Documents Needed to Sell Land by Owner
Getting ready to sell your land - what documents do you need?
Before you start to market the land for sale, you'll want to get certain documents in order. These documents will provide key information that a prospective buyer will want to know. They also show that you have everything needed to transfer ownership of the property.
Survey or topographical map of the property
When selling land, it's often important to have a land survey or topographical map of the property. This document shows the boundaries of the property, as well as any features that are on or near the property, such as trees, fences, and buildings. Often buyers want to visualize the property boundaries. A survey may also be necessary to create a legal description of the land if one was not created before.
Title to the property
Examining the title to the land early in the process is critical for a smooth real estate transaction. The title is evidence of the current owner of the property and can be transferred to another owner. While you may not have doubts about who owns the property, it's important to know exactly who is listed on the title. Those same owners will be listed on the sale contract and the deed.
It's the buyer's responsibility to conduct a title search to check that there are no liens or claims against the property. And the title search happens after signing the real estate contract. Still, discovering title issues later in the sale process can lead to lengthy delays. In certain cases, it may even make your buyer reconsider purchasing your land.
Recent real estate appraisal
If you have any doubt about what your land is worth, you may want to get an appraisal. The purpose of a real estate appraisal is to estimate the value of a particular property. The appraiser considers factors such as location, size, features, as well as recent nearby property sales.
It is important to hire a qualified appraiser licensed in your state. You can locate an appraiser by first finding the contact information of your state's appraiser board at The Appraisal Foundation. The appraiser will inspect the property and review recent sales in the area. After analyzing this information, the appraiser will then provide an estimate of the market value for the property.
Document the list of assets to sell with the land
When you sell your property, you may also be selling the rights to other assets that go with the land. This is particularly true for farm and ranch sales. These assets can include anything from a tractor to a timber stand. Listing these assets with the land can make it easier for potential buyers to know what they are getting, and it can also speed up the sale process.
Real estate taxes
Whoever is buying the land will want to know what the annual taxes on the land will be once they become the new owners.
The annual property tax amount is also needed to create the prorations on the settlement statement. The taxes for that year are divided between the buyer and seller according to their length of ownership for that year. The proration will list how much of the annual taxes each party owes. Typically, the property owner pays the taxes up to the date of sale, and the buyer pays the taxes after the sale.
To find your current property taxes, go to the property tax assessor's website in your county. Search for the address or assessor's parcel number of your property. You can also call the property tax office and ask them to send you a copy of your current tax bill.
Documents for selling land by owner
You'll need to draft several documents before you can transfer the title to the buyer. The most negotiated document is the sale contract or vacant land purchase and sale agreement. Once the contract is signed by both parties, you may need to make several disclosures to the buyer about the property.
As part of the closing, a settlement statement will be prepared to list the key financial details of the transaction. Finally, the deed needs to be drafted. The deed is the document that gives its holder ownership of the property.
1. Contract to sell land by owner
One of the most important legal documents for selling land is the contract for sale between the buyer and seller. The purpose of the sale contract or purchase agreement is to establish a binding land agreement between two parties. This document lays out the terms of the sale, including price, closing date, and any contingencies. It is important to make the property sale contract clear and concise so that both parties understand what they are signing.
Many states have free land sale contract templates available for download. In other states, these templates may only be available to licensed real estate agents. If you don't have a realtor helping you with the sale, you could also ask your local title company for a purchase and sale agreement template.
Every sale contract should include the following:
- Date of the contract
- Identity of the buyer and seller
- A legal description, such as a metes and bounds property description
- Sale price
- Earnest money deposit amount
- Closing date
- Option fee, if applicable
- Signatures of the buyer and seller
Disclosures are another important part of selling land. These documents list any issues the seller is aware of with the property. These might include environmental hazards or zoning restrictions. It is crucial that both buyer and seller are aware of any potential issues before closing on the sale.
To help avoid liability, the seller should provide disclosures to the buyer, even if you're selling unimproved or vacant land. Most likely, most disclosure items will be marked as 'unknown.' Still, the disclosures could point out issues, such as buried tanks, trash, or environmental issues.
3. Settlement statement
The settlement statement (or closing statement) is a document that lists the financial details of the transaction. This includes the amount of money paid by each party, as well as any taxes or fees associated with the sale. The settlement statement ensures that both buyer and seller are aware of all costs involved in the transaction.
Typically, the settlement statement is prepared by a title company. Even if you are selling land privately, you may want to use a title company for certain services. These include creating the settlement statement and preparing and recording the deed. They also act as escrow agent which means they will transfer the closing funds from the buyer to the seller once the deed is signed.
The deed is the document that conveys equitable and legal title to real estate. The specific requirements for deeds vary from state to state, so you may want to consult a real estate attorney to draft this document.
Some common requirements are:
- Buyer and seller must be named
- Wording must make clear the intent to convey the property
- Property must be adequately described
- Deed will need to be signed by the seller and delivered to the buyer
In most cases, the buyer will also want the deed to be recorded in the county clerk's records. To do so, the seller's signature needs to be witnessed by a notary before the deed can be recorded.
Alternatives to sale by owner
Of course, there are alternatives to preparing all the documents required to sell your own land. There are trade-offs associated with each of them, but you may decide it's worth it for the time and aggravation it saves you.
Let a realtor sell the land for you
Now that you know all the paperwork involved, you may be reconsidering selling land by owner. Listing the property for sale with a realtor will not eliminate all of the paperwork for selling a piece of property. An experienced real estate agent can help draft and review key documents for you such as the sale contract. But you'll probably need to complete other documents like the seller disclosures yourself.
Besides reducing the paperwork, the realtor will also help find a buyer for you. Those two things combined - marketing and transaction support - are typically why people hire real estate agents. However, listing the property with a realtor means you'll be paying a sales commission. That might not seem worthwhile if you already know who the buyer will be.
Selling land for cash
The other alternative that will reduce the paperwork greatly is to sell to a real estate investor for cash. Our business buys properties as-is and pay all closing costs. We use a simple land sale agreement that fits on one page in most cases.
When you sell to a cash buyer, you sell the property at a discount, although you won't have to pay any real estate commissions. The other benefit of selling land for cash is that it's fast - usually, the entire process is done in less than two weeks.
If you'd like to learn more, consider selling your land fast by requesting a fair cash offer.