Land Buying Process Explained

Want to buy land?

Here's the problem:

Most people treat it like buying a house.

It's not.

The financing is different. The due diligence is different. The risks are different.

And if you skip crucial steps?

You could end up with a worthless property.

Or worse—legal nightmares.

But here's the good news:

The land buying process isn't complicated once you understand it.

This guide breaks down every step—from financing to closing.

Let's get into it.

How Buying Land Differs from Buying a House

First things first.

Buying land is NOT the same as buying a home.

Here's why:

See the difference?

Land purchases require more upfront cash.

Higher interest rates.

And way more due diligence.

Here's the deal:

Banks view raw land as risky.

There's no structure to serve as collateral.

No rental income to guarantee payments.

That's why financing is trickier.

But don't worry.

I'll show you exactly how to navigate each step.

Step 1: Define Your Purpose and Budget

Before you search for land, answer one question:

What will you use it for?

This matters more than you think.

Why?

Because your intended use determines:

• Zoning requirements (residential, agricultural, commercial)
• Size needed (1 acre vs. 100 acres)
• Location priorities (rural vs. suburban)
• Infrastructure needs (utilities, road access)

Here are the most common purposes:

Once you know your purpose, set your budget.

But here's the catch:

Don't just budget for the land price.

Factor in these costs too:

• Closing costs (2-5% of purchase price)
• Survey ($300-800)
• Title insurance ($500-2,000)
• Soil/perc tests ($300-1,500)
• Legal fees ($500-2,000)
• Development costs (utilities, clearing, permits)

Pro Tip: Add 20-30% buffer to your land budget for unexpected costs. Development expenses—like bringing in electricity or drilling a well—can easily run $10,000-50,000 on raw land.

Step 2: Get Pre-Approved for Financing

Here's a step most buyers skip.

Big mistake.

Getting pre-approved does three things:

1. Shows you exactly what you can afford
2. Proves to sellers you're a serious buyer
3. Speeds up the closing process

But land financing is different than home mortgages.

Here are your options:

Land Loan Options Compared

Here's what I recommend:

Talk to multiple lenders.

Start with:

• Local banks (they understand local land values)
• Credit unions (often better rates for members)
• Farm Credit Services (great for rural/agricultural land)

And don't overlook owner financing.

Many land sellers offer it directly.

This bypasses traditional banks entirely.

Often with more flexible terms.

Pro Tip: Get a "soft pull" pre-approval first. This doesn't impact your credit score. Once you find a property, do the formal application.

Step 3: Find the Right Property

Now comes the fun part.

Finding your land.

Here's where to look:

Online Platforms

• LandWatch – Largest land marketplace
• Lands of America – Great filtering options
• Land.com – Premium listings
• Zillow/Realtor.com – Include land listings
• LandyDandy – Owner-financed properties

Offline Methods

• Local real estate agents – Know off-market deals
• County tax sales – Distressed properties
• "For Sale" signs – Drive your target area
• Newspaper classifieds – Yes, still works

Here's the key:

Work with a land specialist.

Not a residential real estate agent.

Land transactions are different.

A land-focused agent understands:

• Zoning nuances
• Timber value
• Water rights
• Agricultural potential
• Development feasibility

They'll save you from costly mistakes.

What to Check When Evaluating Land

Before you fall in love with a property, verify these essentials:

Pro Tip: Visit the property multiple times. Go during different weather conditions and times of day. What looks perfect on a sunny afternoon might flood when it rains.

Step 4: Make a Smart Offer

Found the right land?

Time to make an offer.

Here's how to do it right.

Know the Market Value

Don't guess.

Research comparable sales:

• Check recent sales of similar properties in the area
• Use price-per-acre as your benchmark
• Adjust for differences (road frontage, utilities, topography)

Most sellers price land 10-20% above market value.

That leaves room for negotiation.

Structure Your Offer

A solid offer includes:

• Purchase price – Your opening bid
• Earnest money deposit – Shows you're serious (1-5% typical)
• Contingencies – Your "escape clauses"
• Closing timeline – Usually 30-60 days
• Financing terms – Cash, loan, or owner financing

Key Contingencies to Include

Never make an offer without contingencies.

These protect you if problems arise:

Most sellers accept a 30-45 day due diligence period.

Use every day of it.

Pro Tip: In competitive markets, consider a shorter inspection period (14-21 days) or larger earnest money deposit to make your offer more attractive.

Step 5: Conduct Thorough Due Diligence

This is where most buyers get lazy.

Don't.

Due diligence protects you from:

• Buying land you can't use as intended
• Title problems that cost thousands to fix
• Environmental issues that make land worthless
• Hidden liens or encumbrances

Here's your due diligence checklist:

Legal Due Diligence

• ☐ Verify seller owns the property (title search)
• ☐ Check for liens, judgments, or back taxes
• ☐ Review all easements and rights-of-way
• ☐ Confirm legal road access exists
• ☐ Understand all deed restrictions or covenants

Zoning and Land Use

• ☐ Verify current zoning designation
• ☐ Check setback requirements
• ☐ Research building permit requirements
• ☐ Investigate future development plans nearby
• ☐ Check for HOA or CC&R restrictions

Physical Due Diligence

• ☐ Walk the entire property boundaries
• ☐ Check for encroachments from neighbors
• ☐ Assess road access quality
• ☐ Evaluate topography and drainage
• ☐ Look for signs of flooding or erosion

Environmental Checks

• ☐ Review FEMA flood maps
• ☐ Check wetland status
• ☐ Research past property use (contamination risk)
• ☐ Conduct soil/perc test if building
• ☐ Verify no endangered species habitats

Pro Tip: Hire professionals. A $500 survey can save you $50,000 in disputes. A $300 soil test can save you from buying unbuildable land.

Step 6: Complete the Title Search and Survey

Two non-negotiables.

Never skip these.

Title Search

A title search reveals:

• Ownership chain – Confirms seller can legally sell
• Liens – Outstanding debts attached to property
• Easements – Rights others have on your land
• Encumbrances – Restrictions on use

Here's a scary stat:

25% of real estate transactions have title issues.

Some are minor.

Some kill deals.

A professional title search costs $200-400.

Title insurance costs 0.5-1% of purchase price.

Worth every penny.

Land Survey

A survey tells you:

• Exact boundaries – Where your property starts and ends
• Acreage verification – Confirms you're getting what you paid for
• Encroachments – Structures crossing property lines
• Easement locations – Where rights-of-way exist

Types of surveys:

For most purchases, a boundary survey suffices.

If you're financing, your lender may require ALTA/ACSM.

Pro Tip: Get physical markers placed at all corners. Take GPS coordinates and photos. This prevents future boundary disputes with neighbors.

Step 7: Close the Deal and Record the Deed

You've made it.

Closing day.

Here's what happens:

Before Closing

• Final walkthrough – Verify nothing changed
• Review closing documents – HUD-1 settlement statement, deed
• Wire transfer funds – Or bring certified check
• Confirm insurance – At minimum, liability coverage

At Closing

You'll sign:

• Deed – Transfers ownership to you
• Settlement statement – Itemizes all costs
• Loan documents – If financing
• Title affidavits – Various legal certifications

After Closing

Don't celebrate yet.

Make sure:

1. Deed is recorded – With county recorder's office
2. Title insurance issued – Receive your policy
3. Property taxes transferred – Prorated at closing
4. Keys/access provided – If applicable (gates, locks)

Typical closing costs for land:

Pro Tip: Bring two forms of ID to closing. Review all documents carefully. Don't be afraid to ask questions—once you sign, it's final.

Frequently Asked Questions

How much money do I need to buy land?

Plan for 20-50% down payment plus 5-10% for closing costs and contingencies.

On a $50,000 property, that means:

• Down payment: $10,000-25,000
• Closing costs: $2,500-5,000
• Buffer for unexpected: $2,500-5,000

Total: $15,000-35,000 minimum

Owner financing often requires less—sometimes as little as 10% down.

How long does it take to buy land?

30-90 days from offer to closing.

Here's the typical timeline:

Cash purchases close faster (2-3 weeks possible).

Can I buy land with no money down?

Technically yes, but it's rare.

Options include:

• USDA loans – 0% down for qualifying rural properties
• VA loans – 0% down for veterans (if building immediately)
• Owner financing – Some sellers accept very low down payments
• Home equity – Use existing property equity

Most realistic: 10-20% down with owner financing.

What should I look for when buying raw land?

The five essentials:

1. Legal road access – Can you get to it?
2. Buildability – Can you use it as intended?
3. Utilities – Available or feasible to install?
4. Clear title – Free of liens and disputes?
5. Proper zoning – Allows your planned use?

Skip any of these checks and you're gambling.

Is buying land a good investment?

Land has historically appreciated 4-6% annually.

But it depends on:

• Location – Growth areas appreciate faster
• Development potential – Buildable land worth more
• Holding costs – Taxes, insurance, maintenance
• Exit strategy – How will you sell?

Raw land generates no income while you hold it.

Factor that into your investment calculation.

Do I need a real estate agent to buy land?

No, but it helps.

A land specialist (not a residential agent) provides:

• Access to off-market listings
• Knowledge of land-specific issues
• Negotiation expertise
• Transaction management

In most cases, the seller pays the agent commission.

So buyer representation is essentially free.

What happens if the title search finds problems?

Common issues and solutions:

Minor issues get resolved.

Major issues can kill deals—that's why title searches exist.

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The land buying process doesn't have to be intimidating.

Follow these seven steps.

Do your due diligence.

Work with professionals who know land.

And soon you'll own your own piece of earth.

Ready to start your search?

Browse available properties or learn about owner financing options that make land ownership more accessible than ever.