How to Negotiate the Purchase of Raw Land

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For many, it is a dream to find an idyllic piece of rural property and build a new house to live in. However, purchasing raw land is sometimes a risky endeavor for the inexperienced. Many circumstances, such as local zoning laws or the quality of the soil, could limit what and where you build on the property. Failure to recognize these potential road blocks could be a costly mistake that leads you to pay more than the land is worth. When it comes to negotiating a good price for raw land, knowledge is power.

Buying raw land

Step 1

Study the property you want to buy thoroughly. Obtain satellite imagery so you can see how much is wooded, how it connects to the road network and any other geographic features. Ask the seller for a survey so that you know exactly what the boundaries are. Familiarize yourself with the applicable zoning laws and building codes.

Step 2

Conduct a comparable market analysis of the property. The best comparisons are recently closed transactions for similar parcels in the area. Different sized parcels may be used for your analysis by comparing the final cost per acre. You should find at least three to five comparable properties for your analysis.

Step 3

Determine the availability of water and a suitable site for a standard septic system if the site is not connected to city water. The cost of drilling a well varies depending on depth and the type of material being drilled through. If there is no suitable site for a standard septic system drain field, you may have to install a costlier above-ground system. These costs, as well as the cost of connecting the property to the electrical and natural gas utilities should be factored into your purchase price.

Step 4

Make an offer based on the information you have gathered. Be prepared for the seller to make a counteroffer. Stand your ground and explain the reasons for your offer price; you may offer to pay a little bit more than your original offer but do not pay more than your research has lead you.

Step 5

Enter into a purchase agreement with the seller. Be absolutely certain that your agreement includes a 30- to 90-day inspection period during which you may perform due diligence. This is your chance to perform an even more detailed analysis of the property and hire experts to ensure that you are able to build your home on the land you are building. If there are any obstacles or defects with the land you can either walk away from the deal or attempt to renegotiate a lower price based on what you discovered.


About the Author

Currently living in Austin, Texas, Alexander Harris is a business journalist covering the self storage industry for and Harris previously wrote daily news for, a business journal in his hometown of Richmond, Va. His work has appeared in various other publications including "Philadelphia Citypaper,", "RVA Magazine" and the "Virginian-Pilot." Harris holds a mass communications degree from Virginia Commonwealth University.

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