by Marija Josifovska
by Marija Josifovska
Selling land by the owner comes with significant benefits. By cutting out the middleman, you can potentially save thousands of dollars you’d otherwise pay to a real estate agent or broker. Moreover, you’ll have complete control over the sale process and you wouldn’t have to compete with other listings the agent has. However, this might also be one of the hardest things to do in the real estate industry. It’s important to first start by gathering all the documents needed to sell land by owner, without using a broker or real estate agent.
This is a challenging and document-intensive transaction. There are dozens of sheets of contracts, statements, forms, and reports you’ll have to deal with. Compiling the complete land selling documentation may feel like a tedious task. However, understanding your obligations needed to sell land by owner is one of the best ways to ensure a stress-free and quick sale.
A purchase agreement is a document that conveys the potential buyer’s offer on the land for sale. The sale agreement should specify the offer for a land contract. It also outlines the purchase price, initial down payment, payment term length, and other sale terms. If you accept the terms of the buyer’s purchase offer, you should sign the offer to make it an official purchase document. This is one of the most important documents needed to sell land by owner.
The land contract contains the terms and conditions both parties agree to. This document is a form of seller financing. Like a mortgage, the buyer agrees to make payments to you in installments until the purchase price is paid in full.
The vacant land contract should list the address and complete description of the property in question. This includes the purchase price, down payment requirement, the monthly payment amounts and terms, and the number of payments to be made.
It should also highlight how the payments are made, including due dates, grace periods, and late payment fees. In most cases, the buyer will be treated just like the property owner. Therefore, they will be responsible for the property’s taxes, insurance, and utility bills billed directly to the property.
Purchase Counteroffer Form
A purchase counteroffer form is a document that allows you to counter an offer you’ve received for your land. This document signifies that the original offer is rejected. You can offer three options to the prospect: accept the counteroffer, reject it, or make a new offer. A counteroffer form is a commonly used negotiation strategy when selling land without a realtor. Therefore it’s wise to have the document in hand. Understand your market and evaluate the offer carefully before providing a counteroffer.
Preliminary Title Report
A preliminary title report helps prospective buyers get a clear understanding of the property they want to purchase. Besides the general information about the property, the prelim should identify the property owner to establish clear ownership. It’s also a common practice to list the land’s previous owners. Additionally, the report should include title insurance requirements and local covenant restrictions.
The prelim should also contain an encumbrance certificate. EC is the evidence of single ownership, and it verifies that the property you sell doesn’t have any legal or financial issues. Though buyers can obtain EC on their own, it’s wise that you apply and get the document out from the government record to show it to them. This will instill trust and positively influence the buyer’s decision.
A sale deed is a document used to transfer the legal title of the piece of land from the seller to the buyer. Beyond a description of the property and both parties involved, the deed should specify the time frame for ownership transfer. Additionally, it may include an indemnity clause. In this case the seller pledges to pay the buyer for any damages in relation to disputes regarding the ownership.
The seller should sign the document at closing. The deed is held in escrow until the final payment is made. Then, it should be filed with the appropriate government agency, such as a county clerk.
You may be required to disclose negative information about the land. In some states, you’ll be legally bound to do so. But even if you’re not, it’s always wise to be upfront about issues with your land. Everyone who has owned the tract of land is liable if something happens in the future. Hence a disclosure document is a way of protecting yourself and everyone involved.
The property disclosure statement should outline any issues the seller should be aware of. Such can be water damage, risk of damage from a natural disaster, or has known or potential environmental contamination. Moreover, you may also be required to disclose problems with zoning, drainage, pending litigation, easements, changes made without permits, and boundary disputes.
A closing statement should be prepared to show the details of the financial transaction as part of the documents needed to sell land by owner. Generally, the statement should include basic information about the property. Such information can be the purchase price, deposits the buyer has paid, and seller credits. If you decide to let the buyer pay prorated amounts toward property taxes or HOA fees, you should include this information in the statement as well.
Make sure you also include information about the loan such as application fees, underwriting fees, points paid, and origination fees. Mortgage insurance premiums and prepaid interests should also be listed in this section. The closing statement should also specify escrow charges and fees charged by government entities.
Other Relevant Documents You May Find Useful
Generally, the more information you have about the property, the easier the selling process will be. Land buyers want to be in the know. Obtain all documents that show what taxes and additional expenses have been paid on the land. This will help the buyer estimate the cost of taxes on their new property at closing.
Though not required, it’s advisable to get a land survey on the land. It will determine the actual property size and dimensions. You’ll be able to identify any improvements made on the property that traverse the property lines. It might also be a good idea to acquire prior surveys. You’ll give the prospect a better idea of the original state of the land and what can and can’t be done to it. Likewise, you can benefit from getting your land appraised to know your land’s worth and negotiate the best deal.
The documents involved in lots for sale by owner and the rules and regulations you must follow might sound overwhelming. You’ll have a lot of work to prepare the land, establish a marketing plan and find a potential buyer. If dealing with paperwork isn’t your strong suit, you can skip the hassle and sell your land as-is to a cash buyer like SimpleLandSelling. You’ll get a fair cash offer while also saving on commissions or extra fees.