Waterfront, lake properties and wooded acreage real estate for sale in WI and MI

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Land Buying Guide

What does land cost these days?

It seems that the only thing increasing faster than the cost of land today is the demand for it. To the casual observer it would seem as if there is plenty of vacant land, yet many factors have come together to create a time wherein land is not only increasingly unavailable, but selling at record prices.

Wisconsin's farm land is not unlike crude oil. We all know that when the price of crude goes up, all petroleum products go up in price.  In Wisconsin, the price of farm land has the same effect on other land products. The March 31, 2001 edition of the Wisconsin State Journal states, "Wisconsin farmland is more expensive than ever...the average price per acre of agricultural land in the state rose 9.4 percent from  Jan. 1, 1999 to Jan. 1, 2000 according to a report by Wisconsin Agricultural Statistics Service." According to the same article, land prices vary throughout the state from a record high price of $68,400 for a single acre in Vilas County! to as much as $4000,00 per acre in Dane County. This article stated that these figures were preliminary and more information would be available in June.

The Milwaukee Journal Sentinel's  June 17, 2000 issue, stated: "The average price for an acre of farm land in Wisconsin rose by 24% in 1999, the largest one year increase in at least 20 years, according to a state report released Friday ( June 16th)." In June of 2001 the same report stated that Wisconsin lead the nation in farm land price increases for the year 2000 with another %18 increase! That's a 42% increase in just 2 years!

On the surface $4000.00 per acre may seem  like a good deal, but one must remember that this price is for one whose budget will allow the purchase of large tracts of land totaling, perhaps, one hundred acres or more. This would be a developer's cost and does not include the costs of preparing the land for resale. Less expensive land may be found, but it will most likely be treeless open land suitable for crop farming and you will most likely have to take care of getting an easement, installing a road and bringing in the electricity and telephone service on top of the price you pay for the land.  

It is also important to remember that build-able land is not priced by the acre. Only when buying large tracts of land for agricultural purposes will the price be reflected in "per acre" units. There are virtually no development costs associated with agricultural land.  Just like city lots, rural building parcels, regardless of size, are priced based on the raw land costs and the costs associated with preparing the land for sale.  Even if you could purchase 5 or 10 acres of undeveloped land, by the time you pay for an access road or driveway, surveying, soil testing, and electric and telephone service to the property, your cost per acre will be even higher.  
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Why Is land getting so expensive?

There are many reasons including, but not limited to, high demand. As Wisconsin's rural land continues to be developed and cities and suburbs swell into the surrounding countryside, land use committees prescribe zoning regulations designed to keep population density confined to the cities. Every year, more and more townships are adopting zoning laws that mandate 35 acre minimum subdivisions. This means that one would have to buy 35 acres in order to build one single family home in the country. With land getting so expensive, the cost of 35 acres is prohibitive.

Other factors resulting in the high cost of land include it's nearness to metropolitan areas (commutable distance) where work can be found. If the land is wooded, has water frontage, a nice view or a high degree of seclusion, it will be more expensive.  
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Will the price of land ever come down?

The industry analysts don't see that happening. It's the law of supply and demand. Many people waiting for the price of land to come down can't imagine that the cost of land will continue to increase. Ten years ago, these same people thought land was over priced then!  While some people sit around grumbling about the high cost of land, the prices continue to rise and zoning becomes more restrictive. There will be much more to complain about tomorrow unless they act today!  
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How do I know if I am paying too much ?

Many things determine the value of a parcel of land.  Ultimately, it comes down to what the market will bear. It is not the seller, real estate broker, the bank or anyone else who sets the value of the land. It is the consumer. It is the demand for land that drives it's price up or down. The easiest way to determine whether or not you have offered too much is through the appraisal process.

The vast majority of real estate purchases are financed through a lending institution.  In the case of vacant land, banks are usually financing 80% of the purchase. They have the greatest amount of risk and are not willing to proceed with the financing without first having a qualified, licensed appraiser confirm that the land is worth the risk.

The appraiser's job is not to determine the property's ultimate value, but whether or not it is worth what has been offered. If the property does not appraise, you would have the option of canceling your offer to purchase, putting more money down to reduce the bank's risk or renegotiating the purchase amount with the seller.  
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What should I be getting for my money?

We've all heard the saying, "you get what you pay for." This is as much true for land as any other consumer product. Considering the rising cost of land these days, if it seems too good to be true it probably is. Some things a buyer should determine is whether or not  the land is guaranteed  to be build-able? Has there been a recent survey and soil test? Is there clear title and legal access? Is telephone service and electricity on site or scheduled to be installed? These additional expenses can add substantially to the cost of the "too good to be true" deal.  
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Can I finance my land purchase?

Yes. It used to be that many lending institutions would not finance vacant land, but today, land is considered a great investment!  As a result, many banks and credit unions will finance vacant land. Most lending institutions will require 10% to 20% down and finance the remaining 80% to 90%. The bank is taking most of the risk so they will want to make sure you are purchasing quality build-able land. Your real estate agent should be able to provide you with
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Can I use the equity  in my home to finance my land purchase?

Many people find that using home equity is an advantage. By using the equity in your home to
finance your land purchase you may be able to finance 100% of the purchase price rather than putting 10% to 20% down. There may also be tax incentives when you purchase vacant land with home equity. It is important that you consult with a financial expert when considering financing options.   back to the top

Are there any advantages in pre-approving my financing?

Yes. In fact, there are many.
Pre-approving will help you determine what you can afford before you look at property. It allows you to find the loan program that best suits your needs. Pre-approval allows you to get ahead of others by showing sellers that you're a buyer with a written pre-approval in your hands. When it comes time to make an offer, you will have the clout of a cash buyer and more negotiating power.  Additionally, pre-approval will eliminate unexpected delays in loan approval and closing your loan, so you can begin enjoying your new land sooner.   back to the top

What do I do if I want to make an offer?

There are three primary elements of an offer: 1) the purchase price, 2) earnest money, and 3) the closing date. While all are important, purchase price alone is not necessarily the most important element of the offer.

The purchase price is a negotiable amount.  Keep in mind that when two offers are essentially the same, usually the offer with the highest purchase price will be accepted. However, both earnest money and closing date could influence a seller in your favor even more than the purchase price you offer. Let me explain.

When making an offer on property you should act in good faith and make your best offer. Your goal is to make a strong offer that will get accepted and stand up against any other offer that should be submitted. In addition to a fair purchase price, your offer will be much stronger if you include solid earnest money of $1000.00 or more and a short closing date of no more than 2 or 3 weeks if possible.

Sellers will often judge the seriousness of an offer by the amount of earnest money tendered with the offer. Earnest money is money put down as a deposit and is fully refundable if your offer is not accepted. Earnest money is deposited into the Broker's trust account and is applied to the purchase price at closing if your offer is accepted.

The closing date on the offer will also get a seller's attention.  What concerns a seller the most about a long closing date is that something may happen to prevent you from closing during the interim. Nobody can predict the future and your plans to close on the property could be interrupted by circumstances beyond your control.  The seller will have missed the opportunity to sell the land to another buyer while waiting for a closing that ultimately never occurs.

In addition to the purchase price, earnest money, and closing date one other factor that could either make or break your offer is the presence of contingencies. Contingencies are conditions or requirements that must be met before an offer can proceed to closing. To many sellers an offer containing contingencies (other than standard financing language) is less attractive. An offer free of contingencies is in many ways superior to offers that contain them.  
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Are there any advantages in working with a developer?

There can be a world of difference between buying land from the "guy down the road" and from somebody who develops land for the market on a regular basis. Buying from a developer means that you do not have to worry about many of the details mentioned above. A professional real estate developer regularly arranges for such things as surveying, road work and the installation of utilities and is more likely to get a better price from the contractors  than an individual who develops a single parcel for a personal residence. The developer can pass the savings on to the buyer.

It may be worth remembering that the developer is a professional who is in tune to the market and what the consumer is looking for. The developer handles carefully the details associated with making raw land suitable for a residence and does so in a much more cost effective manner than the average consumer. Things you and I may forget are handled routinely by the professional developer.  
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I don't want a subdivision.

Without a doubt, most people considering a vacant land purchase feel the same way. This is especially true if the land will be used as a vacation getaway.   In Wisconsin, a subdivision is defined as 5 or more lots of 1.5 acres or less. The idea of living shoulder to shoulder with close neighbors clustered around a paved cul de sac is not what most people have in mind. But, it is important to remember that all land everywhere is subdivided. The land must be subdivided or you would be forced to purchase more land than you want or can afford.

Since all land is subdivided, the size, number and characteristics of the parcels within the subdivision is what matters. Privacy and seclusion come from the topography of the land, the amount and position of tree cover and other features like water on or near the property. Decide for yourself, is there more seclusion in a large open field or a small wooded lot?

Many people dream of purchasing 5 acres or so at the back of a 40 acre tract. Considering the cost of land today, if you can not afford the entire 40 acres, the only way you will be able to own the secluded 5 acres parcel is if the property is divided and the development costs are spread out among several others. The difficulty in obtaining an easement across the remaining 35 acres, the cost of  the road and the cost of running the utilities to your parcel would be tremendous.

It is important to keep in mind that even if you could find a 5 acre tract surrounded by undeveloped land, it is because local zoning has permitted subdividing the land into smaller parcels. There would be no way to know if or when the land next to you're would be further subdivided.

When it comes to purchasing waterfront land in today's market, considering the cost and rarity of waterfront land, it is almost certain your only choice will be relatively small lots in rural subdivisions.  
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What are covenants and do I want them?

Protective covenants are sometimes misunderstood and almost always a benefit for the buyer. Simply put, covenants are designed to protect your property's value and maintain it in substantially the same way it appeared  when you first purchased it.

Most people who purchase rural recreational or residential vacant land do so because it's natural beauty appeals to them. Most people expect that the land will retain the same characteristics that first attracted them. They don't want to worry that unsightly development or the accumulation of trash will spoil their dream. This is why protective covenants are essential.

Imagine how upset you would be if you built a cabin or year round home in a beautiful natural setting only to have it spoiled by a neighbor who abandoned old vehicles in the woods. How much would your enjoyment of your property and it's value be affected by a commercial business opening up next door? What if your neighbor, by the absence of protective covenants, was within his or her legal right to build a shack next to your tasteful home?

Protective covenants are recorded and legally enforceable in a court of law. They give you legal recourse to take action, if necessary, to handle violations. Without protective covenants your options could be severely limited and your enjoyment of your property and it's value could be
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What is an Owner's Association?

Owner's associations are established in order to provide property owners in a development an opportunity to share in management of and to provide funds for maintenance of common areas and access easements.

Associations may be formed to provide for management and maintenance of lake shorelines, ponds,  parks or other "green spaces" that are common (jointly owned) areas in a development. A typical owner's association would be a private road association. Private roads require periodic maintenance such as snow plowing, grading, and gravel. By forming a road maintenance association, with each property owner paying a nominal annual fee, the costs for maintaining the road is shared by several users rather than by a single owner.  
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What should I do to prepare for looking at land?

Looking at land is not the same as looking at a house. You will be out of doors so weather conditions will be a factor. You will want to dress for the weather and even be prepared with additional clothing in the event weather conditions should change. Appropriate clothing for a land showing would include items such as hiking boots or tennis shoes, jeans and jackets. Remember, you will be out of doors in fields and woods. You may be visiting a lake or river shoreline. Dress as if you are going camping and not as if you will be inside of a building.

You should be willing to set aside an entire day so the real estate agent can, if necessary, show you several properties. Once on the land, you should be willing to explore the entire property with the real estate agent. Remember, a land purchase is every bit as important as a home purchase. You would never buy a house without having explored every room. It is just as important to give this same attention to vacant land.

Wisconsin law requires that you personally inspect any property that you purchase. In the case of married couples, only one spouse is required to be present. However, it is imperative that all decision makers are present when touring property so that you have the ability to write an offer to protect the property  in which you have an interest. All to often, one of the decision makers is not present and the intended property sells before a second visit can be scheduled.  
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Can I look at property without a real estate agent present?

It is difficult to see any advantage in looking at land without the assistance of a real estate agent. A professional real estate agent will have specific knowledge that will be of great value to you. Even though you may have asked several questions before going to visit the land, you will most likely think of several more once you begin walking the property. Having an agent present will result in your being able to get the answers you want on the spot.

If you are looking at a remote property it may be difficult to locate without having an agent present. The professional real estate agent will have visited the land prior to your visit and will be able to make sure you are walking the right property. Imagine how disappointed you would be if you wanted to make an offer on a property only to discover you were on the wrong land.

A professional real estate agent will be able to help you understand the boundaries by locating the survey markers and assist you with reading survey maps. Additionally, the real estate agent can answer your questions about zoning, building setbacks, driveways, utilities and covenants, if any.

One other consideration worth mentioning is that sellers are often concerned with your safety and the liability they could incur should you sustain an injury while visiting a property. Some sellers mandate that all showings be guided by a real estate agent for this reason.  
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What should I expect from a real estate Agent?

Honesty and professionalism. A professional real estate agent will know the market and will be familiar with the properties he/she is showing to you. The real estate agent should also be familiar with the area and able to inform you about amenities such as lakes, parks, and other recreational opportunities. The real estate professional should be prepared to inform you about such things as schools, churches, and medical facilities as well as police, fire, telephone and electric service. These things are important whether you are purchasing land for recreational or residential use.

The real estate professional wants to help you locate the perfect property and is depending on you to be honest about your needs. If you do not accurately convey your particular needs to the real estate agent he/she will not be able to direct you to the best possible properties.

Don't be afraid to tell the real estate agent if you do not like a property. Sometimes people are afraid to say "no" and they attempt to soften it by saying "we need to think about it." The professional real estate agent knows that when you say "no" you are saying "no" to the property. He or she will not be offended.  The agent will want  to continue to search for the perfect property for you, so you must let the agent know when a property is not right for you.  
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