okay so you want to buy land welcome to
the club
[Music]
i've wanted to own rural land since i
was in college and it took me quite a
bit of time a number of years before i
was really able to afford it but i've
been fortunate enough to be able to buy
and sell several places now
and i've been able to walk through
several transactions with buyers and
sellers as a land agent and i love every
minute of it if you're watching this
video you can probably relate and at
some level you're probably interested in
actually buying some land whether it's
now or even a little down the road
either way there's a lot of things to
understand and even prepare for because
buying rural land isn't like buying a
house in a suburban neighborhood there's
a lot of nuances and differences in the
transaction itself but don't worry
because in this video i explain the full
process to buying rural property like i
said i've gone through this process many
times personally and with my clients and
how do i wish i would have seen this
video before i started the process it
seems like everywhere i went i would get
answers to questions but people would
only paint a small piece of the picture
for me i would get answers about the
survey or about a title but i could
never really get anybody to put the big
picture together for me well my friends
this video is to help you fill in some
of the gaps and to help manage your
expectations for when you start the
process to understand the full process
welcome to landowner tv where i make you
smarter about your land one video at a
time my name is michael morrow and on
this channel i cover questions that
landowners frequently have questions
about questions about wildlife or
conservation or livestock sometimes
hunting and sometimes about real estate
transactions just like this video so if
you're a landowner or just enjoy
learning about land in general mostly in
texas be sure to subscribe to the
channel and if you liked the video it
would mean a lot for me if you hit that
like button so i cover this in about
seven steps there's all kinds of ways to
slice the pie but this is the way that
mentally i did step one i would say
securing financing and no i'm not
confused when you're ready to make that
plunge i definitely want you to do this
as your first step
okay and if you're one of those really
lucky people that gets to pay cash for
land you get to go ahead and skip to
step two
for the rest of us who do typically run
through some financing process
pay attention now the truth is you don't
necessarily have to secure financing
first but it can help in a lot of ways
it familiarizes you with the process
it'll help you catch any unexpected
surprises when you submit an offer
sellers will often take that offer more
seriously if they see that you've been
pre-approved and that could be a major
thing because at the time i'm making
this video in 2022 the rural land market
is about as hot as i've ever seen it
like as a market rural land has been
progressively hotter really since the
90s and kovid set it on fire several
markets tracks are selling really
quickly some have multiple offers and in
general the prices are going up faster
than they ever have take a look at this
this is a graph of rural land price
trends in texas notice anything crazy
about the last two years
like maybe the hockey stick on the graph
at the very end chances are the trend
won't continue like that forever but it
does indicate a really hot market so
having your financing ready will make
your offer all the more advertising to
the seller so if you're gonna finance
where do you go where do you start i'm
gonna actually have a complete video on
financing real land that's gonna be able
to walk you more specifically through
the process
but here are the big bullet points you
do have a couple of options in terms of
where do you go
to finance that raw land or rural land
or a ranch or farm or whatever but
overall the best lender most of the time
will likely be a member of the farm
credit system now i don't get any
referral dollars for saying that they're
not paying me but as someone who
specializes in rural land transactions i
can tell you that if you're buying
several acres or a lot of land
it's typically going to be one of your
better options just so you know the farm
credit system was established back in
1916
to create liquidity in the agricultural
land market much in the way that fannie
mae and freddie mac
create liquidity in the home mortgage
markets today in the national farm
credit network there's 71 institutions
11 of those are in texas and you can
check out their logos right here now
each of these institutions are actually
member-owned cooperatives and you can
find out a lot more information if you
just google the texas farm credit system
i'll also just note that i have a
comprehensive article about this video
posted on landassociation.org so you can
go check it out for more information
there but members of the farm credit
system specialize in rural agricultural
land transactions they know all the
nuances of a farm and ranch purchase
they can do things like include
equipment in the purchase of the
property and they have a number of
resources at your disposal when it comes
to these large rural land transactions
now i will say if you're going to buy a
smaller track of land let's say under 10
acres what i would do if i were you is
compare the cost of a loan from one of
these texas farm credit lenders
to a local lender like a local bank or a
credit union in the county that you're
going to buy the land in i've actually
personally done this on a couple of
small purchases that i have and it
worked out wonderfully generally though
your big bank chains your national
brands are most often not your best
solution when it comes to lending on
rural land plus the local bank or credit
union as well as some member of the farm
credit system will have local surveyors
local appraisers that will know that
land in and out whereas big chains they
don't okay step two
or step one for you cash buyers this is
the fun part you get to go out and find
the place of your dreams now if you're
watching this video you no doubt have
already been doing this you've probably
got a list of properties you've probably
been daydreaming about but now you get
to take action now you reach out and you
start scheduling showings now there are
a couple good websites that are really
ideal for going and finding rural land i
personally use haar which is the houston
association of realtors website lands of
texas i use zillow and look there's
dozens of other ones like check them out
here the biggest step into finding the
right rural property farm or ranch for
you
and i'm going to try to say this with as
little bias as possible but get yourself
a buyer's agent and look i don't care if
it's me but holy moly this is the
biggest no-brainer ever
i know that you watching this video here
are resourceful because you're watching
this video and you're super smart
because you're still watching but unless
you have transacted
multiple times with rural land you just
may not know the nuances of the contract
or even the market that you're going to
be going into despite the fact that
you've been able to see a few listings
the good news is a buyer's agent doesn't
cost you a thing
because remember in most real estate
transactions the commissions are
actually paid by the seller they're not
paid by you the buyer so what it means
for the listing agent is now that you
have a buyer's agent you're they're
gonna have to split that commission
between the buyer's agent and the
listing agent and it is important to
note that when you contact that listing
agent the listing agent is contractually
obligated to serve the interest of the
seller
not you
now it is common it happens a lot where
the buyer and the seller work to the
same agent it's called dual agency and
it happens a lot in texas but you as the
buyer and hopefully a landowner tv
subscriber i'm telling you
you should probably go ahead and get
yourself a buyer's agent because you've
got nothing and hopefully that buyer's
agent is familiar with that local market
and the land in that area step three
okay so you found the perfect place
you've taken the family family approves
this is the place that you really want
let's talk about step three which is the
offer in the contract how do you make an
offer on a ranch and what are the
important parts of that contract if the
transaction takes place with a licensed
real estate agent they're going to be
using the trek promulgated contract trek
being the texas real estate commission
as a licensed real estate professional
in texas we are obligated to use a trek
promulgated contract so it's basically
just a contract that we'll use to
outline the transaction the good news is
these contracts have been used thousands
if not millions of times for land
transactions and they provide a lot of
flexibility to include or disinclude
anything that's appropriate for your
transaction now with the offer itself
the question i get a lot is how much
should i offer asking prices x what
should i offer well as i mentioned the
markets do vary in really hot markets
offers go above asking price on the flip
side you may have a track of land with
some undesirable feature that's sat on
the market for a year and a half two
years maybe there's an access problem
maybe it's next to a landfill who knows
so in those instances
i would suggest going in you know maybe
even below 10
so it really does vary the key thing is
to get with your buyer's agent who has
local knowledge of that market and they
should know what's an appropriate offer
for that particular track of land we
could talk all day about the contract in
different ways to change it to make it
best suited for you but let's focus on
some of the key points and move along
i've already mentioned financing once
again being pre-approved is going to
make that offer even stronger to a
seller
minerals all mineral rights are
automatically transferred from the
seller to the buyer by using this
contract unless they're specifically
reserved by the seller it's important to
know that in the state of texas the
surface rights can be permanently
severed from the mineral interest of
land but in texas the mineral interest
is always the dominant estate now
there's way more to that subject to
cover in this video but just be aware
it's a thing and you should probably get
legal advice if you have specific
questions about that because oh by the
way i am not an attorney now let's talk
about the option period the option
period will outline a specific number of
days that you have to review the
property and change your mind if you
don't want it and this period goes
between 10 days sometimes 30 days most
of the time in rural land
sellers don't like option periods going
as far as 30 days i see 10 days a lot
and i've also seen really strong offers
with no option period there's also the
survey that you need to keep in mind now
i'm going to cover that next but just be
aware who pays for it that's a thing the
other thing you can negotiate in the
contract is closing costs now these
costs can include things like the title
policy things like the closing costs to
generate your loan
and a few other things but they can
range between two and five percent of
the overall transaction so negotiating
between who who pays for closing can be
a major sticking point in a contract so
just be aware next is the closing date
more recently in rural transaction i'm
seeing closing dates being pushed out to
45 sometimes 60 days simply because
people aren't able to get surveys or
appraisals in time because of just the
high demand
of those things just be aware although
you want to close very quickly sometimes
there are constraints that you really
don't have any control of like getting a
survey out there or an appraiser out
there in time okay step four inspecting
the property like i just mentioned after
you execute this contract you'll likely
be inside of an option period
this is your chance to even more fully
evaluate the property to make sure it's
going to suit your needs unlike a home
purchase there aren't any licensed land
inspectors that means for raw land like
a ranch
it's going to be up to you a buyer's
agent or sometimes a qualified
consultant to go out there and do
research on that track of land
now as a buyer's agent i'll pull soils
data floodplain data vegetative cover
info
and a lot of times i'll connect a buyer
with a local wildlife biologist or ag
expert in the region once again just to
make sure it's going to meet their needs
whatever you do do not buy land sight
unseen that's just generally a really
bad idea more on inspecting the property
you know there are a number of free
resources with a ton of really good
information that you can utilize
to find out even more about your
prospective property first i'm going to
recommend that you go to
landassociation.org
and read an article that i wrote called
10 things to know before buying a piece
of property and more recently i posted
some information about some of these
free online tools that you can use i
actually have links to those articles in
the description of this video but the
resources i would recommend are the
texas railroad commission web soil
survey fema floodplain maps and the
texas waterwell website step 5 is the
survey and this is a critical part of
the transaction because it literally
defines what it is that you're buying
now surveys on rural land are conducted
a bit differently than the survey that
was used for your house in the suburban
neighborhood that survey is a lot in
block most likely the survey method used
to define your land it's going to be
called meats and bounds now look it's
nice when the property you're buying
comes with a recent survey in fact when
i buy and sell land on my own i always
make sure that i get a recent survey
before i sell it because it's more
enticing to the buyer but if you're
looking at a piece of property and
you're going to finance it most likely
that lender's going to require a recent
survey which is good because even if
you're buying cash i would get a survey
done and
if you're looking to get a title
commitment for that property the title
company is going to require a recent
survey also all good reasons to have a
survey
now rural surveyors have a special
credential that i would recommend you
make sure they have before they do your
survey what you want as a surveyor is a
registered professional land surveyor an
rpls now this is a challenging
accreditation for a surveyor to get it
requires a long apprenticeship and
there's only a finite number of these
folks around i say this because during
hot markets they're hard to come by and
they get booked out weeks in advance
once again going back to those extended
closing periods the good news is a
buyer's agent and likely your lender are
gonna know a registered professional
land survey so step six i would say is
title commitments and even though i put
it at step six the title commitment
really does start early in the process
usually immediately after that land
contract is executed it's sent over to
the local title company and it usually
takes two to three weeks to receive a
title commitment back so what is a title
commitment because honestly when i
started this whole process i didn't know
either a title commitment is a
commitment for title insurance it
provides the terms and conditions for
the way the final title policy will be
issued and title insurance offers
protection for buyers and their lenders
from a defined group of defects in the
title one of the main purposes is just
to make sure that the person you're
buying it from owns that property and
the people they bought it from actually
owned it before them and so on
it also goes through things like it
ensures there's no tax liens against the
property in other words that current
buyer hasn't leveraged it for other
loans the irs isn't wanting it because
they haven't paid other taxes and so on
there are a number of other items that
these policies ensure against but
they're very specialized and once again
you're going to have to look at your
specific title policy okay step seven is
closing you're here
at this point you will hopefully have
checked all the boxes with your lender
you have checked all the boxes with your
title company and you will have provided
that title company all the items
scheduled and title c that title
commitment the only thing now is left to
close it means you and the seller will
sign over title you'll finalize all your
financial agreements and you're going to
sign about 50 pages of things so just
get ready with that writing hand once
again i really hope this video was
helpful i'm sure you have questions
remaining there are a lot of things i
just didn't have time to cover in this
video the good news is i'm going to
continue producing content for you to
make you smarter about your land to make
you smarter about these transactions and
look if you have any specific questions
be sure to put them in the description
below i'll be happy to answer them i
look forward to seeing you on the next
video thanks