Selling
homes on acreage is much more involved than selling a home in a plat,
where most of the time, what you see is what you get.
This report is to stress the importance of recognizing problems
early on in the marketing process to facilitate a smooth transaction.
Homes on acreage have issues like:
Zoning
Wetlands
City & County Ordinances
Growth Management
Easements/Encroachments
Any
one of these can blindside you close to closing time, if not dealt
with properly in the beginning.
Where to Start…
Before you can
determine value, you must know what you have to sell!
It is important that you disclose all material facts about the
property and must use extreme caution not to mis-represent something
you, yourself, have taken for granted over the years.
Review the Title Report
Review your current title
report. If a copy has not
been ordered have your agent order one or call a title company for
help in ordering one. Once
you get the report, read it and if you have any questions, contact the
title officer who prepared it (usually noted on the top of the
report). Be sure to ask for any referenced attachments (often
indicated by a recording number).
This is important since there may have been liens or documents
recorded against your property that you may not be aware of, or that
were attached erroneously. This
will give you time to address any problems that surface.
Conditions, Covenants & Restrictions
(CC&R’s)
Any CC&R’s will be
attached to these documents and you should review them even if they do
not seem enforced. For
instance, if you are selling equestrian potential property, make sure
you know what the restrictions in the Covenants are (even though a
neighbor seems in violation). A
buyer could be damaged if the covenants were falsely represented or
falsely assumed to be different and you may be held liable later.
Many properties were created prior to any current restrictions
and regulations were put into effect.
It is always good to know what new regulations you may be
dealing with and if there are any “grandfather” issues that apply.
For example: does
your property violate any existing codes; i.e., zoning violations?
Is your property conforming?
Are there any easement issues of public access rights? Are there any setback or sensitive area issues?
For example: if you are selling view property and much of the view needs
to be cleared, make sure you are aware of any clearing restrictions.
Never guarantee a view! Ask
your agent how best to represent that feature of your property.
Property Lines
One of the most fought after
issues in real estate are property lines.
Know where your property boundaries are ahead of time.
You will most likely be asked to identify your boundaries, so
you may want to take steps to have them located and save time during
the sales process. NEVER identify property corners of lines unless you are 100%
sure of where they are, normally identified by a survey rebar.
If you don’t know and don’t have funds to hire a surveyor,
ask your agent how best to handle that issue.
The buyer may ask to have the property surveyed before closing
and you should discuss your options with your agent or factor the cost
into your price.
Zoning
Know your zoning.
If you are selling property that can be divided, make sure the
current zoning will allow for subdivision and what conditions will it
be subject to. The ease
or difficulty will determine property value.
Just because the zoning may allow for it, does not
automatically equate into an increase in property value.
The cost of doing so, may offset the increase in market value.
NEVER represent the subdividing potential of your property. Allow a reasonable time for the buyer to do their feasibility
do diligence to determine the potential and cost of doing so.
Wet or Dry
When in doubt, always
disclose. If you have any
drainage problems that are not apparent in dry weather, you must
disclose them to the buyer. It’s
always easier to deal with an issue up front than after the fact or
after the buyer has made an offer and discovered a problem afterwards.
Well System
You may want to inspect your
well water quality ahead of time by having the Health Department
certify the well and water (King County Health Dept. 206-296-4932).
You most likely will be asked to warrant the quality of the
well in the purchase and sale agreement.
NEVER “warrant” the well, only agree to have it inspected
and certified by the appropriate Health Department.
If you “warrant the well” (and that goes for the septic, as
well), you may be liable after the sale for years to come.
If your purchase and sale agreement has that verbage in it, ask
your agent to point it out to you and change it.
Septic System
YOU will need to have the
septic inspected and pumped as part of the condition of sale, in order
for the buyer to get bank financing on the property.
The certifications are usually good for at least six months;
sometimes up to a year. If
you think it will take your home longer than six months to sell, don't
pump the system until you have a purchase and sale agreement in place.
However, you may want an inspector to check it out ahead of
time, so you know if you have a potential problem. Since this can be a
costly item to be repaired, it’s best to know ahead of time how it
will affect your bottom line so it can be factored in when
establishing a price for your home.
Encroachment and Easements
Make sure you have legal and
recorded access regarding easements if you are crossing over
someone’s property. This
information should be recorded on the title.
If several property owners use the same road, is there a
current road maintenance agreement and how well is it enforced? While you may not be concerned, the buyer’s lender may make
it a requirement of closing. Knowing
ahead of time, will save time at closing.
Pricing
Determining the value of the
home and land, and deciding on a fair market price is a complex and
ambiguous process, because many times there are not a lot of
surrounding properties that can be used for comparables.
A
list of value factors are:
*Supply
*Demand
*Usability – for example,
level land is more valuable
*Location – for example,
neighboring property condition, schools, and shopping
*Public transportation and
proximity to trails
*Zoning and building codes
*Water, quality and quantity
*Soil drainage
*Amount of timber and type
of vegetation
*Availability of utilities
*Barn and farm equipment
included in the sale
*Exposure to the sun
*Timing of the sale
*The buyer’s eagerness to
buy the property and your eagerness to sell
*The length of time the
property has been for sale
*The current market for the
property
*Your ability to know when
you are getting a fair deal
*Is it in an urban or rural
designation in your city’s Growth Management Plan
*Access to trails
Your agent should be
able to show you properties that have sold and that are currently on
the market and adjust for each of these factors.
Sometimes a cost replacement method is the only way of
establishing value.
Structures
Be cautious when evaluating
structures other than the residence. Sometimes the structures can be functionally obsolete and may
only have value to a buyer if they were to use them for the same
purpose. Otherwise, they
may be a detriment. Don’t
overevaluate your property and risk losing a potential buyer.
On the other hand, existing structures, while obsolete, may
have a “grandfather right” attached to them.
It’s best not to assume and check with the County first.
Property Not Included
Be sure to list all and any
items that are not included in the sale, that a potential buyer could
assume to be part of the property.
Sometimes, it’s the little things that can cause the greatest
setback to a deal and make for a very unpleasant and stressful
transaction. Any item
physically attached stays with the property, everything else is
considered personal property. However,
there are grey areas – such as, weathervanes, doorknockers,
flagpoles, playsets, outbuildings not attached to the ground, hottubs,
etc.
Final Consideration
You will be asked to complete a property disclosure statement
at time of listing your property.
By being fully informed, you will be able to provide all
pertinent information that will protect your legal responsibilities
and facilitate a smooth closing transaction.
I
hope this information will be helpful to you.
It is not all inclusive, so I would be pleased to discuss your
plans and concerns for selling your home on acreage.
Please contact me to help you establish value and discuss
marketing strategies.
