There’s a good chance that you will be working with a real estate agent in your search for land. A good agent or broker (the owner of a real estate brokerage) can be a great resource and help you locate, evaluate, and compare pieces of land. Always remember that, however, that unless you are expressly working with a buyer’s broker, the agent is working for the seller, not you. No matter how professional, friendly, and informative the real estate agent may be, and no matter how many properties and agent shows you, agents traditionally work for the seller and have a legal fiduciary obligation to act in the seller’s best interest.
When getting down to the financial nitty gritty of prices and offers, you should take their advice with a fair amount of caution. Also, most agents are more knowledgeable about houses than vacant land, so their knowledge of the intricacies of wells, septic systems, zoning, and the rest may be pretty limited. You’ll need to do your own research to make sure the land you are considering will meet your needs.
I’ve bought and sold a lot of properties and worked with many real estate agents as both a buyer and seller. In most cases, I’ve found agents to be helpful and honest, although clearly some are more knowledgeable than others about the technical aspects of houses, land, construction, and law. Choose an agent carefully as there is a lot of money on the table and mistakes can be costly. Look for someone who is knowledgeable and experienced, who listens well, and that you have a good rapport with.
However, whether you are working with a buyer’s broker, seller’s broker, or some combination of the two, at the end of the day, the agent’s first priority is to make a sale happen – that’s how they get paid. They get paid the same whether they show you 5 properties or 50 before you buy, and get paid nothing in most cases if you don’t buy anything they show you. So put yourself in their shoes. They are more likely to say, “It’s a cozy spot with pretty marsh views” than “Are you sure you want to build in this mosquito-infested hollow?” So take all their advice with several large grains of salt. Also remember that they are not building contractors, engineers, home inspectors, or lawyers so don’t rely on them for professional advice in these areas of expertise.
WORKING WITH THE SELLER’S AGENT
Like it or not, there is by definition an adversarial relationship between buyer and seller. So confiding in an agent who is working for the opposition (for example, telling the broker how high you will go in a negotiation) is unwise as the agent is obligated to tell the seller. On the other hand, the seller’s listing agent can be an excellent source of detailed information about a property. He or she probably knows more about the property and the seller than any other agent, even those working out of the same office. With the increasingly strict real estate disclosure laws enacted in many states, the seller’s agent is unlikely to withhold information from you if asked directly.
So pepper the agent with any questions you may have about perc tests, water quality, wetlands, former uses of the land, and so on. Just make sure you confirm any information before acting on it. The listing agent also knows how long the property has been on the market and its price history (now readily available to anyone on the Web), and probably has some insight into the sellers’ level of motivation and what they are willing to accept. While the agent is unlikely to advise you how on much to bid, and would be violating his legal obligation to the seller by doing so, he may with a wink and nod answer your question, such as “Would it be worth offering $60,000 on this $100,000 property of would I be wasting my time?” You’d be surprised at the information you can sometimes glean.
WORKING WITH A BUYER’S AGENT
Fortunately for buyers, the real estate business is in transition and more and more agents and brokers will also work with you as a “buyer’s agent” or “buyer’s broker” at no additional cost to you, as they are paid out of the sales commission. In this case the broker’s fiduciary obligation is to the buyer. If you plan to look at a lot of properties. I’d recommend working with a buyer’s broker, if available in your area. You lose the benefit of talking directly with the seller’s agent, but it will simplify your search process, and you can have your agent ask the same questions of the listing broker. Sometimes things get more complicated because the seller’s broker and buyer’s broker work out of the same office, creating a possible conflict of interest. For example, the buyer’s agent might get a bonus for bringing the buyer to his own office. Worse still, some states allow brokers to act as “dual agents” working for both the buyer and the seller – creating a guaranteed conflict of interest. Avoid both of these situations as they make a somewhat murky relationship even murkier.
Land is often sold directly by the own, often a developer who has bought a larger parcel and subdivided the land. With fewer middlemen, you can sometimes get a better deal this way. However, you’ll need to be on your toes as you will be dealing directly with a seasoned pro who knows a lot more than you do about land. Most land developers are honest, hard-working folk, but some will gladly sell you swampland in Florida or former toxic waste dump. If possible, ask around and talk to others who have bought land from the developer. Before making an offer directly to the seller, I’d strongly recommend working with a lawyer to carefully draft an offer with the necessary contingencies to protect you from any surprises.