Cash is always an excellent method of payment for land sales. One of the biggest benefits of getting a cash offer for land selling is getting the money right away. Instead of waiting for months until the buyer sorts out the financing, selling the land to cash buyers is much faster. Additionally, you will receive the total value of your undeveloped land. You won’t be responsible for additional costs like broker commissions or listing fees. As a result, you can sell your land for a higher price than you would in a regular real estate transaction.
To make the most out of selling a plot of land for cash, you should keep in mind a few important things. To avoid any hurdles, you must confirm the buyer’s serious intentions before deciding whether to accept a cash offer for land. Check out the top five things to consider to ensure the transaction goes more smoothly.
Does the Buyer Have the Deposit?
You’re likely to encounter a lot of potential buyers when you sell your raw land. In some cases, the majority of them will be window shoppers. They might initially be interested in the property but aren’t really serious about making a land cash offer. Some of these buyers could even try to talk you out of accepting a cash offer for land.
You should search for buyers who are willing to take action and demonstrate their commitment. Checking to see if a buyer is prepared and willing to make a deposit is the best tactic to tell if they are serious. When a buyer is prepared to pay a deposit, you can be sure that they share your enthusiasm for finishing the transaction. This payment, sometimes known as earnest money, is usually placed in an escrow account.
Does the Buyer Agree to the Purchase and Sale Agreement?
When selling land, you’ll have to draft a purchase and sale agreement for your buyer. They must concur and sign the contracts; otherwise, your efforts would be in vain. You’ll want to include legal clauses that adhere to your standards. The document should outline the agreed date and the deadline you intend to have the contract by. A description of the property legally being sold “as is”. Also, the amount of the land purchase and the method of payment you are given. Any supporting information about who will cover the closing fees are welcomed.
Can You Check the Source of Funds?
When dealing with cash, it’s important to consider what type and amount of cash the buyer has. This is a common practice in accordance with anti-money laundering laws and protects you from obtaining illegal money. A bank statement demonstrating that the buyer has the funds necessary to acquire the property in their account would be sufficient at this point.
The purchase price and closing charges must be covered by the buyer’s liquid cash, which must be in the bank. The buyer should be able to present a bank or cashier’s check for potentially hundreds of thousands of dollars at the closing. If they don’t have the money readily available they might need, for example, to sell an existing home to pay for the purchase. In this case you run the same risk as dealing with a buyer who receives financing. There is a possibility that you won’t be able to sell your current property by the deadline.
Does the Buyer Agree to All Aspects of the Deed?
Since the deed is the official document that transfers ownership from one person to another, it’s a crucial component of the land selling process. You can provide your buyer with one of five different forms of deeds.
With a warranty deed, you assure the buyer that there are no problems with the land. This type of deed provides a series of legally binding promises that protect the buyer from prior claims and demands. Land buyers prefer warranty deed over other types because it provides the highest level of protection.
When you sell land with a quitclaim deed, you aren’t providing a title warranty. Instead, you inform the buyer that they accept the conditions and are purchasing the property “as is.”
Bargain and sale deed
According to a bargain and sale deed, the owner of the property and the only person with the authority to transfer ownership is the land seller. This type of deed does not provide the buyer with any protections against liens or other claims against the property, which means that the raw land buyer would be liable for them. Because the seller is likely to know little about the past and present of the property, bargain and sale deeds are frequently utilized to transfer property in tax sales or foreclosures.
Special warranty deed
A special warranty deed can be used instead of the quitclaim deed. You also promise no flaws with this deed, but only while you hold the property. Although you cannot promise a new history from the start, this assurance appeals to purchasers looking to purchase vacant land quickly.
Grant deed certifies that the seller is legally entitled to sell the property. The buyer won’t be burdened by any encumbrances left over from the seller’s ownership. A sullied title, current liens attached to the piece of land, unpaid property taxes, unreported easements, or other elements that could harm the buyer’s ownership rights are examples of encumbrances.
Will There Be Any Contingencies?
The absence of a finance contingency in a cash offer for land properties does not imply that the request should be unconditional. Most buyers retain the right to view and assess the property before closing. They can terminate the agreement if the examination shows significant repair needs. You will be required to make the necessary repairs and renegotiate the purchase price if an inspection reveals any issues. Because of this, a cash transaction might not go much more quickly than a mortgage-financed purchase. There’s still a risk that the deal won’t go through.
Money is, without a doubt, the greatest and quickest way to make a transaction when selling land. It’s perfect for people who want to avoid the drawn-out process of loan closing. You should nevertheless exercise caution and evaluate potential buyers before accepting a land cash offer.
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