With its iconic natural wonders, year-round sunshine, wine-growing regions and booming job markets, California is a land buyer’s dream. The state’s high demand and limited supply are bolstering property values well above national averages, giving buyers a strong investment opportunity. But investing in the right land isn’t without risk.
Investing in mistakes to avoid when buying land in California real estate requires extensive research and due diligence to make the most of your money. If you’re considering a purchase, here are a few common mistakes to avoid when buying land in California:
Unreasonably high expectations.
Many buyers approach land as an investment with the idea of building a home or developing a commercial project on it in the future. This is a major financial commitment, so it’s important to have an all-in budget in place before looking at properties. A mortgage calculator can help you determine a comfortable monthly payment to create your all-in budget.
Failing to perform adequate research and due diligence.
When researching a property, it’s crucial to have an understanding of the area and local zoning regulations. An experienced agent can guide you through this process. It’s also a good idea to hire a professional engineer or surveyor to assess the property and ensure it meets your needs.
Performing a thorough title search is another must-do when purchasing land. During this step, you should be sure that there are no existing liens or other issues that may impact your ability to develop or sell the property in the future. Having an attorney review the title report is also helpful. An attorney can also ensure that the property boundaries are clearly defined and walked by you to prevent boundary disputes in the future.
Failure to consider septic systems.
Before purchasing land for a home, you should have an engineer assess whether the site can support a septic system. This will help you avoid expensive septic system upgrades in the future.
Overpaying for the property.
It’s essential to negotiate a fair price for the land you’re buying. If the seller’s asking price is far above market value, be willing to compromise. Provide data and reasons for why your offer is reasonable to help them see that you’re in it for the long haul and want to find a win-win solution. Be patient and remain calm throughout negotiations to keep emotions in check.
Purchasing land with cash
A key mistake to avoid when buying land is paying too much for it. If you’re purchasing land for development or a private home, you can save on closing costs by paying in cash instead of financing your purchase with a mortgage.
Closing on an all-cash deal typically takes 1-3 months and can go much faster than a financed sale. Closing costs include title insurance fees, escrow charges, recording fees and due diligence like surveys and appraisals. These fees usually total 1-5% of the purchase price.
By sidestepping these common mistakes, you’ll be able to score discounted dirt for a smart investment and build your dream home or business in California.