Trying to ascertain all of the information about a vacant or unimproved piece of property before the buyer has even determined if the seller will entertain their offer can undermine the
buyer's position. In real estate transactions, buyers are rarely in a position to know all variables about a property BEFORE they offer on that piece of property, that is why most states have some form of Due Diligence or Inspections period in the contract.
buyer's position. In real estate transactions, buyers are rarely in a position to know all variables about a property BEFORE they offer on that piece of property, that is why most states have some form of Due Diligence or Inspections period in the contract.How can being well informed possibly undermine the buyer's position? At the right time, it can't. Pursuing inspections prematurely, before the buyer has even made an offer can waste valuable time and run the chance that another buyer will snatch up the property. Intense scrutiny of the property, involving other professionals such as excavators, surveyors, well diggers, septic installers, etc on the property sends out an ultra clear signal to the seller of the interest level of the buyer, putting the seller in the uber-power position in negotiations.
Is it possible to pursue these investigations before the offer without telling the seller? No. Until there's a contract, there's no expectation of reasonable and repeated access to the property. If the buyer or the Buyer's Agent enters the property without informing the seller or their representative it is called trespassing.
What if the seller accepts the buyer's offer and then the buyer finds out the land preparation will be more expensive than expected? Any good Buyer's Agent will help the buyer determine how much time they will need to pursue their inspections and build in ample Due Diligence or Inspection time into the buyer's offer. With the help of appropriate professionals, the buyer determines that what they want to do with the property either can't be done or can be done but exceeds their budget then the buyer has a couple of choices. While still in Due Diligence, the buyer can try to renegotiate a purchase price to offset those costs but the seller is under NO OBLIGATION to accomodate the buyer, the decision to renegotiate a contract will depend upon the seller's motivation. The buyer can adjust their plans or the other choice, in North Carolina at least, is to simply withdraw in writing from the contract prior to the expiration of the Due Diligence period, have the earnest money deposit returned and resume the search for a more suitable piece of property.
Is there anything inappropriate about wanting to know all the variables about a piece of property before the purchase? Of course not. Who wouldn't want to know everything about a property beforehand? Knowledge however isn't always free. It would be a shame for the buyer to waste their own time and money hiring contractors and other service providers for advice before they even know if the seller will accept their offer! An opportunity to fully inspect a property before purchase is exactly why most states have a Due Diligence clause in the contract, it is a form of Consumer Protection.
What is the recommended procedure for purchasing vacant land in North Carolina?
- Be honest with yourself about your financial wherewithal to undertake this project, consult with a financial advisor.
- Hire a Buyer's Agent experienced with vacant land transactions and fully explain the preferred parameters for what you want to do with the property.
- The Buyer's Agent should verify as much as possible the particulars of the listing, i.e.; permits on file, surveys on record, etc.
- After looking at properties that come the closest to achieving all you want to achieve, the Buyer's Agent should run a market analysis for you to determine a market value.
- Make an offer and go under contract.
- Schedule all inspections promptly.
- Analyze the inspection reports and costs to achieve your goals for the property.
- Compare the results and costs to your overall budget.
- If everything is satisfactory, proceed to closing and get on with your dreams.
- If the costs exceed your budget, either adjust your plans to meet your budget; try to renegotiate with the seller; or simply withdraw from the contract prior to the expiration of the Due Diligence period.
We all wish we had a crystal ball, but we don't. Buying real estate is always risky and buying vacant land isn't for the faint of heart. Make sure wanting to know everything up front isn't just fear talking you out of what you think you want to do. Your Buyer's Agent doesn't want you to make a purchase that isn't right for you. Just know that in NC at least, your Due Diligence period is there to protect you and while you might not get to know all the variables about a piece of property before the Offer, you should know most of them before the final purchase.
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