We are looking to move in a non-urgent way in the near future. I’ve found an interesting piece of property that has a barn (newly refurbished), water, electricity, and new fencing but no house and no septic. The current owner bought a large chunk of land and is selling off smaller parcels, this one included. he is advertising it himself and would rather not go through a realtor if he can avoid it.
So, what are the upsides, other than him saving 6% or so? How much of a PITA is it to get all the legal stuff done correctly? Would I need a RE attorney myself, or is that his job?
We’ve bought and sold a couple of houses before but always worked through an agent of some ilk, so I don’t really know how much I don’t know, if that makes sense.
Anyone have some ideas on this? We’re in SC if that makes any difference.
I’d hire an attorney, a surveyor, building inspector (perhaps two independent building inspectors). I think you’re generally far better off this way than paying an agent, since these people are unequivocally working for you. You can be confident that they will tell you frankly about any problems; and (depending on the value of the property) the cost will usually add up in aggregate to far less than you’d pay an agent (the fact that a seller nominally pays the agent is irrelevant, of course, it’s still coming out of the buyer’s pocket).
An agent is supposed to work for you and tell you about any problems, and the few honest ones will do so; but you’re giving them a huge financial incentive not to do so. It’s strongly in an agent’s interest to ignore or minimize problems, since they get paid nothing if the deal doesn’t happen. And any notion that they have any liability if they screw up is fantasy. That’s what’s ugly about the system, along with the ridiculous cartel pricing that still has a hold on the U.S. market, for people whose main professional qualification is an ability to count bedrooms. Agents in the U.K, for example, get paid around 1% now.
Does “his” mean the seller? One of the reasons to get an attorney is to make sure you aren’t screwed by anyone, including the seller, title insurance company, lender, etc. I’d say that’s certainly not his job, in particular to make sure that he’s not screwing you himself
I can’t speak for SC. Here in WA I wouldn’t have wanted to get everything legal and financial sorted completely DIY without professional guidance. For our current house that we bought five years ago we hired an agent ($1500) and a lawyer ($2000) at a fixed price to handle negotiation, price comparisons, and drawing up / evaluating offers and contracts. I’d recommend this strategy. The seller shouldn’t care if you’re paying for them independently out of your own pocket (which is what we did).
There’s an argument that realtors are rent-seekers, at least to some degree. I tend to subscribe to that view. I’ve bought houses with and without an agent, and I didn’t see that an agent added any value.
It sounds like Riemann is advocating spending money on inspectors and specialists rather than an agent. I happen to think that’s great advice.
I sold a house in Wisconsin using a flat-fee attorney who specialized in this stuff. I think his fee was about $600. It was the best real estate transaction I’ve ever engaged in.
I think a specialist, flat-fee attorney is worth a lot more than a realtor. Realtors who insist on a capital R would likely disagree. But it’s worth asking yourself what value an agent provides. For some people, an agent is valuable. For me, that wasn’t the case.
A real estate agent would tell you (seller) that she can find lots of eager & qualified buyers for your special house, and thus get you a much better price than you could get on your own - easily covering the commission she’ll charge. The cynical view is that she’ll probably try to get you to list your house for a bit under the market price, resulting in a quick sale and a nice commission for a few hours work.
Quote from a friend who’s been very successful in Boston-area real estate: “Realtors are a tax on stupidity.”
A realtor, IMO, is probably better to have if you’re selling a place rather than buying. If I’m buying, I figure I know what I want. A realtor might have access to more current MLS data, but other than that, I could probably do without one.
That being said, a selling agent is probably most helpful when you have limited time and access to the property you’re selling. If you’re already in your new hometown and you’re trying to sell your existing property in your old town, then a selling agent makes sense. But if you’re in the same city and you don’t mind a little extra time and effort, you probably don’t need an agent once you understand how the process works.
Prior to the advent of the internet (and the Zillows of the world), real estate agents had a substantial monopoly on basic information even about what houses were for sale. You could spend your time driving around looking for “For Sale” signs, confine your search to the properties advertised in the Sunday newspaper, or work with an agent who had access to the local multi-list. How fast were houses selling in particular areas, what were the taxes like, what features drove up prices, and even average pricing levels in various neighborhoods were perhaps discoverable if you had enough time to spend at the local courthouse, but weren’t really accessible to the general public without consulting an agent. That led to an ingrained habit or tradition that of course you used an agent, and the changes in information access over the past 25 years or so haven’t quite been enough to break the habits.
Even today, if the seller is using an agent, you can hire a flat-fee attorney and do your part yourself, but you can’t go around that agent (whom the seller is contractually obligated to pay), so you’ll still end up paying at least part of that commission.
You’re not buying a house. You’re buying a piece of paper, with the hope of building a house.
You need professional advice!
And not necessarily from a [del]snake oil[/del]real estate salesman–but from someone , or several someones, who know the local laws, engineering requirements, procedures and taxes.
Does this private owner have all the legal permits?What registration /legal fees are you responsible for?
Did the original owner pay them, or are they split among the new owners of the new parcels?
How is this land zoned?
Are building permits available for the new lots, or are the permits still undefined, with final details yet to be determined.(for example. are basements required?, how many parking spaces? etc)
What size house meets the zoning requirements? Does the house you want to build fit those dimensions?
What is the access to the newly divided parcels? I assume that there must be a new road or two. Are they already paved? Who pays for it? (the city, using the money from 10,000 taxpayers, or is there a special sur-charge, taking the money only from the dozen new landowners who will be the only ones to use the access road?
How about drainage of rainwater? Are culverts in place, and the underground pipes to serve them? Are there fees involved, and have they already been paid?
What about sewer hookups? A septic tank may not be expensive, but is/will there be a need to hook up to a main pipeline?Who pays for that?Will the location of the septic tank limit how you design your new house on the lot?
What are the taxes on the lot before building, and after?
I obviously don’t know the facts, so maybe all my questions are irrelevant.
But maybe it’s something to be concerned about…
The owner bought a large chunk and is slowly dividing it up, and has made considerable improvements to the section I’m interested in. He has sold the other acreage already and those places have been/are being built on. He’s keeping a tract for himself also. This is rural, agricultural, an equine-focused area, so @chappacula, most of your excellent questions don’t really apply. I would be buying 12 acres, fencing, a barn, a well, and the right to put up a house. I’d need a septic system, landscaping, and probably some irrigation. I obviously need professional assistance, that’s not in question. What KIND of professional is my dilemma. I do actually have several friends involved in the realty business in various ways and they’ve covered some of the bases for me but I thought a dose of Dopesnark wouldn’t hurt.
I must say I’m having a ball with the GIS tax-mapping for the county, and it’s been useful already in weeding out some potential sites because I can see what’s around, and what might very well be changing in the area. (A giant potato operation has bought enormous areas locally. I don’t really want my place backed up to one of those farms. They are drawing enormous amounts of water and the quantities of chemicals used is kind of frightening).
The frugal side of me would prefer not to pay fees I don’t have to, the lazy side of me would rather be able to say “I want that, make it happen” And yes, I do know there’s still a shitton of legwork on my end, realtor or no.
Anyway, thanks for the advice, good food for thought!
You haven’t said what you’re paying, which is pretty important. If your spending $25,000 then paying $1500 for an attorney, $1000 for a surveyor etc is questionable, maybe you do your own research and take a punt. But unlike realtors, attorney & inspection fees are generally based on hourly rates, not a proportion of the property value. If you’re paying $250,000, you need an attorney at the very least.
This place is probably more than I need to spend considering there’s no house yet. He’s got it at 130something thou so paying a bit more for a survey is worth it, and an attorney is a must for any purchase, I think.
It’s most unlikely he would have been able to subdivide a tax parcel without the careful work of a licensed surveyor. So hie yourself down to the relevant Registry of Deeds and have a close look at this.