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Top 14 Due Diligence Items You MUST Perform Before Buying Land Online

Top 14 Due Diligence Items You MUST Perform Before Buying Land Online

These days you can find almost anything online, so it shouldn’t come as a surprise that you can buy land online as well. In fact, this isn’t a bad way to go about finding the perfect spot for your future home! The downside: purchasing land online requires a thorough due diligence process and you must rely on your own expertise to determine whether the listing is a deal or a scam. Below is a running checklist of all due diligence items we go through before purchasing a lot. We based these items on our experience and update them as we improve our process. Enjoy!

  1. Find the Assessor’s Parcel Number (APN): the APN is the number assigned to the parcel by the county tax assessor and is used to look up the parcel’s tax records. The APN number is also called the Property Identification Number. Not every seller will list the APN number in their listing so you MUST ask the seller for this before you do anything else.
  2. Verify Ownership: give the recorder’s office a call to verify that the owner in their records is the same as the owner entity in the seller’s listing. Just because the seller is listing a property doesn’t mean that he or she owns it. Don’t buy land from someone whose name or company is not on the deed.
  3. Get the GPS Coordinates: many rural land parcels do not have an address and the only way to find the parcel is through its GPS coordinates. If the seller is not showing the GPS coordinates in the listing, ask him for the coordinates. If the seller does not respond in time, use the APN number to pull up a property report from a professional service, like AgentPro247, and get the GPS coordinates from there. You can also use the APN number to get the GPS coordinates from the county’s GIS service.
  4. Check for Wetlands: you MUST check for wetlands before you buy a property. For all intents and purposes, you CANNOT build on wetlands without permission from the jurisdictions protecting them (including multiple federal and state government agencies). Many times, permission is difficult or nearly impossible to get. To check whether there are wetlands on your parcel, visit the US Fish and Wildlife Service’s Wetlands Mapper. Please note that this mapper isn’t 100% foolproof. If you want complete security, you will need to hire a wetlands consultant.
  5. Double Check the Property Taxes: don’t rely on the tax amount listed in the seller’s listing. Many counties will reassess a property when it is sold and the taxes can go up or down when you buy the land. Most county assessor’s offices have online tax records that allow you to look up the current amount due on the property. First check that the amount shown online is the same as what the seller listed, then give the county assessor’s office a call and ask whether they will reassess the property once it is sold. Also ask for the general method they use to calculate the tax rate. This will help you calculate your future tax burden. Last but not least, also ask if there are any back taxes due. Never buy a property without checking for tax liens or overdue taxes.
  6. Check for an HOA: do a Google search to see whether there is a Homeowner’s Association (HOA) or Property Owner’s Association (POA) covering your lot. If there is an HOA or POA, call the Association’s office to verify all dues have been paid. Be careful, it’s not always easy to find an HOA. For example, a property was recently listed on eBay and the listing specifically stated there were no HOA fees. When we spoke to the county assessor, we asked whether she knew if the property was part of an HOA and she said yes. It turns out the property had a lien on it for unpaid HOA fees.
  7. Look at the Property and Surroundings on Google Earth: if you are in the area, visit the parcel. If you are purchasing out of state, leverage Google Earth or hire a local photographer or real estate agent to visit the site. People buy land for many reasons, but make sure the area meets your criteria. Also check the topography of the land for obvious red flags, like rough terrain. Finally, make sure the lot is not being used as a landfill! When you open Google Earth, look at photos from previous years to ensure the area was never used for a purpose that could leave long-standing contamination. If you are looking to build a house on your property, check to see if there are other homes in the area. This is a good sign your lot is buildable.
  8. Check All Recorded Deeds: most counties will have an online public records database where you can view all documents recorded against your parcel, including historical deeds, mortgages, covenants and restrictions, liens and easements. Check the historical deeds to ensure there are no breaks in ownership. Also check for liens, mortgages or other kinds of encumbrances or covenants that could complicate title. If you are unsure where to look, go to the public records database and search for the state and county where your parcel is located. The website will bring up the county recorder’s public database. Remember, no matter how thoroughly you check the county’s records, the only way to guarantee clear title is to buy title insurance.
  9. Get a Professional Property Report: there are many services that offer property reports, the most helpful (and the one we use) is AgentPro247. AgentPro247 provides complete property profiles, including information on taxes, foreclosure activity and transaction histories. Their profiles give you a solid base for determining whether you want to buy a parcel. This report is very important and the only reason it isn’t #1 on our list is that a property report will cost you money. It makes sense to clear any free due diligence items before spending money on a report. Please note that AgentPro247 will be retired early next year and replaced by SiteXPro, which comes with a higher fee. So take advantage of AgentPro247 while you still can! Another tip: if you are having a hard time finding your parcel using the APN number on AgentPro247, try removing the leading or trailing zeros.
  10. Get Parcel Boundary Coordinates: go to the county’s GIS map and see if you can find the GPS coordinates for each corner of the property. This will help you verify the property’s boundaries. If the value of the property is more than $10,000, we recommend you get a survey before closing.
  11. Check the property’s Flood Zone: The zone to look out for is the FEMA Special Flood Hazard Area, or an area where there is a 1% chance of flooding each year. If your parcel is in a Special Flood Hazard Area, you will need to buy flood insurance. To check your parcel’s flood zone, go to FEMA’s flood maps. Also look into FEMA’s design guidelines and research how you can reduce your flood insurance premium by building smart in a floodplain.
  12. Look into Setbacks and Road Access: If you want to build on the lot, call the local zoning department to ask about setbacks and road frontage requirements. These requirements can make it difficult to build on a property, depending on it’s shape and size. Also, double-check you are not getting a landlocked parcel. If your lot doesn’t have road access, talk to your neighbors and see if they will record an easement allowing access through their lot. Be prepared for the neighbors to ask for compensation.
  13. Look into Utility Services: many rural counties do not provide water and sewer services. If this is the case, you will need to install a well and septic system. Keep in mind that you will only receive approval for a septic system if your lot passes a percolation test (which measures the rate at which water pecolates into the soil). If you really want to be sure your lot is buildable, it is worth investing in a percolation test before purchasing the lot. Be sure to call the county health department to understand the approval requirements for a septic system. Finally, call the local power company and check whether power is available at your parcel. If power is not readily available, check how much it will cost to have it connected.
  14. Look at Sales Comps: run a check to see what other parcels are going for in the area. Don’t overpay for your parcel, especially if you are buying it for investment purposes. If you are looking to build on the property, check sales comps for homes in the area to make sure the local housing market is solid. You don’t want to invest in a new building only to find your home is worth less than it cost to build. Call a few local contractors and see if they will give you a rough cost per square foot for a single-family home. Compare the cost to the comps you researched before purchasing.

We’re constantly updating our list. Please let us know what you think with a quick comment – and feel free to contact us if we missed anything.

8 Comments

  • Frances
    Posted January 20, 2019 1:41 pm 0Likes

    Thank you Erika. Helpful basic checklist & Links too. If you suggest Any other resources for due diligence research, let me know!

    • Erika
      Posted January 20, 2019 6:15 pm 0Likes

      Thank you for the feedback! I’ll let you know if we come across any other comprehensive resources.

  • Rana
    Posted March 24, 2019 4:12 pm 0Likes

    Great work erika, wish I could have seen this few years back before I bought a piece of paper with all previous taxes dUe from a UK Company selling land in USA. I could have saved few thousands bucks. Hats off nice info.

    • Erika
      Posted March 24, 2019 7:10 pm 0Likes

      Thank you, Rana. I’m sorry to hear about your experience, I hope you’ve had better luck since then!

      • Rana
        Posted March 25, 2019 7:59 am 0Likes

        Hi Erika,thanks for the quick response, Further to your comments (no) I never bought any thing since then, just moved here in queens from uk, and planning to have some land For agricultural purposes or for a poultry farming business. If you Guys have some lots coming in ny Pls always always keep me in mind. I have sUbscribed to your newsletter so hope for good. Thanks and have a lovely day ahead

        • Erika
          Posted March 25, 2019 6:49 pm 0Likes

          As soon as we have a new property in NY, we will let you know. Thank you for subscribing!

  • Dianne Cox
    Posted May 27, 2019 9:08 am 0Likes

    Thanks for this information, good order of things to do. I do want to comment though after all this has been done it also might be good to see what the crime rate in the area is. For me a senior, I am very careful to look at areas that are not going to cause me concern on staying on the property, of course anything can happen, but I want to make sure to stay out of a heavily depressed, crime ridden area.

    • Erika
      Posted May 30, 2019 10:04 pm 0Likes

      Thank you, Dianne. You have a good point, crime rates are definitely an important factor to look at before purchasing a property.

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