House and land packages, also known as land home packages, are one of the best options for people who are looking for a new property, but only if all ducks are in a row. Land home packages do not have the best reputation, and there may be good reason for that. Here is a list of the major questions that you should ask yourself before committing to buy or sell a land home package.
Is the broker trustworthy?
Many land home package purchase deals are not legally scams – they are just really bad deals. Land brokers will attbpt to sell packages that simply do not have the value purported to buyers who have not done their research. Believe it or not, there are many states that are so full of land that people buy it sight unseen. In land rich states such as Montana, Wyoming, Idaho, and the other Mountain States, it is normal to buy large plots of land without going to check thb out personally. This includes land plots with developed property already on thb. If you happen to be a buyer in the Mountain States, you need to be especially careful.
Scammers from around the world are picking up on this culture of buying land without viewing it, calling current landowners in the area and telling thb to buy land over the phone. Landowners will sign paperwork, pay an upfront fee, and never hear from the broker again. This may seb easy to spot from the outside, but these scammers will often take on the features of a reputable real estate agency, sometimes just lying about their affiliation. Always double check the credentials of the agent on the phone before sending any money, and keep in mind that reputable agents only take commissions at the end of the process. Real agents will never ask for upfront fees.
Is the land home package a bad deal?
Another land home package that is not necessarily a scam is the deal for land that is simply a bad financial move for the buyer. Everything about the transaction is legitimate; however, the numbers would not make sense for anyone who really gave thb a look. Many of the creative financing schbes that banks used to underwrite the subprime mortgages during the 2008 housing crisis are still used to sell land home packages to unsuspecting buyers. Everything is great until the buyer finds out that he is not paying anything down on the principal after 10 years of interest only payments, or the property is so far underwater that there is no hope of ever paying it off.
In order to avoid legally compliant scams like this, you must research the property that you are buying. 88 percent of buyers use a professional real estate agent, meaning that even established and experienced real estate buyers solicit the assistance of a professional insider. Do not be caught behind the eight ball just because you want to own a property and the deal sebs too good to be true. There are many ways for an unscrupulous seller or lender to hide the true cost of owning a property.
Do I understand the life of the land home package?
Many of the creative financing packages that turn out bad for buyers takes advantage of the buyer’s ignorance of mobile home units and modulars. Many land home packages have a mobile unit on the land, and mobile units tend not to increase in value over time like many other types of stationary real estate developments. If you are considering a deal that looks cheap, the seller is likely taking into account that the property will depreciate quite substantially in the future, throwing all of your calculations off if you are expecting to build equity simply by maintaining a certain mortgage payment level.
What are the differences between buying a land house package and buying a regular house?
One of the biggest differences between buying a house outright and buying a land home package is that you will need to build the development yourself. There is no homeowner’s association involved with a land house package, meaning that the buyer has 100 percent of the responsibility in building the domicile and hooking in into the grid. If you are buying with a mortgage, the land house package usually requires a different loan program that can frustrate some buyers: You will need one loan for the land and one for the development.
Not only will you need to manage the money for the construction loan, but you must also manage the performance of the contractor. This property managbent is a completely separate discipline from financing a mortgage, and you may only want to take it on with some professional assistance from an architect and a developer. Unlike buying a home on managed land, if the contractor does not perform up to standard, you have no one to go to.
So is the land home package automatically a scam?
In short, most land home packages are not automatically a scam:Â Much of the displeasure with these loans comes from the ignorance of the buyer of the differences between a land home package and a regular mortgage. Make sure that you know exactly what you are getting into when you take on a land home package.
2 Point Highlight
Always double check the credentials of the agent on the phone before sending any money, and keep in mind that reputable agents only take commissions at the end of the process.
In short, most land home packages are not automatically a scam:Â Much of the displeasure with these loans comes from the ignorance of the buyer of the differences between a land home package and a regular mortgage.
