Do you ever sell your land without a purchase agreement? I have a buyer that has purchased several lots in this subdivsion from another dealer. This guy does not even know what a doc fee or PA is. He said this other dealer simply got his cash and mailed him the deed and he’s asking why we charge a doc fee. Does anyone skip the PA? Advantage or disadvantage?
@suitedconnector it seems like you could skip it if the other party is okay with that. I think the PA is just a formality involved in most normal deals, but a land flip is not exactly “normal” because there’s no financing, no title company, the price is usually far below market value, etc.
@suitedconnector as I see it, a PA is where the commitments of the 2 parts, especially the seller’s one, become binding (if you, as buyer, records it, that’s even more true) and provides the timeline of the deal, ensuring you have time to conduct the necessary due diligence before you actually buy. So, probably not necessary from a procedural standpoint but i would feel pretty uncomfortable to work without it, especially as buyer.
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@arturo Yeah, that’s how I feel about it. Especially that you have disclosures and that the buyer is accepting “as is” and responsible for due diligence. I was just surprised that this investor has bought several props from a pretty big dealer and (according to him) never had any docs except a deed.
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I’ve done PA’s at the same time we closed with a deed. These were in person closings within days of making a verbal agreement. I wanted to strike while the deal was hot so I wouldn’t lose it. You can lose days of time with back and forth on a PA. I don’t do that all the time but sometimes it makes sense for me.
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@suitedconnector Sounds like they have a solid transactional relationship and are comfortable skipping the formalities as they churn properties. A PA is for transactions where trust and/or ability are in question. Reply to him that you will be happy to wave the doc fee for a seasoned investor such as himself, then consider offering him your PA for your first transaction to establish the relationship, or skip it if you feel you have landed the whale.
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Many larger land operations have a type of purchase agreement worked into the online checkout process. I have them pay a reserve (doc fee) and then generate one for esigning.
The only real legal document needed for selling land is a deed… but most buyers will want a purchase agreement. On cash sales that I close in house I also provide them with a small settlement statement and have them sign a survey waiver/disclosure.
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I use one 99/100 times. But I’ve not used one in the past when buying when I just wanted to close quick, I was meeting the seller in person, and I was absolutely sure of everything I was buying. Selling I always use one to protect myself - never know what a buyer might try to pull.