This method for getting land at an affordable price strikes me as fairly doable, and without a lot of the problems that some of the other creative land acquisition options pose.
Basically, the idea centers around finding unused land that is just no longer wanted by the owners, but which the owners aren’t highly motivated to sell either. Thus, year after year, they simply pay the property taxes, and in-between times, may even forget that they own the land. It’s not a high priority on their otherwise busy schedules.
The secret seems to be in knowing that, by giving these good folks an offer for their land, it gives them an easy “out” to the yearly hassle of paying the taxes, lands some cash in their laps, and takes the whole issue out of their minds.
Pros:
~ Get quality land at a really good price
Cons:
~ Takes a lot of time-consuming effort
~ Usually requires all-cash payment (some owners may be willing to owner finance, but I think this would probably be a rare scenario)
~ Requires some flexibility, thinking out of the box, and negotiating/people skills
My introduction to the how-to’s for this method of land purchasing came from homestead.org, and specifically, Neal Shelton’s post here.
Here’s my overview of his method:
1. Determine what area you want to buy land.
You’ll need to be specific. You’ll see why next.
2. Make a list of names from your local county assessor’s office of out-of-state landowners.
Many counties have this info online now. You probably can’t just go in and ask for the list. You’ll actually have to know the specific area/plots you are trying to find out the ownership for, and then ask for the owners info of that plot. Then proceed to find out who the owner is of the next plot. And so on. Here’s how Neal phrases it:
“Arrive at the assessor’s office with a friendly smile, tell the clerk that you’d like to copy some addresses for property owners in Sections X and Y, and ask if she could show you to the appropriate book(s). (Later, you can ask for Sections Z and A if you don’t get enough names. I don’t recommend that you go in sounding as if you’re going to be there all day.)”
3. Once you have your list of the out-of-town owners’ info, go to the maps (either online, or otherwise) and see if any of the parcels of land that they own is of interest to you.
4. If any of the locations are appealing to you, go visit them in person and check em’ out.
Just to make sure they are worth your hard earned money.
5. After verifying the properties you want to potentially buy, determine how much you are willing to offer for the land.
Make the offer fair, but affordable for you. Keep in mind that you are seeking to buy unused and unwanted land. As a result, don’t think you have to offer “market value,” which is somewhat a misnomer concept anyway.
The goal here is to offer enough as to avoid being insulting ($100 an acre may literally be a “steal,” but it’s extremely doubtful that it would fly successfully as a proposition in most cases), but still make sure you’re getting a good deal. In other words, you don’t want your offer to simply be rejected out of hand. It needs to be at least high enough for them to consider it as serious. Otherwise, you risk simply getting zero response and zero land. Neal’s take is:
“The landowner only has to log on to the internet to compare your offer with what brokers are selling land for, so you can’t be senselessly low, but since you’re offering cash right now, a good many people will be willing to sell for significantly less in order to have a deal right now that doesn’t include paying any commissions.
You can determine what is within reason to your own mind by simply perusing similar property on your state’s multi-list sites. Read forty want-ads and visit five or six of the properties, and you’ll have about as good an idea of what that sort of land is worth as anyone else.”
Also, keep in mind that often the county’s info on the land you are interested in will contain the price that the current landowner actually paid originally to purchase the land. This can really help you to know how much they are going to profit or lose should they accept your offer.
6. Send the owners a short and to-the-point letter with your offer.
This is Neal’s letter sample:
Property Owner Name
Address
City, State ZipDear [name of property owner]:
I am writing to inquire about your 40-acre property in Polecat County.
I am in the market for a property such as this, and I would be willing to pay you $[give your specific offer] for your land, should you be interested in selling.
If you would consider selling this land, please contact me at the address below.
Sincerely,
You
7. Handle the fallout.
Neal says that when you send out these letters, typically one of three scenarios happens:
“They’ll either ignore your letter completely, accept your terms, or inform you emphatically that the property is worth much more than whatever you said you’d give, which you may treat as an offer to negotiate.”
If you succeed in making a deal, then congratulations! You’ve just won! But, if not, then it’s my guess that you simply didn’t contact enough people. Go back to the drawing board and find some more unwanted/unused land, and start sending out those letters again. I did say it was work, didn’t I?
8. Tweaks
Here’s my thoughts on tweaking Neal’s system. First, I don’t think I’d spend the time personally visiting all the plots that I thought were of interest. I think I’d want to send the letters first, and of those who responded, I’d then go out and visit and make sure it was something I wanted to move forward with. No sense in wasting time visiting 10 plots if only 1 person is willing to talk.
The downside to not visiting the plots in person before making the offer is that your offer may not incorporate problems or benefits (that, should you visit it in person, you’d visually be able to ascertain) and that would throw you out of the game for that particular plot.
I think the way to potentially overcome this issue would simply be to modify the letter, to state something along the lines of “I am in the market for a property such as this, and based upon my preliminary research and pending any changes that further investigation may require, I would be willing to pay you $[give your specific offer] for your land, should you be interested in selling.”
But, if you have the time and want to visit it all in person first, go for it!
Also, any other normal and necessary due diligence should be done before you part with your cash as well, just to make sure it’s what you are expecting and there aren’t any hidden surprises.
However you proceed, it will be up to you to finalize the paperwork, hire the title company, etc. and close the transaction. You could hire a lawyer to help you, but according to Neal it isn’t necessary, and I’d tend to agree with him on that point.
Neal claims to have made several successful deals this way, and never felt that the seller wasn’t happy with the situation.
So that’s it! What do you think? Any added thoughts or ideas to make this a potentially more powerful way to get a great deal on quality land?