Landlocked properties can be perplexing for first-time land buyers and a potential nightmare for landowners looking to sell. The term 'landlocked' refers to a piece of property that lacks public road access and can only be reached by crossing someone else's land. While landlocked properties are typically inexpensive, their limited accessibility deters most buyers. However, for niche investors, they present an intriguing opportunity.
Why Do People Buy Landlocked Properties?
If a landlocked property is adjacent to a thriving or potentially expanding business area, holding onto the property and selling it in the future at a higher price becomes a compelling reason for its purchase. Additionally, the comparatively lower price of landlocked properties can appeal to prospective buyers in more expensive neighborhoods.
Advantages and Disadvantages of Landlocked Property
Landlocked properties typically have a lower value compared to the surrounding properties, primarily due to their limited accessibility. Nevertheless, it is important to note that landlocked real estate still holds value. In fact, its lower price can make it a more attractive option for prospective buyers in expensive neighborhoods. This can provide them with an opportunity to become part of a community that would otherwise be financially out of reach.
Securing a loan or mortgage for a landlocked property can be challenging, as banks may be hesitant to finance such properties. The lack of access to public safety services, including medical and fire personnel, often deters banks and potential buyers from dealing with landlocked properties.
Pricing Landlocked Property
When listing a landlocked property for sale, take extra thought in determining the asking price. Remember that getting access to a landlocked property may require a lot of time and a significant investment for a potential buyer, including hiring an attorney or hiring an appraiser. Consider pricing the property as-is; this will ensure that the listing gets attention from prospective buyers.
It is also important to remember that most lenders will not finance properties that do not have deeded access, so a prospective buyer may have to purchase the property with cash. This weeds out the pool of potential buyers significantly. Make sure to note in the listing that the property does not have deeded access.
The best way to determine the value of a landlocked property is to put it in a competitive marketplace to see what buyers are willing to pay.
Consider Getting Access to Landlocked Property
Going through the additional costs and due diligence required to get legal access to landlocked property before listing it for sale can help fetch a higher price. Consider going through the motions to gain access to the landlocked property before listing it to fetch a higher price and get more potential buyers interested in the property.
Selling landlocked properties can be challenging, but it is not impossible. By understanding the potential niche market for these properties and taking certain steps to make them more attractive to buyers, property owners can still find success in selling their landlocked property. Consider all options when determining the price and marketing strategies for a landlocked property, and always seek professional advice before making any major decisions.
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