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I was thinking of investing in buying a land. I found one land that is weirdly too cheap($28k). The houses built around have the value estimated around ($300k). Location Ohio, USA.

The Ad says:

HOA is not active, but building plans must be approved by seller. No fees. Seller is motivated. Listing Agent related to seller. Zoned R1B-Residential Single Family.

My question is, will the seller expect me to provide house plans for the house that will cost me around $300k, or at least the value will need to be that price? Or what is the reason for the low price?

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    We don't know. Ask a local agent what's wrong with it. The seller may have unreasonable requirements regarding the acceptable plans. Or there may be other problems. We don't know; we aren't there. – keshlam Jul 30 '16 at 23:24
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    If that's written into the sale contract, which it clearly is in the quoted ad, your choices are to accept this, not buy, or get your own lawyer to find a loophole. Pick one. – keshlam Jul 30 '16 at 23:30
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    "Seller is motivated" is not really compatible with "plans must be approved by seller". Is this a land contract? Is he expecting/hoping/scamming to get the property back at some point? If not, he may simply be respecting the concerns of neighbors. I know a seller who drove by the buyer's current house and saw 20 cars "under restoration" all over the front, side and back yards. He backed out of that deal, knowing the neighbors wouldn't appreciate it much. – Harper Jul 30 '16 at 23:55
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    Can't speculate as I don't know his reasons for the restriction. – Harper Jul 31 '16 at 0:27
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    The seller might have an obligation to the other buyers in this development that all houses will be in a certain range, size, price, style. Why do you hesitate to call the listing agent? – JoeTaxpayer Jul 31 '16 at 0:41
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There's no fixed ratio for the value of land vs the value of the house you put on it. In your situation, nothing seems wrong, a parcel of land for $33k and house for another $300k.

The listing is clear, the seller needs to approve the house plans, and to me, the implication is that time is a factor, i.e. You can't buy it to invest long term, you need near term plans to build.

But, most important, these details can only be clarified to you via the listing agent. That's what the seller is paying him/her for.

  • so there is no way for me to buy the land if I don't have the house plans? – Grasper Jul 31 '16 at 0:23
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    I can't say for sure. All I can do is understand the clues provided, and help you prepare for what you might hear. Call the listing agent, and ask if/what the requirement is regarding the construction. If, as I suspect, there's a deadline, you might decide to move on. Consider, that might be why the land is priced as it is. Not many people are ready to build now. – JoeTaxpayer Jul 31 '16 at 0:36
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Basically, when you buy the land, you will have to factor in the cost of the house that the seller will force/allow you to put on the land. So you will have to look at the two as "one," and not think in terms of the "bargain" that you would be getting on the land alone.

If the seller is halfway reasonable, there may be an opportunity to build a "qualifying" house on the land where the cost of the house and the land will come to less than the $300,000 that the package might sell for, based on "comps." But you will have to do your homework for both lot and house before you commit to buying the lot. Otherwise, you will just be wasting money on the lot.

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