We've prepared this “Buying Land in Texas Checklist” to walk you through some of the higher-level components and steps for buying land in Texas. Depending on your needs and the specific property, there may be some additional steps and things to consider, but this basic framework should hold true.
Table of Contents
Budget, Preparation, and Research
✔️ STEP 1: Establish a Realistic Property Budget
It's best to establish your financial budget for buying land in Texas before you get too far down the proverbial road. It's fun and harmless to browse properties for sale online. However, when you get serious, and before you start emailing property inquiries to agents, you need to sit down and determine what you can afford. Your budget will have the largest impact on what and where you can afford to buy land.
It will be disappointing and frustrating for you, your family, and your realtor if you don't have a clear sense of what you can afford before looking at properties and making an offer.
When considering your budget, be sure to consider annual costs like mortgage payments, property taxes, insurance, utilities, maintenance, etc. in your analysis too.
✔️ STEP 2: Get Pre-Approved For A Land Loan
Depending on your budget and available cash, most buyers will need a bank loan or mortgage to finance the purchase. Like determining your budget, you'll want to do this early in the process and talk to your bank or loan officer. Credit scores, credit history, and debt-to-income ratios can sneak up on buyers and ruin the day.
Plus, most banks will require a larger down payment and offer a lower loan to value when financing land.
Finally, when you are pre-approved, you'll signal to your realtor that you mean business, and sellers will have confidence that you can close on your offer. Most sellers won't accept a contract with a financing contingency without a pre-approval letter, and you don't want to lose a deal while scrambling to find a loan.
✔️ STEP 3: Determine Your Property Needs, Wants, and Deal-Breakers
When you're looking to buy land, it's important to have a clear idea of your needs, wants, and deal-breakers. Your needs are the things that are essential for the land to have, such as a certain amount of acreage or a certain location. Your wants are the things that would be nice for the land to have, such as a pond or mature trees. And your deal-breakers are the things that would make the land unsuitable for you, such as a high property tax rate or a property that floods. By being clear about your needs, wants, and deal-breakers, you can save a lot of time and energy when searching for land.
✔️ STEP 4: Research Areas and Browse Online Land Listings
When buying land in Texas, it's important to do your research. There are many different areas to choose from, each with its unique benefits and drawbacks. Fortunately, several online resources can help you narrow down your search. Realtor.com and Zillow are both great places to start. You can browse listings in your desired area, learn more about the local market, and even get in touch with a real estate agent who can help you find the perfect piece of land.
Don't forget to look at the Texas land listings on LandWatch, Lands of America, and Land and Farm too. These three listing sites have more properties than any other after the MLS-related sites (e.g. Realtor.com, Zillow, Redfin, and Trulia).
Once you've found a few potential properties, it's important to take the time to learn about the area and what it has to offer. What is the climate like? Is there good access to roads and utilities? What kind of terrain are you looking at? All of these factors can impact your decision-making process. With a little research, you're sure to find the perfect spot to call home.
✔️ STEP 5: Spend A Weekend In The Area
If you are unfamiliar with an area or haven't spent much time there, it's a good idea to get an Airbnb and spend a long weekend there. Better yet, get a long-term rental for a month or even a year. And don't stay at a hotel or resort! That's not what it will be like to have your own property; you won't have maid service or an on-property restaurant. Have you tried the restaurants in the area? How's the grocery store? What's the vibe from the locals? What are the attractions and entertainment options in the area? This is a big financial investment, and you want to avoid buyer's remorse. Try it, before you buy it.
Should You Hire a Realtor or Not?
For most buyers in most situations, it's probably a good idea to hire a realtor, but it's by no means an automatic YES! It's not a free service; there's a cost to you as the buyer. And if you do decide to hire a realtor, make sure she has expert-level experience in the area and specializes in land, farm, and ranch properties.
✔️ STEP 6: Are You Hiring a Realtor?
You aren't required to have a realtor when buying land in Texas. Or selling for that matter. However, in all likelihood, at least one realtor will likely be involved in the transaction.
A Few Advantages of Hiring a Realtor
- Expert Guidance: If you're not a real estate expert, hire one. A great realtor will have done hundreds of transactions and be very familiar with all phases of the process. She will have worked through problems in the past and will know what to look out for. Unless you're feeling charitable, now is not the time to hire a new or inexperienced real estate agent; you are paying a commission and should receive valuable information and services in exchange.
- Experience in the Area: A great realtor is a subject matter expert in a specific geographic area. She'll have a good sense of pricing based on her other transactions plus her gut feeling or instincts. If the seller's agent is local, she'll have done transactions with the listing agent in the past. She'll know how to differentiate properties based on their specific locations. She'll know the best title company for the area, as well as surveyors, inspectors, and contractors who can help along the way.
- Access to Sales Comp Data: In non-disclosure states like Texas, access to the regional MLS's historical pricing database can be invaluable in determining if an asking price is reasonable or not. Historical prices don't dictate current prices per se, but they are an invaluable tool to evaluate closed transactions and area trends.
- Exclusive Listings: If your agent is an expert in an area and does a disproportionate amount of transactions, she may know about off-market or hip-pocket listings that are not on the open market. She may also know about future listings that can be snagged before anyone sees them.
A Few Disadvantages of Hiring a Realtor
- High Cost: The seller will likely accept a lower offer if it doesn't include a buyer's agent commission. Don't believe the deceptive line “the seller pays the commission.” It's only technically accurate because commissions are taken from the seller's proceeds at closing. But in reality, it's a significant economic cost in the transaction, and a savvy seller takes this cost into account when listing the property and accepting an offer.
- Competing Clients: Your agent will have other clients and may not always be available. You won't have her undivided attention and that can be frustrating.
- Scheduling Conflicts: Showings are more time-consuming with rural land, and a great agent has busy weekends; scheduling showings may be challenging.
- Conflicts of Interest: Because fewer realtors specialize in land compared to home realtors, conflicts of interest are far more common in the country. Land realtors are frequently land investors too, and they have complex business relationships with other land owners in the area.
A Few Situations Where You May Not Need a Realtor...
- Experienced Investors: If you're an experienced real estate owner and investor, you may not need a realtor. Some investors prefer to find THE BEST realtor in an area and leverage the realtor's experience and knowledge in exchange for a fee. But others have enough experience to save the cost, which can be substantial.
- Family Transactions: If you're buying out a family member or buying a family member's property, you probably don't need a realtor, assuming you trust this person and nothing is screwy. You probably just need an attorney to look over everything.
- Neighboring Property: If you're buying a neighbor's property or are very familiar with a property, you likely don't need a realtor. You may need an attorney to review the documents and prepare the deed, but you shouldn't pay a commission.
- Specific Property: If you know what property you want and have done your homework, you probably don't need a realtor. Further, some sellers, like Remarkable Land® have simplified the sales process and lowered the costs for everyone.
✔️ STEP 7: Property Showings
When buying land in Texas, you must do your due diligence. This means taking the time to tour properties, ask questions, and learn as much as you can about the land and the area. You may want to hire a realtor to help you with this process. A realtor can provide valuable insights and help you make an informed decision. Remember, buying land is a big investment. It's important to research and choose a property that is right for you.
✔️ STEP 8: Initial Property Research and Questions
Formal property disclosures will be provided later, but this is a good time to do some initial property due diligence. When touring and talking with seller and agents consider the following:
- How do you access the property?
- Does the property have utilities?
- What improvements are on the property?
- Does the property have utility, access, or pipeline easements?
- Is the property fenced?
- Does the property flood?
- How does topography affect access, use, and development?
- How is the property zoned?
- Are there any deed restrictions?
- Does the property have an agricultural tax exemption?
5 Free Resources for Land Buying
- Texas Railroad Commission – Research wells and pipelines on the property.
- Soil Survey – Find out more about the soil types on the property.
- FEMA Flood Maps – Look into floodplains.
- Texas Water Wells – Learn about water wells in the area.
- Google Earth Pro – Look at historical satellite images of the property.
2 Paid Resources for Land Buying
Make an Offer on the Property
If you want to buy land, the best way to start is by making an offer on the property. The first step is to find a piece of land you're interested in and contact the owner or her realtor. Once you've reached an agreement, you'll need to draft a contract and have it signed by both parties. This contract will outline the terms of the sale, including the price, any contingencies, and the timeline for closing. Once the contract is in place, you'll need to put down a deposit and begin finalizing the details of the purchase.
✔️ STEP 9: Choose the Appropriate TREC Contract
There are many different types of land contracts available in Texas, and it can be confusing to determine which one is right for your situation. The Texas Real Estate Commission (TREC) offers a variety of contract forms that can be used for different purposes. For example, the Residential Purchase Agreement can be used for the sale of a home or other property, while the Farm and Ranch Contract can be used for the sale of land that will be used for farming or ranching purposes. It's important to choose the right contract form for your needs to ensure that all of the necessary elements are included and that you are protected in case of any problems.
These are the most frequently used TREC forms for buying land in Texas:
✔️ STEP 10: Determine Your Offer Amount
There are a few things to consider when determining your offer amount on land. The first is the buying price of similar land in the area. You can research this online or by talking to a real estate agent. It's important to have a good idea of what land is selling for so you don't overpay. The second thing to consider is your budget. You need to be comfortable with the monthly payments and have a down payment saved up. The third thing to consider is your negotiation strategy. Will you try to negotiate the price or offer more money for a quicker sale? Lastly, you must ensure all of the land's features are mentioned in the contract. This includes any buildings, fencing, or other structures on the property. Once you've considered all of these factors, you'll be able to come up with an offer amount that makes sense.
✔️ STEP 11: Consider Other Contract Terms
It's important to consider all the contract terms when making an offer on land in Texas. In addition to the purchase price, you'll also need to pay for a property survey and title insurance. You'll also need to put down an earnest money deposit, typically 1-2% of the purchase price. In some cases, you may also be asked to pay an option fee, which gives you the right to back out of the contract if certain conditions aren't met. However, all of these terms are negotiable, so it's important to have an experienced real estate agent on your side who can help you navigate the contract and negotiate the best possible terms.
✔️ STEP 12: What About Mineral Rights?
Mineral rights are a complex, confusing, and divisive issue when buying land in Texas. Buyers and sellers can get twisted up over the subject. First, without an explicit reservation, mineral rights will transfer with the land.
However, mineral rights are frequently severed in part or whole from the surface rights, and the current parties can't do anything about it. Further, running mineral title is different from than running surface title; your title policy will exclude coverage for minerals.
Ultimately, the issue comes down to either A) a seller thinking the mineral rights are extraordinarily valuable, or B) the buyer is scared of a well padsite in their front yard.
If the minerals are producing, then the value can be readily determined, and if they are non-producing, then, in all likelihood, they are not very valuable. And oil companies aren't going to put a wellsite next to your house; they'll have to negotiate with you for a location, and they'll be looking for best location with the least impact and resistance and lowest cost. Don't worry too much about this issue.
Put the Property Under Contract
✔️ STEP 13: Title Due Diligence and Title Policy
Before you purchase land, it's important to conduct due diligence to ensure that the land is free and clear of any liens or encumbrances. The best way to do this is to work with a title company. A title company will search public records to confirm that the seller is the rightful owner of the land and that there are no outstanding claims or judgments against the property. This process is important to protect your investment and ensure that you can take possession of the land free and clear. Once you've conducted due diligence and are confident in the land title, you can move forward with your purchase with peace of mind.
✔️ STEP 14: Property Disclosures and Due Diligence
Land is a valuable asset, and when you're buying land, it's important to do your due diligence to ensure that you're getting what you expect. One key part of due diligence is getting a property disclosure from the seller. A property disclosure should list any known problems with the land, such as easements or encumbrances. It's important to review the disclosure carefully and ask the seller any questions. You may also want to hire a land surveyor to verify the property's boundaries and check for any easements or encumbrances that are not listed on the disclosure. By taking these steps, you can help ensure you're getting the land you want.
✔️ STEP 15: Surveying the Property
You aren't required to have a survey unless the title company requires it or you want “boundary coverage” with your title policy. Nonetheless, it's usually a good idea to get a new survey if the buyer doesn't have a reasonably current one, and most won't. This is a negotiable contract term, but most buyers expect the seller to pay. A word of warning: rural property surveys are more expensive than a city lot survey, and they can take a while to complete; most survey companies have a 2-4 week backlog or more.
Closing on the Property
✔️ STEP 16: Sign On The Dotted Line!
Closing on the land is the last process of buying or selling land or a piece of property. It usually happens within 30 to 60 days after the contract is signed. The land is usually transferred between the buyer and seller at a specified location, called the closing. During closing, the land contract is reviewed, land possession is transferred, and any final payments are made. The contract will state who pays for what during closing. In Texas, for example, the seller traditionally pays for the title search, while the buyer pays for the title insurance. Once everything has been reviewed and signed, the land officially changes hands and you assume possession. Congratulations! You are now a landowner.
Bonus - Estate Planning for Your Property
✔️ Step 17: Prepare or Update Your Will
When you purchase land, you are not only investing in property – you are also making a commitment to future generations. Because land is a finite resource, it is important to carefully consider how you would like your land to be used after you are gone. This process is known as estate planning, and it can help to ensure that your land is used in a way that aligns with your values and goals.
Don't put this off until later! NOW is the time to do this. The documents are fresh, you have momentum, and you may already have an attorney involved who can help you.
Estate planning can be a complex process, but there are a few key things to keep in mind. First, consider who you would like to inherit your land. Second, think about what you would like them to do with it. Finally, make sure to put your wishes in writing and update your estate plan on a regular basis. By taking these steps, you can help to ensure that your land will be used in accordance with your wishes long after you are gone.