Few prospective land buyers begin their search with the intention of buying land for sale in Virginia by owner.
The fact is, the vast majority of land for sale in Northern Virginia is listed by a real estate agent. However, you do come across the occasional FSBO on the internet or when you’re out driving properties. We’ve all seen the hand-painted “for sale by owner” sign propped against the fence on the side of a country road.
The question is, how do you approach these sellers? Should you involve a real estate agent? And how do you negotiate the terms of land for sale in Virginia by owner?
Obviously, the seller has chosen not to hire a real estate agent to help him with the sale, but that doesn’t mean you can’t hire one. Most FSBO sellers are willing – and even expect – to pay a buyer’s agent. So, if you already have an agent, the agent should make initial contact with the seller.
If you don’t already have a buyer’s agent, you should still consider bringing one in. If the seller is willing to pay a buyer’s agent commission, then representation costs you nothing. You can only benefit from having an experienced agent on your side.
If you do hire an agent, then from your perspective the transaction should not be much different from a regular sale. The agent will handle all the transactional details, from ensuring the paperwork is completed correctly to negotiating a feasibility period and coordinating with the settlement company.
If you proceed without the assistance of an agent, then the first thing to sort out is the purchase offer. If you’re not comfortable writing the offer yourself, or if you’re not sure what the offer should contain, then you can enlist the help of a real estate attorney. Alternatively, you can purchase template paperwork from a website like RocketLawyer, but keep in mind you’ll still have to fill in the blanks.
How much should you offer?
One of the benefits of working with a real estate agent is that you will have access to the most accurate and up-to-date “sold” data from the MLS and county records. This information is critical for determining how much to offer for the property. These days, most of this information is available online if you know where to look for it—county websites, third party data providers, etc. However, if this is your first time preparing a comparable sales report, you might miss things an experienced agent would not.
Perhaps more importantly, the best agents will offer valuable insights on how to interpret comparable sales data. There are various reasons two seemingly identical parcels of land could sell at substantially different price points. Things like utilities access, flooding and drainage, zoning, subdivision potential, soil quality, topography, and easements can all affect land values. If you don’t know how the property you’re looking at stacks up on these issues compared to other properties that have sold, then you cannot possibly write an informed offer.
If you have any doubt about how to interpret comparable sales data and craft an appropriate offer, then you should involve an agent.
What about contingencies?
You should always write in contingencies to give you an “out” if your due diligence doesn’t check out. Common feasibility items in land and rural property sales in Virginia include soil evaluations, well and septic inspections, surveys, and environmental studies. Other common contingencies include appraisals, loan approvals, and marketable title.
Should I give my deposit to the seller?
Never give your deposit to the seller. Instead, it should be held in escrow by the settlement company. If you work with an agent, the agent will likely recommend a settlement company. The benefit of working with the agent’s preferred company often boils down to quality of service. If the agent refers a lot of business to the settlement company, then the company has more to lose by not providing you with the best service possible.
If you don’t work with an agent and you have no pre-existing relationship with a settlement company, then you will have to select one yourself. Interview several companies before making a decision, and try to find one where you will have direct access to the owner/principal.
When will you take possession of the property?
Your purchase offer should clearly specify the date you will take possession of the property. Possession usually coincides with settlement, but it does not have to. There are various reasons it would not. For example, perhaps the owner is farming the property and needs to maintain possession until the end of the farming season. In this case, you could rent the land back to the owner after settlement.
Are FSBO sellers serious?
When you see land for sale in Virginia by owner, you might wonder, “Is this person serious about selling his land?” Frankly, it’s a mixed bag. Some FSBO sellers just want to test the waters, and they might have an unrealistic price in mind. Others are truly motivated to sell and just want to save some money by not involving a seller’s agent.
The bottom line
If you’re shopping for land and you come across land for sale in Virginia by owner, you should certainly follow up. Either have your agent contact the seller or – if you don’t have an agent – contact the seller yourself. If you’re unrepresented, then proceed with caution and make sure you understand the risks.