If you are looking to purchase vacant land for building or recreational purposes, you may be considering participating in a land auction. While a land auction may be a good place to purchase land or other real estate, it is important to be prepared and understand the process before auction day. Below are a few tips on buying at an auction:
Have funds available: Buying agreements at land auctions are binding like other transactions. It is best to have a pre-qualified loan value established with your lender and determine a maximum buying price. In addition, be sure to consider the down payment and closing costs along with any auction fees, when establishing how much money you will need to close.
Know the value: Many people attend auctions hoping to get a good deal, and while some do, most land sold at auction goes for market value or sometimes higher. Researching the property description with the county, including any improvements, easements, road frontage, etc. will help you be a more informed bidder and also are considered when determining the fair market value.
Read the fine print: Auctions can have many details or buying stipulations including minimum prices, commissions, tax implications and use. Closing information along with other buyer fees will also be in the pre-auction information. Read the information carefully and reach out to the auction company if you are unclear on any detail.
Bidding wars: Land auctions can be confusing to those unfamiliar with the process. If more than one parcel is involved, bids can be accepted on individual lots, the whole parcel or even several combinations of the two. A visit to a land auction you do not intend to buy at is helpful, along with recruiting the help of a lender or realtor. At the close of the auction, the winning bid is responsible for the transaction.
Ready to close: Most auction transactions close within 15-30 days. Given that, buyers need to be ready to access financing if needed and any other documents or funds needed to close. Potential buyers also need to take into account any past or current property taxes that may be owed and due at closing.
GreenStone Farm Credit Services specializes in financing the purchase of vacant land. If you have questions about vacant land financing or how to purchase land at auction, reach out to me or call your local GreenStone branch at 800-444-3276.