Any agent helped buy land in Colorado? What's the process?

[James Carlson]

I have a buyer under contract on a mountain property. The owner of two adjacent parcels is willing to sell them to my buyer. (He's offering them for $6,000 each, which seems like a good price.) 

I'm not sure if I'll be involved in this part of the transaction or not, but if I am, I've never helped a buyer buy land before. A few questions:

-- What kind of fee do you charge? Does the seller pay that fee?

-- My buyers can buy with cash. Is that the best way to do it? If they wanted, can they get a loan for that?

-- Does the seller hire a title company? 

-- Do my buyers need a survey/ILC?

-- Any other kind of inspection they should do?

-- What other information should they consider?

-- If they want to do it themselves, how easy is that? Is it just a bill of sale?

Thanks for any help!

[Ruth B.]

-- What kind of fee do you charge? Does the seller pay that fee? Usually the seller pays, but the terms can be negotiated. One of my sellers requested that the buyers pay all closing costs and fees. He owned a beautiful land parcel in a desirable subdivision, and the buyers agreed and paid for all fees and closing costs in addition to the full list price. 

-- My buyers can buy with cash. Is that the best way to do it? If they wanted, can they get a loan for that? Small local banks will often lend on land, but as @Anthony Taylor pointed out, even those banks may not be interested in these small loan amounts, and if they were interested, fees would likely be expensive. If your buyers can pay cash, I would go that route and call it done. 

-- Does the seller hire a title company? It can be the seller or buyer, as specified in the contract, but usually the seller selects the title company and pays for the title insurance commitment.

-- Do my buyers need a survey/ILC? We always recommend a survey and/or flagging the lot corners, but some cash-strapped buyers may wish to skip it and hire a surveyor later when they are ready to build. If there are structures, fences, or propane tanks near the lot boundaries, I would urge the buyer to at least complete an ILC. It may seem crazy to think about someone being careless enough to actually build a structure or fence on their neighbor's land, but it happens.

-- Any other kind of inspection they should do? Water rights and mineral rights if important to the buyer and their goals for the property. Fun fact: As of this year, water rights and mineral rights are now separate inspection deadlines on the contract to buy and sell land in Colorado.  

-- What other information should they consider? Association documents, which you are likely already familiar with since you are under contract on the neighboring property. Also look closely at the exceptions on the title commitment and pay attention to the type of deed listed in the last transfer. For example, a tax lien investor may end up with a land parcel and a treasurer's deed and wish to then sell that property, but the title may not be warranted with only a treasurer's deed. I'm not an attorney, and I would recommend that a buyer consult one in these circumstances. @Rodney Sumsmentioned utilities and easements, always something for a buyer to consider.

-- If they want to do it themselves, how easy is that? Is it just a bill of sale? If the two parties wish to proceed without broker representation, they could contact a local attorney who also works real estate transactions. The title company may have someone in house, but if not they can definitely recommend someone.

@James Carlson, please reach out if you have any other questions. I've learned a lot from listening to you and Erin on your podcast and would love to return the favor!