So we’ve already covered how to set your NEEDS vs WANTS, and how to compare them against each other when trying to find the right land to buy for a homestead, but now let’s get into the meat and potatoes. Just a heads up, this process may get frustrating. Try to keep that frustration in perspective, and don’t sacrifice anything that you’re not comfortable with. You might end up looking longer than you had anticipated, but that just gives you more time to save.
When we started looking for land, we had already narrowed down our wants vs needs. This is important, because for most real estate websites you can set similar parameters. For the basis of our search, we looked in a certain zip code as that would identify our school district that we wanted. Then, we set our minimum acreage to 10 acres. Even though we wanted more, we thought that for the right price and the right parcel, we could settle for less. Lastly, we set our total price. Now, this can be a fluid situation. As you save more money for a down payment, you may be comfortable paying more for that right piece of land for your homestead.
We set up accounts at realtor.com, zillow.com, and a couple of local realty companies. One of my coworkers also works as a part time realtor, so we had him set up an email alert so that any time a parcel gets listed that meets our parameters, we would get notified with an email. Then, we just started looking. Daily. Multiple times a day. I couldn’t stop looking. And this is where it gets frustrating, because at certain times of the year, the listings dry up. In our region, not much gets listed during the winter time. Traditionally, sales are low this time of year, so most sellers just wait to list until the spring. Seeing as though we were set on finding the right land to buy for a homestead, we became frustrated with the lack of opportunities.
That’s not to say that there weren’t possibilities out there. There were plenty of parcels that met our parameters. We would mark these parcels and spend some time physically out looking on the land. It’s a courtesy to notify the listing agent that you’d like to go spend some time looking out on the land, but in our region anyway, its not necessary. Raw vacant land that is listed for sale is open to being viewed. In every situation, there would be something that we weren’t comfortable with. By establishing our needs vs wants list early in the process, we didn’t have to make compromises, and we were totally fine with that. Actually, this helped to ease our decisions, because we wouldn’t have to regret not making an offer.
Most of the time, the flaw was obvious. Either the land was too low and wet, too wooded, in a bad neighborhood, too expensive, or just plain ugly. Bre and I didn’t always agree, and sometimes my impatience got the best of me. Again, I have to make plainly clear that it was her patience and fortitude that got us through this process. I spent so much time looking for land that I wanted to make compromises and jump on the opportunity to buy something that was “ok” just to start our process of building. I am so thankful that we didn’t, because it would undoubtedly lead to dissatisfaction later on.
Remember, this is the land you’re looking to establish your homestead on. It’s a huge investment, and one that cannot be overstated. Don’t feel bad by turning down a parcel that isn’t perfect for your needs. In other words, if you’d like a big field (like me) to establish some crop land, does it make sense purchasing something that is densely wooded? Probably not.
The other benefit of this search process is that it helps you understand the market value for parcels. By looking at and comparing several parcels, you can obtain an understanding of what drives the price. This way, you’ll know that when you eventually make an offer if the price is reasonable.
After months of searching, we finally came upon something intriguing. A parcel was listed for sale at $60,000. It was ten acres, and had a small clearing. That met some of our needs. It was, however, in the wrong school district. We thought that the potential was good enough to at least go look at the land, and we’d discuss our options afterwards.
Once we went out to the parcel it was pretty clear that we were both interested in it. It had a 40×60 pole barn with a slab, and it had a driveway and electric to a building site. These are costs that can drive the value of a parcel up. Now, again looking at the $60,000 price tag, lets break it down a little bit. The pole barn alone we can conservatively estimate as a value of $30,000. The driveway and electric break down to about $20,000. That means that the 10 acres of raw land would be valued at $10,000, or $1,000 per acre. This was a fantastic value, and something that we had to consider. The downside of it was that we would have to petition to have our future children transfer to our preferred school district. There was one other aspect that was detrimental to our decision. That was the fact that the parcel had an exclusive easement granted to the parcel behind it. The way that the parcel was situated was such that this easement cut through our “field” so we’d essentially have someone else’s driveway go right through what would be our eventual front yard.
The pros definitely outweighed the cons, and this is where our imaginations began to run wild. Because of the electric and the pole barn on site, and the fact that there were two campers that came with it (I didn’t include these in the cost comparison scenario as the cost of a campers varies greatly), we thought that we could legitimately move out to one of the campers in the pole barn, sell our house, be able to pay off the land loan quickly, and start building. We’re confident that we’ll be able to make some profit when we sell our house, and with our down payment we figured that we’d be able to pay off the land loan within a year. That means that we’d have to live in a camper for a year. The benefit to this particular situation was that the camper was situated in the pole barn, and because the pole barn had a slab we’d have ample room for storage.
After coming home and discussing the possibilities, we decided to make an offer. This is where our frugalities got the better of us. We decided to make an offer of $57,000. We thought that $3,000 less than asking price was fair, and even though we knew that the asking price was a really good deal we just thought that it would be prudent to offer a little bit less.
As I’m sure you can imagine, our offer was not accepted. Another offer was submitted for the asking price, and that offer was accepted. Initially, we were heartbroken. Devastated. After months of saving and searching, we let our imaginations get the best of us, and we had already envisioned us owning that parcel. We started discussing how we would develop the rest of the land to attain the perfection that we were looking for, and when we found out that we didn’t get it, it hurt.
Looking back, I’m thankful that we didn’t get it. Thankful because the parcel was too small for what we wanted to do with it, because we wouldn’t have to deal with school district issues down the road, and thankful that we wouldn’t have to deal with working to make the land right. I am especially thankful for what happened the very next day.