In general, recreational property and timberland sales are usually simpler to close than residential sales. There are rarely any structures or other improvements, so there are no utility bills to pro-rate, no termite policies to buy and no mortgage insurance, among other things. And many timberland tracts currently for sale have been owned by one owner or family for decades; this often means there’s no mortgage to release and title research can be streamlined.
Keeping in mind that rules and laws vary state-to-state, here are a few things land buyers (and sellers) can do to prepare and make the land sales process easier:
- Arrange financing in advance: It always eases the process when the buyer has pre-approved financing at the time of the offer. A cash buyer makes a closing go even smoother, as there are usually no appraisals required and no lender involvement.
- Be flexible about closing date: Both parties having a wide closing window can often help make a sale happen.
- Make a title decision: We are always surprised how often buyers will make an offer on land, and yet have not made a decision on how they will take title on the property (i.e.: as spouses, in a limited partnership, in a trust, etc.). We suggest setting up your trust, your LLC, or whatever entity will appear on the title before even submitting offers.
- Be aware of closing costs: While many expenses fall on the seller’s side, a first-time buyer needs to be aware of the incidental expenses beyond the purchase price. These are usually modest, but can include deed recording or document stamps. These will vary by state. The good news is that some or all of these expenses may be tax deductible.
- Be prepared: It goes without saying, but we remind both parties to be prepared with all documentation and contact information. One of the best things we can do as agents is to make an information sheet with contact information, including phone numbers, fax, email and mailing information, for all the important parties in the sales transaction. Keeping lines of communication open and flexible are key.
These are some broad suggestions to help ease the land sales process, but remember it is always important to get in touch with sales professionals, attorneys and financial advisors to ask about what to expect with a land closing in your state.