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What do I do if I want to make an offer?
There are three primary elements of an offer: 1) the
purchase price, 2) earnest money, and 3) the closing date.
All 3 are important - purchase price alone is not
necessarily the most important element of the offer.
The purchase price is often a negotiable amount. Keep in
mind that when two offers are essentially the same, usually
the offer with the highest purchase price will be accepted.
However, both earnest money and closing date could influence
a seller in your favor even more than the purchase price you
offer. Let me explain.
When making an offer on property you should act in good
faith and make your best offer. Your goal is to make a
strong offer that will get accepted and stand up against any
other offer that should be submitted. In addition to a fair
purchase price, your offer will be much stronger if you
include solid earnest money of $1000.00 or more and a short
closing date of no more than 2 or 3 weeks if possible.
Sellers will often judge the seriousness of an offer by the
amount of earnest money tendered with the offer. Earnest
money is money put down as a deposit and is fully refundable
if your offer is not accepted. Earnest money is deposited
into the Broker's trust account and is applied to the
purchase price at closing if your offer is accepted. The
seller will not receive your earnest money until the
closing.
The closing date on the offer will also get a seller's
attention. What concerns a seller about a distant closing
date is that something may happen to prevent you from
closing during the interim. The closing is when the seller
gets paid for their property. Understandably, the seller
preferd to get paid as soon as possible. Should you not
close, the seller will have missed the opportunity to sell
the land to another buyer, while waiting for a closing that
ultimately never occurred.
In addition to the purchase price, earnest money, and
closing date; one other factor that could either "make or
break" your offer is the presence of contingencies.
Contingencies are conditions or requirements that must be
met before an offer can proceed to closing. To many sellers,
an offer containing contingencies (other than standard
financing language) is less attractive. An offer free of
contingencies is in many ways superior to offers that
contain them.
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Are there any advantages in working with a developer?
There can be a world of difference between buying land from
the "guy down the road" and from somebody who develops land
for the market as a profession.
Buying from a developer means that you do not have to worry
about many of the details mentioned above. A professional
real estate developer regularly arranges for such things as
surveying, road work and the installation of utilities and
is likely to get a better price from the contractors than an
individual who develops a single parcel or a single project.
The developer can pass the savings on to the buyer.
The professional developer routinely handles things you and
I may forget, or don't even know about. The developer makes
sure the property complies with all local zoning ordinances,
and state and federal laws. He or she will also make sure
there are driveway permits available in areas where they are
needed, as well as many other details that make a property
ready for your home.
It may be worth remembering that the developer is a
professional who is in tune to the market and what the
consumer is looking for. The developer handles carefully the
details associated with making raw land suitable for a
residence and does so in a much more cost effective manner
than the average consumer.
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I don't want a subdivision.
Without a doubt, most people considering a vacant land
purchase feel the same way. This is especially true if the
land will be used as a vacation getaway. In Wisconsin, a
subdivision is defined as 5 or more lots of 1.5 acres or
less. The idea of living shoulder to shoulder with close
neighbors clustered around a paved cul de sac is not what
most people have in mind. But, it is important to remember
that all land everywhere is subdivided. The land must be
subdivided or you would be forced to purchase more land than
you want or can afford.
Since all land is subdivided, the size, number and
characteristics of the parcels within the subdivision are
what matters. Privacy and seclusion come from the topography
of the land, the amount and position of tree cover and other
features like water on or near the property. Decide for
yourself; is there more seclusion in a large open field or a
3 acre wooded lot?
Many people dream of purchasing 5 acres or so at the back of
a 40-acre tract. Considering the cost of land today, if you
can not afford the entire 40 acres, the only practical way
you will be able to own the secluded 5 acre parcel is if the
property is divided and the development costs are spread out
among several others. If this did not happen the difficulty
in obtaining an easement across the remaining 35 acres, the
cost of the road and the cost of running the utilities to
your parcel would be tremendous.
It is important to keep in mind that even if you could find
a 5-acre tract surrounded by undeveloped land, it is because
local zoning has permitted subdividing the land into smaller
parcels. There would be no way to know if or when the land
next to yours would be further subdivided, possibly into
smaller parcels than yours, which can mean even more
neighbors!
When it comes to purchasing vacant waterfront property in
today's market, consider the cost and rarity of waterfront
land. It is very likely that your only choice will be a
relatively small lot in a subdivision.
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