We had found a lot we liked enough to start making some calls. The first was to the listing agent to confirm whether the lot was still on the market – it was. She also let us know what the rectangular “berm” was on the property. It wasn’t an old foundation, it was what was left of the neighborhood skating rink. So much of the berm would need to be knocked down (skating rinks depend on retaining water; not exactly a good thing when it comes to home building), but it was good news that someone hadn’t discovered some sort of lurking problem.
Then we put a call into the County Planning Department to make sure we didn’t have any wetlands to deal with or any weird zoning issues. No problems there. We set the HOA architectural regulations to Shaun to see if he saw anything problematic to work with. No problems there. So far so good.
Since we were considering just buying land, we decided to go through with making an offer and potentially closing on the property without a realtor. By this point, we had purchased two properties (with structures) with a realtor and understood the basic process. And here, it was Shaun, our architect and likely builder, who could guide us through the questions about how easy or difficult the lot was to build on. And since we are lawyers by trade, we figured we could handle the contractual side of things.
Another perk of the property was that the sellers had already completed a soil survey and a lot survey. Looking over them, we didn’t want to use their planned building volumes, but it allowed us to get a good (and quick) look at what we would be dealing with. When Shaun was satisfied with those, we went about putting together an offer.
Putting together an offer on a piece of land is about like putting together an offer on a house. You look at comparable properties for sale, comparable property sales, handicap those for the various lots’ strengths and weaknesses, and try and come up with a number for your offer. But some of the process is more art than science. No two lots are exactly the same, and something important to us (like the views of this lot) may be less important to someone else.
The lot we liked was listed at $255,000. It had been on the market a year ago at the same price, was pulled for a few months, and then re-listed. That suggested to us that either there was some wiggle room here given the amount of time the place had been on the market. Or the sellers were stuck to their price and wouldn’t budge.
Frankly, the price was in-line with what other, similar places had gone for. It was a pretty fair price, though the lot next door went for less a year earlier. Then again, there wasn’t much lost in putting together a lower offer.
After some going back and forth, we decided to put in a pretty low offer: $208,500. Along with the offer itself (Colorado uses form contracts for real estate offers and contracts, so it was a pretty straightforward fill-in-the-blank process), we included a letter to the sellers introducing them to our family and why we wanted the property. It may have come off as a little saccharine to some, but we figured it was unlikely that the sellers would dislike selling to a couple with a pair of young kids who wanted to make this their primary residence, and maybe it would endear us to them a little. Especially since the offer itself wasn’t hugely endearing, dollars-wise. But it did have two other things going for it.
The first is that we were representing ourselves, without involving a realtor. Since buyers’ agent fees are usually paid by the sellers, this stood to save them $7,000 or so.
The second is that we were making an all-cash offer with no contingencies. We had spoken with some lenders about construction loans, and they all said basically the same thing: they want 20% down, but the 20% can take the form of equity in the land. If we needed to pony up that much cash anyway, it made sense to do it on the front end so that the cash could work for us by assembling a clean, all-cash offer.
Since the whole process was pretty stressful for us – we had started to envision ourselves in a house on the lot – we baked in a short time frame for them to accept or reject the offer – 36 hours. So we waited. A little.