How to buy land for dirt cheap
Posted by Hughes Group Blog Team on Tuesday, December 13th, 2016 at 3:27pm.
Let’s start this article off by saying this: it is very hard, if not impossible, to buy land for a substantially low price. However, a discounted price, now that is what we’re talking about. In this blog post we will give you a few strategies to find yourself land for a better price than you would anticipate. Not all of these strategies will work for you and none of them are without risk. So, be sure that you take time to thoroughly think through each purchase and consult with a financial professional before taking any steps with large ramifications.
REO land (bank or government owned land)
REO/ bank owned land are things like foreclosures and so forth. They are ones that the owner, typically a bank, and sometimes the government, needs to sell. This is a process called liquidation (the turning of assets into cash) and, put simply, it means that they want to get the money from a property because having cash is much more valuable to them than a hunk of land. But why does this help you, the prospective land owner? Well, put it simply, it is motivation to sell and emotional detachment.
When organizations like banks reposes property that has been foreclosed on they don’t want to hold on to it — for the reasons we explained earlier. However, they may also have a time limit in which to liquidate that asset (this may not be the case for the banks in your area). If there is a time limit, then they will become much more motivated to sell and may part with it for a reduced price. This, however, will only apply to certain banks as some of them may not even consider private sales, persisting that it must be put on the market for the public to view first.
Emotional detachment in home buying is great for someone who wants to save a few dollars. Let’s look at an example: say you want to buy a piece of land that the owner had used for horseback riding or some other sort of recreation for many years; or maybe they farmed it for most of their life. If this is the case, then the property will have a higher intrinsic value to them that they may think is translatable into a higher price. When you are buying from a bank or government, on the other hand, you don’t have that attachment (most of the time) and you can stick to business as usual.
Another great advantage a buyer may have when buying a foreclosed piece of land is the way it is sold. We alluded to it before when we talked about buying it from the bank, but really, the best way is to contact the bank directly and buy directly. This way you don’t have to compete with other offers, and, again if they are motivated to sell, they may think of your proposal as a long awaited miracle. However, make sure you find out how the bank handles their foreclosures first. If they just list them with a normal agent, then they can be searched for on our website, which actually happens a lot.
One of the other popular ways that banks liquidate old property is by holding an auction. You will need to do some research on when these auctions will be held and make sure to have your financing all lined up before you start bidding away like it is an auction in a movie. Don’t forget to understand and abide by the auction rules; maybe even take a trip down to watch one first.
There are also online auctions and online listing sites that are put on by other government organizations. Some of them get uploaded to the IMLS system, but it is good to check as well. You can find these on the website HUD.gov.
By the way, why don’t we talk about how you can search for foreclosures, bank owned properties, and short sales on our website? All you have to do is go to the property search feature and open the advanced search option. Scroll down to the bottom and there will be 3 drop-down menus that will allow you to select your preferences in those areas. Now, like we said earlier, the foreclosures, bank owned, and short sale homes don’t always go up on the IMLS system and therefore don’t make it on to our website. So be sure to check out the other ideas we gave you above.
Buying unlisted land
Now, this option will take more time, but sources say it pays off. This idea was talked about in detail by Neil Shelton on the website homestead.org
Essentially, what it boils down to is searching for undeveloped land in the area you want to live that is owned by someone that lives elsewhere. Shelton says that once you’ve found a few plats you like, go to the county office and look up the information on the owner of this land as their name and address will be listed there. After that you pick ones that are owned by people who live out of the area or, better yet, out of state. Then, all you do is write letters to them with an offer on the property (an offer you construct by using your own research and budget). This way you can control how much you will buy it for, and you can get it pretty inexpensively too, assuming they want to sell it.
Now, there are thousands of other tactics that you can use to buy land for a low price. Keep looking around, and even talk to one of our real estate agents. They will gladly help you with any question you may have. Call them today and glean as much knowledge as you can from these real estate experts. Even if you just want to get to know more about the Boise/ Meridian/ Eagle Idaho area, give them a call — they can help.