What Does it Cost to Sell Your Vacant Land Lot? Part1: Closing Fees Explained

What Does it Cost to Sell Your Vacant Land Lot? Part1: Closing Fees Explained
Hi, I’m Beth with TB Properties Buys Land. Do you have rural vacant land that you’re interested in selling? Have you taken the time to sit down and calculate how much money you’re going to have to spend in order to sell your property? Yes, you heard me right. I’m asking you how much money do you have to put down and spend before you can sell that property? I know most of the time when we’re selling land or a house, we’re thinking of the money that’s going into the bank. Cha-ching, we’re going to be rich!

However, often the case is that you have to spend money in order to sell your property, or you’re going to have money deducted from that sell price at the end of the transaction. We’re going to talk today about where that money is coming from, in terms of the deductions, and what you might have to put into the property upfront before you can actually even have a buyer interested in your property.

The first thing I’m going to discuss today are the closing costs that are associated with selling your land. If you’re selling your property through a title company, there are going to be fees that are associated with that. The first one I’ll discuss is title insurance. When you’re selling your land, most buyers are going to want title insurance. Traditionally, you, as the seller are responsible for paying the title insurance.

I wish I could give you a dollar value so that you can calculate that cost into selling your property, but it really varies depending on the sell price of your property. If your property sell price is pretty low, your title insurance may be as low as like $350 or $500, something like that. If you’ve got a larger property, it’s more expensive, it could be thousands of dollars or maybe even more than that. That’s something to think about.

Escrow fees: this is another part of the closing costs. What does that mean? Escrow fees are basically the cost of using a title company for doing all the work to close your property. Most of the time, the escrow fees are split between the buyer and the seller. Whatever those amount total, you can divide that in half and most of the time that the buyer will pay for half of that. Again, that depends on the value of the property. It could be $300 or it could be thousands of dollars. This is another cost to consider.

What about property taxes? Are you up to date on your property taxes? Have you been paying those every year? If you haven’t been paying those, you’re going to have back taxes that you’re responsible for paying before you can close on the property. They’re going to withhold that from the money that you make from the transaction. Did you inherit this property? Was the person that owned the property before you paying their property taxes? If not, that’s another thing that can be deducted from the proceeds of your sale. These are all things to think about.

Depending on the state in which your property is located, you may have excise taxes as well. That would be something that you would have to pay when it comes to closing. When it comes to closing costs, this is not normally something you have to pay upfront. It’s normally something that’s deducted from you at the close of sale.

On a different note, something that might be charged upfront that’s part of closing costs could be a survey fee. Let’s just say you go to Title with the transaction. Title company says, “Hey, it’s been a few years since this property has been surveyed. In order for us to provide title insurance to your buyer, we need an updated survey.” What is that survey going to cost you? That’s going to add some time to the transaction too, but there’s also some risks involved in the survey of your property.

I’m going to get to that next week, but that survey would often times have to be paid for upfront before you close. This cost will vary; it could be $1,500… we’ve also paid $3,000. We’ve seen where its cost is over tens of thousands of dollars in order to survey a property. I’ll get to that in the next segment. But what does it cost to sell your land? We know that closing costs are going to take money away from your proceeds.

If you want to bypass all of this, one easy way is to sell your empty land lot to a land investor like TB Properties Buys Land. We’re going to give you a quote for your property and whatever that dollar value is, is what you’re going to bring home. You will not be responsible for any closing costs. You’re not going to be charged title insurance. You won’t pay for escrow fees. Oftentimes we’ll pay for your back taxes, if you have those. You’re not going to pay for recording fees, excise taxes, NO closing costs.

The dollar value that we quote you is what you’re going to bring home. Because we close with a title company, you know that your transaction is secure. You know that you’re going to be paid on time and it’s going to be done correctly. So if you’re interested in learning more about some of the costs involved in selling your property, tune in for next week where I discuss more. Thanks.
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