Negotiating with a land seller is part of the give and take in buying a piece of property. The seller asks a particular price and the buyer wants to pay less. To purchase the land at a lesser price, negotiations must take place. The asking price is rarely the agreed-upon purchase price. A wise buyer will offer a lesser amount of money after reviewing the current title of the land for sale and visiting the property. A good land negotiation takes place when both the buyer and seller believe they have received a good deal.
Read More: How to Write a Contract Agreement For Selling Land
TL;DR (Too Long; Didn't Read)
Arm yourself with information to get the best price on a parcel of real property. Order an appraisal, a survey and an inspection, and review land records.
Research the Property
You'll need to research the property; the more you know about it, the better you can come up with an appropriate value. Start by visiting the county register of deeds and searching through the records for the property to see if there are any problems with ownership or any encumbrances on the property, such as mortgages, easements and rights of way. You can also check out the tax assessor's office and the zoning board. The information and documents you find in these offices could provide you with a negotiating point to justify a lower offer, as well as the legal description of the property.
Read More: How to Find Property Dimensions and Records
Get an Appraisal and Inspection
If you have a recent appraisal of the property, review it. If you don't have an appraisal handy, you can order one. Ask the appraiser for a list of like properties that have sold in the area. Compare those prices and see if the asking price is within reason of those that have sold. An appraisal will have to be done if you are seeking financing, but during the negotiation phase, a comparables analysis will do.
You should also inspect the land that is for sale. Notice aspects dealing with water, sewer and electricity. Is there a phone line to the property? Will you need to drill a water well? Will you need to put in a septic system? If a septic system will be needed, is there appropriate land for a leach field? Will you need to pay to have the power company build an electric line? Is the access a right of way through the neighbor's property? How many gates will you need to open? The answers to these questions will dictate whether a lower offer should be tendered.
Get a Survey
A land survey will confirm the metes and bounds of the land you're buying. A professional surveyor will confirm where the property lines actually fall. If you order a survey and the seller has the boundaries of the property wrong, it may be another way to reduce the price.
Making an Offer
Calculate all of the costs to bring the land up to the condition you would like. It is possible that the land is already prime and no additional costs will be incurred. Calculate the price of like properties that have sold. Calculate the need of the seller. Find out why the land is being sold. If the seller is in a hurry due to a move or money issues, calculate the offer you believe will interest the seller. Calculate the most you are willing to pay the seller.
Offer a lower amount of money than the asking price. Make sure it is significantly lower than the highest price you are willing to pay. The land seller will likely counter with a higher offer than your lowest amount. Judge the amount of time that was taken for the counter offer to be tendered. If it was close to your offer, try one more amount, in between your initial offer and the counter. It is likely that a price will be settled upon. If it was quick, but not much lower than the asking price, wait.
After waiting up to two weeks without any word from the land seller, make another counteroffer. The length of time is dependent upon how badly the seller needs to sell. If the seller is willing to wait, the need is not too great. Your next offer will need to be more.
After making a counteroffer, conditions or contingencies may be placed on the offer. You may offer a higher amount, but examples of contingencies or conditions may be that the seller pay closing fees or pay for the appraisal. These items can negate the higher dollar amount that you are offering.
Continue the back and forth of offers until an amount is reached that is agreeable to both parties. Do not exceed the price you initially set as your maximum amount to pay. No property is worth paying more than you can afford. If both you and the land seller believe a good deal was made, negotiations were successful.
Read More: Types of Land Purchase Agreements
- Entrepreneur: 11 Things You Need to Know About Real Estate Negotiations
- U.S. News & World Report: The Do's and Don'ts of Buying Vacant Land
- Legal Beagle: Types of Land Purchase Agreements
- Legal Beagle: How to Write a Contract Agreement For Selling Land
- Legal Beagle: How to Find Property Dimensions and Records
- Legal Beagle: How to Search Property Title Deeds
- Legal Beagle: How to Find Easement Information on a Property
- Legal Beagle: How to Read Your Land Property Description
This article was written by Legal Beagle staff. If you have any questions, please reach out to us on our contact us page.