Browsing the various websites featuring rural land for sale is a lot of fun. I should know, I spend time almost everyday browsing the internet for land deals. Gorgeous pictures, superlatives extolling the virtues of country living, assurances of the very best prices, etc. At some point though, if we are really serious about owning some land, now is the time to get organized and take action.

So let’s talk about some specific steps which, taken in the right order, will make for an efficient and enjoyable journey to finding your perfect property. Folks reading this post will include the very experienced to the novice. Hopefully, everyone will pick up some great insights but I am aiming my remarks primarily to the beginner. Additionally, I am focusing on rural land within about 100 miles of a major urban area as contrasted with remote or production agriculture.

Decide why you want to buy rural land

Your eventual use of the land will set the stage for your search. Country home, production agriculture, weekend retreat, investment, recreational/hunting all help set the parameters for the property you will be looking for.

Engage an experienced rural land broker

Now let’s pause right here! If you read only to the end of this paragraph you will have been exposed to about 80% of the advice I have to offer on this post. This is easily the most important step you will make. With all due respect to the extremely hard working residential and commercial brokers out there (and there are many) this is the time to choose a Rural Land Broker. I further suggest you choose an Accredited Land Consultant (ALC). The land professional who has earned this designation has spent years developing theirs skills. The ALC is awarded by the Realtors Land Institute (RLI). After selecting your rural land broker, stick with them. A successful transaction requires a high degree of trust and cooperation between the client and their broker. Dealing with multiple brokers will almost surely complicate the search.

Drive the neighborhood

The initial step is to drive the countryside with your land broker. You don’t even have to have specific properties in mind at this point ( in fact you shouldn’t ). This is an opportunity to get to know your land broker and pick their brain. Spending a day or two driving will crystalize what you want in the way of neighborhood and property specifics. School districts, growth patterns, major infrastructure projects, distance from the city, etc are all important factors to consider before beginning to look at specific property listings.

Research prices in the market

What are properties actually selling for in the area you like? While asking prices provide an introductory guide, the actual prices being paid for land comparable to properties you are interested in is the best data by far. Your land broker can research and provide sales data which you can rely upon to establish what market values really are.

Consider your budget

At this point you have driven the neighborhood, decided on what type of land you are interested in, and you have a good idea of values. Now you are in a position to make a decision about your budget. What is the maximum amount you are willing to spend. What is the minimum acreage you are willing to buy. Also now is the time to consider the ongoing annual costs of owning rural property. Operating expenses will include; ad valorem taxes, property insurance, utilities, repairs and maintenance, etc.

Financing

you have a letter from your l Most buyers of rural land will borrow money to finance their purchase. Choosing a lender is fairly straight forward. Farm Credit institutions and local banks are the most likely sources of funds. A gigantic national bank with branches on every corner is not the one to turn to for a land loan. Your land broker will be familiar with lenders in the area. Typically a 20% cash downpayment will be required based on the market value of the property. After making application to include providing various financial documents, the lender will advise you as to what loan amount they are willing to commit to. This is referred to as qualifying the borrower. At this stage no particular property has been chosen. Many sellers will not accept a contract without a letter from the lender. When you submit an offer and it is accepted then the lender will order an appraisal of the property as part of the loan process. To summarize, the lender will ascertain what you can afford to pay and also the adequacy of the underlying real estate as collateral.

At this point we have been describing the process of finding a property in general terms. The following discussion will be aimed at selecting a particular property. This is the point that your land broker will begin showing you properties that are for sale. Of course many of the steps can be accomplished simultaneously.

Accessibility

Access to a property is generally provided by frontage from a road or via an easement across another property. Road frontage can be from a paved road or an all weather road ( good base but no asphalt topping ). All easements should be created by a legal instrument. If not, maybe there is no legal access and the property is land locked. Land locked tracts should be bought only if you own the abuting property. A hybrid form of access could be a lane extending from a road to the property but conveyed in fee simple title.

Land Size

The land size matters for many reasons and almost always the more land the better. One reason for a larger tract is road noise and proximity of neighbors. Peace and quiet are important reasons for buying property in the country. A general but good rule of thumb is that the value of the land should be at least the same as the residence. A common mistake for buyers is to skimp on the price paid for the land in order to be able to spend more on the house. Another consideration is the size of the land of the neighbors adjoining you.

Improvements

A residence, barn, sheds, fences, interior roads, and ponds all impact market value depending upon condition and appropriateness to the land. Rural land is unique and each buyer has a set of likes and dislikes. Accordingly, any improvements (particularly the residence’s) contribution to value varies widely. The cost of the improvement does not represent its contributory value. A common mistake is over improvement. It doesn’t take much to overwhelm a 5 or 10 acre tract.

Infrastructure

Utilities such as water, septic, electricity, telephone, internet service, propane gas and all the rest that make living in the country comfortable are not always in place or even available. Water is often provided by a rural community system. Sometimes a well is the only source. A new water well will be expensive. If a property does not have electricity available you probably should not buy it.

Easements

Easements almost always restrict the use of land. The owner of the easement has a superior claim to land use over the underlying property. There are almost an infinite number of types of easements. By far the most common easements associated with rural land will be power lines and pipelines. All easements should be recorded in the County Clerks office. They will usually be obvious by sight. The main restrictions easements have on land is that they do not allow the existence of improvements with the possible exception of fences. Agricultural use is often allowed across an easement subject to the owners maintenance.

Mineral Rights

Mineral rights ownership in Texas is seldom the same as the owner of the land. Buying a tract of land without minerals is quite common. The owners of the mineral estate may enjoy one or both of two rights; surface control and income from royalties. Owing the surface rights means control of access for purposes of drilling. These rights are similar to easements in that they are superior to ownership of the land. Mineral rights should be recorded in the County Clerks office.

Ad valorem taxes

This is a tax based on the assessed value of the land. In most counties rural land can receive an exemption from ad valorem taxes based on use. Common examples of uses would be agricultural or wildlife. Exemptions are administered by the County Appraisal District. Each county has different rules. Most counties establish a minimum size often 10 acres. Generally speaking residences are not included in the exemption.

Surveys

Many properties do not have a survey or, put another way, many owners don’t have a survey of their property. Why is this important? Because in order to close title on a property a survey is almost always required by a title company particularly if financing is involved. Surveys consist of two parts; a plat and a metes and bounds description. If financing is involved the boundary, easements and improvements will usually be required in the survey. Surveys are generally recorded in the County Clerks office. Your land broker will be familiar with surveyors in the local area. FYI a survey is not an appraisal. We will talk more about that later.

Floodplains

Be on the lookout for any natural hazards such as floodplains, wetlands, environmental issues, etc. All these affect the use and value of land. FEMA is a good sourced for maps. Again your land broker will have mapping programs which will have detailed information about any natural hazards. Just because a particular tract has some floodplain is not a deal killer and in many instances is an amenity. However, make sure there are building sites outside of the floodplain.

Local ordinances

Be aware of any restrictions on land use affecting the property you are interested in such as; setback requirements, zoning, ground water conservation districts, etc.

Appraisals

Appraisals and appraisers are the subject of much discussion and some of it is not positive. I know, I have been an appraiser for much of my career. There are many reasons for appraisals. One is financing. If you are going to borrow money to buy land your lender will require an appraisal. An appraisal establishes the market value of the property for purposes of collateral. There is a lot of confusion regarding what an appraisal is and what it is not. An appraisal is not a survey. It is not a comparable market analysis or a brokers opinion of value. These last two documents are provided by a land broker to ascertain a general idea of an appropriate listing price.

Insurance

Typically insurance requirements are driven by financing and involve improvements and liability. Ask your land broker to provide a list of property insurance agents who write policies or rural property in the area.

Closing the transaction

Selection of the title company and responsibility for the various closing costs are usually spelled out in the earnest money contract. A very general rule is that the seller pays for proof of ownership to include; survey, title insurance, title policy, attorneys fees to draw up deed, outstanding ad valorem taxes, etc. The buyer is responsible for all financing costs to include the appraisal. Having said that, all items are negotiable.

SUMMARY
Finding that perfect property requires planning and action. Choose the right land broker and your journey to owning rural land will be a lot easier. Enjoy the trip. It will be fun. Living in the country is worth it.

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Allen Realty Advisors represents buyers and sellers of fine quality rural land near Houston. We specialize in weekend retreats, country estates, farms and ranches, recreational property and investment land. Our market area is generally within 100 miles (two hours) of Houston.

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