You just got that big bonus you were expecting and are leery of the stock market or simply prefer to invest in something tangible. Maybe you and your family have been coming to the Berkshires, Upstate New York, or Vermont every summer and renting, and now is the time to build your dream home here. People buy land for lots of reasons as the first step in building a home, for investment or development, to gain income from timber, for asset diversification, to hunt or fish, or sometimes just because they love the idea of having a piece of land of their own. But how to go about it? Where do you look, how much land do you really need or want to take care of, and who can help you make this decision? These are but a few of the questions that arise. With this in mind, here are Phil's Top Ten Tips for Buyers:
Hire an experienced Realtor as your Exclusive Buyer's Agent, or to facilitate Transactional Brokerage, a collaborative approach. Make sure your agent has a wide variety of knowledge about land and the resources to discover those parcels that truly will meet your needs. This takes a real ability to ferret out only the most suitable properties, and since 1979 Harsch Associates has been known as one of the top Realtors in Western Massachusetts, Southern Vermont, and Eastern New York.
Have a good idea of what you are looking for, and in what general area, before contacting an agent. Nothing is more frustrating for all parties than driving around looking at 2 acre lots in town when what you really want is 10 acres on a hillside. Do you really need to be 10 minutes from Tanglewood? Do you cook a lot or like to go out to nearby restaurants? Will you be using your land in the winter when conditions are much different? Narrow as many of these things down in advance as you can.
Have a realistic budget and if you are financing the purchase, keep in mind that lenders usually have more restrictive policies for lending on land purchases than for homes. Many will require 20- 30% of the price as a downpayment. A good agent will have an excellent referral list of lenders if you are financing. Harsch Associates has an extensive network of lenders with innovative land financing programs and an eagerness for your business.
Be prepared to spend some money every year keeping up your property. Unless you are buying timberland or some kind of property with a mineral right or saleable asset, land has a carrying cost every year: taxes for certain, but also perhaps a mortgage payment; clearing, mowing or plowing; dues and assessments, etc.
Be aware of changing markets, both favorable and unfavorable. Is nearby development bringing new buyers in and pushing up prices? Is the population growing or shrinking in the area? Are second home buyers moving in?
Be patient if you don't have to buy immediately. Sometimes the right piece just isn't available, or you found a good parcel but the cost is too much. Rising prices tend to bring out more land for sale, so sometimes it pays to wait.
Comparison shop for value, just like you would for a car or any other major purchase. Some sellers ask unrealistic prices because they are waiting for that one buyer who will pay nearly any price for their property. Occasionally this happens, but normally the market is more rational. Check comparable sales in the area for 2 or 3 years, since in some communities land doesn't sell that frequently and 6 months' worth of history isn't enough. An experienced agent will understand how to research that and give you solid, up-to-date information.
If you are building, make sure you have the contractors, engineers, excavators, and other trades people you need to complete your project within the time frame you have budgeted. Make that time frame somewhat longer than you really want so you will not be disappointed. Many of our area's better trades people are very busy these days. It may take a year, for instance, to get the contractor you want to build your house. Besides that, we have real winters here and you will find that building can be very much impacted by this. We can help you with referrals, but the more of this planning you do in advance, the less you will be frustrated when you embark on the journey. Building is not for everyone, but it can be very satisfying if you have the right mindset.
Consider buying land for asset diversification. Many large institutional investors, pension funds, and mutual funds buy large amounts of land. Their purposes are varied, from an inflation hedge to income from managed timberland. With proper assistance, you, too, can make this investment very profitable and satisfying over the long term.
Consider buying a larger parcel than you might have originally thought. Your cost per acre is frequently less, and, depending on available frontage, you can often subdivide these to lower your cost even further. Larger parcels are increasingly harder to find these days, which enhances their desirability, and offer diversification within the same parcel, for instance a combination of building lots and agricultural use.