Buying Vacant Land with Special Warranty Deed?

[Scott K.]

I'm looking at buying some vacant land in the southwest, which I've never done before.

I'm surprised to see some of this land sounds pretty cheap, like $2,500 for 10 acres in the wastelands of New Mexico for example. It's just land, no utilities. My use of it would be to camp on it with my RV and maybe do some rock hounding and prospecting. Some day, maybe I'll build a home on it with several RV pads with full hook-ups to rent out.

But for $2,500 for 10 acres and maybe just $20 per year in property taxes, I'm wondering what's the catch. 

The company selling lots like these from NM to AZ to NV, charges a $400 doc fee and says this on their website:

"What kind of deed will I receive? You will a receive a special warranty deed, which means the seller is guaranteeing the property wasn’t encumbered during the time of his/her ownership."

OK, so what are the pitfalls of buying land like this? 

Is this some kind of scam like I buy the land and then I get socked with a bunch of back taxes and fines and penalties or something, or it's Indian burial land and I'm forced to build a 5-star cemetery on it, and I can't get out of it? 

Is this land actually free or worth pennies to anyone looking hard enough to buy it from the state directly?

I suspect the company is really in this for the $400 doc fee.

[Seth Williams]

@Scott K. - depending on what part of New Mexico you're looking in (and who you're buying it from), this number does sound on the cheap end, but I wouldn't say it's unreasonably cheap. I sold a parcel of New Mexico desert land last year and I had it priced a little higher than this - but still in a similar ballpark.

If you're buying it from a land flipper (someone who probably paid closer to $500 when they bought it from another motivated seller), $2,500 would be enough to give them a decent profit and you a great deal. There are a more than a few land flippers in New Mexico - and given the language you shared from their website, I have a feeling that's the kind of seller you're dealing with (and they can be a great source of below-market deals).

As for the pitfalls - it sounds like you already understand the limitations you'll be dealing with (no utilities, very remote, not near any kind of convenience). To some, this could be perceived as a negative, but to others, this is exactly what they want.

As @Wayne Brooks said, if you're really concerned about it, just make sure you're getting title insurance on the property to verify there are no title issues.