property , any property, with a Quit Claim Deed you better run , not walk , unless your lawyer can find some kind of explanation.
3) UNDOCUMENTED RIGHT OF WAY : Believe it or not this is pretty common especially when buying recreational land, land that’s out in “the sticks” so to speak. You may find a piece of land you want to buy and the seller is telling you “we have always used Joe’s road through his property to get there , he doesn’t mind”. Oh yeah? Joe’s going to mind when someone new is driving through his land and he’s going to do something about it. Although it’s illegal in NYS for property to be “landlocked” that doesn’t mean access is granted free , because it isn’t. If access to the property isn’t documented , located and visible then you better think twice before going farther. Not only access to the land you want to buy but what about someone else using that land to access their property? This is why you NEVER EVER buy property with a right of way involved unless your lawyer researches it and can explain exactly what the right of way is. I’m not saying you should run away from any land that has a right of way but you better find out everything about it before you buy. Land encumbered by a right of way is not nearly as valuable as land without a right of way. It’s an opportunity to buy property at a reasonable price but it’s also an opportunity to lose money if you don’t have all the info you need. Overlook this and I guarantee you will pay for it eventually.
4) RIGHTS ,TIMBER/MINERAL/GAS : Here’s a prefect opportunity to be taken for a ride so listen up. Do not ever buy land without getting the timber rights with the purchase. If you don’t own the timber rights then someone else does and they will be back to cut the trees on your land at some point and you will have no say about it. Not only that, but you won’t make a penny off the sale of those logs. I don’t care how low the price of the property is , don’t ever agree to a deal without timber rights ! Mineral rights are a loaded gun just like timber rights. I’ve bought plenty of land without mineral rights over the years. In St. Lawrence County , for example , there are tons of parcels without mineral rights. Many years ago there were zinc mines up there and the companies operating at the time owned those rights. Those companies went out of business decades ago and the mineral rights were never transferred back to the individual parcels. This is a situation that’s well known and is well documented therefore the risk is near zero. That’s not always the case though so if you aren’t getting the mineral rights with a property you want to buy then you have to find out why. Not only find out but find out in writing. I’ve written countless times over the years about gas rights in NY. If you’re considering buying land in the southern tier of NY you should assume the gas rights have been sold. It isn’t always the case but it’s too common to ignore. Our wonderful Governor has not allowed gas drilling in NY but that hasn’t stopped gas companies from buying gas rights to as many properties as possible. You have to look at this as though gas drilling is inevitable because not even Andrew Cuomo can stop it forever. Even if the property you want to buy comes with gas rights ,what about the parcels next door? If/when gas drilling is opened in NY do you want to put up with it next door? I don’t think so. My own advice is simply this : DO NOT buy land without gas rights ever. Better yet , stay out of the southern tier and you won’t have to worry about it. Some of you who live or own land there will disagree but you won’t change my opinion. Land without gas rights is an absolute loss no matter how you look at it. The mere possibility of gas drilling on your property is enough to pretty much remove most of the value. Don’t do it.
5) BUYING BY LAND CONTRACT : Not me , not ever , and you shouldn’t either. Land contracts are land mines for disaster and loss of money. Not to say every land contract turns out bad but there’s the possibility of it depending on the terms. You can agree to pay the seller X amount of money over X number of years and feel like you made a good deal. What if the contract keeps the deed in the sellers name until the land is paid off ? This is common and is not good for the buyer. If you’re buying with “owner financing” and hit a rough spot along the way what will happen ? If the deed is in the sellers name you will lose because the seller still “owns” the land. You would have paid into this deal and have no recourse , in fact you won’t even be able to sell it and get out of the deal. Instead you’ll just lose everything you put into it. Typically these deals are made with buyers who shouldn’t be buying in the 1st place because they don’t have enough money to put down on a purchase. So someone with little or no down payment gets themselves in to a deal like this , finds out they can’t make the payment this month and the seller takes the place back. It happens , don’t let it happen to you. There are enough banks , especially up here , who lend money for land purchases. If you can’t come up with the down payment , typically 25 – 30% then don’t attempt to buy land until you can.
Hopefully something in here made sense to you and will help you when looking to buy land. As always , if you’re interested in buying land in New York then you’ve come to the right place. Click , look , call or write ! Thank you for stopping by and please feel free to write anytime and don’t forget to share with your friends. mj