January 2015 – Survey Size Matters

Why Survey Your Mountain Land Purchase?

When it comes to surveying land – size matters.  Listen to what one very dissatisfied landowner told us.  In his first call, he said he wanted to sell his 314-acre land parcel.  We suggested he have it surveyed before putting it on the market.  Two months later he called back.  He had the property surveyed and learned that he only owned 205 acres.

He asked what he should do.  We then asked whether it had been surveyed when he made the purchase several years earlier.  His answer was “No!”.  We asked why he had not had the land surveyed.  His answer?  “Because the previous owner told me it was a really good deal”  Apparently he had never heard the phrase “caveat Emptor” (Let the buyer beware) .

“It Was a Really Good Deal”

Of course it was a good deal – for the owner who sold it to him!  This property owner learned a vary hard lesson.  So, why is a survey so important?  Most properties that were purchased 10, 20, or 5o years ago may or may not have been surveyed at that time.  Those that were surveyed were surveyed using less than accurate measuring instruments, probably even before personal computers were in use.  Surveys performed prior to about 1980 were hand-drawn with the acreage calculated manually using “plane geometry”  Remember, there were also no hand-held calculators available until post 1970 or so.  In short, most of the older surveys were not accurate.

Don’t Cut Corners – Always Survey!

When making a land purchase – always survey.  Keep in mind that the present owner’s deed may describe the property as being 103.5 acres, more or less.  The owner’s deed may even refer to a previous survey done in 1963 by John Doe, Registered Surveyor, and describing in detail the 103.5 acres.  Take that “with a grain of salt”, but insist on having it surveyed now – with today’s accurate measuring instruments.  As it turns out, a new survey may show the original one to be fairly accurate – perhaps being 104.1 or 102.7 acres.  That slight difference is understandable considering it was done by a different surveyor using different instruments.  A new survey almost always has some variation from the original.

Often, however, there may be an error in the earlier survey, resulting in a substantial change in actual acreage present on the property.  If you offer to pay a fair price for 103.5 acres, but then learn you are only getting 96.1 acres, you aren’t likely to want to pay for the inequity of acreage – which can create a disagreement with the existing landowner.

What’s the solution?

When buying mountain land, you can eliminate potential problems by taking two actions: 1) have a new survey performed on the property, and 2) add a simple paragraph under “Other Provisions” in the purchase contract.  Those two actions will insure that you are only paying for the exact acreage included in the purchase.

Assume that you are paying $414,000 (4,000 per acre) for the property, and having it surveyed.  Include the following paragraph in the purchase contract:

“Buyer is to have property surveyed at Buyerr’s option and expense prior to closing.  If survey shows more, or less, than 103.5 acres, purchase price is to be adjusted at the rate of $4,000 per acre for each acre, or fraction thereof, more or less than 103.5 acres.”

Get Insurance!

Most land buyers ask their attorney to provide Title Insurance, as protection against possible undiscovered faults or flaws in the title to the land.  There are actually two levels of protection available.  Normally, title insurance protects against flaws in the title.  You can get added protection by asking for title insurance “as to matters of survey”.  It may cost a little more, but it also insures that your new survey is accurate.  You can even further protect your new survey from question by permanently recording a certified copy of the survey at the county courthouse. Doing so is like staking out a claim for the whole world to see that this is YOUR PROEPRTY.

Ready to Buy Mountain Land?

We can help!

 

 

MARCH 2014 – Scary 1929 Market Chart

A Scary 1929 Market Chart in a recent article by Mark Hulbert, Market Watch – shows what appears to be an eerie similarity between the stock charts leading up to the market crash of 1929, and the current chart period.  Does the current chart portend another catastrophic crash in the equities market?  That sort of prediction is above my pay grade!

Notice, however, that this Scary 1929 Market Chart shows equities are at a record high point – an Everest of sorts in the work of equities.  The question becomes – do you adopt a new stock investing method? Call it “Buy high – sell low!”  Unless you believe that – in this current world of job loss, “Afforable Care” uncertainty, and skyward spiraling national debt – that there is no top to equitiers, you might want to consider using another well-worn, and highly respected approach to investing – called “Buy low – sell high!”  In the current equities market, however, that may present a problem.

So, wait – why not invest in raw land?  Land is a commodity that runs in cycles also – cycles that typically run for 7-8 years between the top and the bottom.  In July of 2006, the raw land market took a dive.  First, buyers becomes scarce. This happened at almost the precise moment that “asking” prices reached their peak.  In one North Carolina mountain county, the asking price for 100+ acres reached a peak of $42,211 per acre – while the average actual selling prices for large parcels was around $5,500/acre.  Motivated land buyers at that point said simply “I don’t think so!” – and went home.

What followed was a dearth of real buyers, and a gradual reduction in asking prices.  Today, seven years later, asking prices are around $7,573/acre, down from $42,211/acre and now at their rock-bottom low point in that county. What’s more – the average time on the market for those properties over 100 acres is about 4+ years – that’s YEARS, not months.

Consider your options – including that Scary 1929 Market Chart – when you buy equities.  You can 1) BUY, 2) SELL, 3) HOLD, or 4) HOLD for Dividends.  The top dividend payer in the DOW 30 right now is AT&T, paying dividends of $1.84 per year, or about 5.57% annually – a very modest return.

With raw land, your options multiply.  Yes, you can 1) BUY, 2) SELL, or 3) HOLD. While holding it, you can also  4) build a home on it,  5) camp on it,  5) hunt on it, 6) improve it, 7) hike on it, 8) rent it, 9) trade it (tax-deferred), 10) sell marketable timber, 11) put it in your IRA, 12) mine it, 13) donate it, 14) give it away, 15) devise or will it.

In times of uncertainty, land may also be used as your secure, strategic location, in case of a currency devaluation, national crisis, or complete breakdown of society as we know it.  Think that’s a joke?  Approximately 60% of the buyer phone calls we’ve received in the past year have been from individuals with that thought on their mind.  

What ever your investment motivation, it’s a great time to invest in raw land which can provide a host of benefits not available from the stock market.  The North Carolina mountains is the place – and the time is now!