Legal Land Issues: Financial Privacy When Buying Land, Fair Market Value and Bundle of Rights

The Rural Real Estate column covers legal land issues, including maintaining financial privacy when buying land, information on fair market values and the meaning of bundle of rights.

| August/September 1997

A veteran real-estate expert smoothes the wrinkles of land ownership in the Rural Real Estate column. This issue includes information on maintaining financial privacy when buying land, fair market values and bundle of rights. 

Q. We are looking for land, and when talking to real estate agents the first thing they ask is about our personal financial picture. We feel this is nobody's business and find this practice very offensive. How can we avoid this happening in the future? 

A. You probably can't maintain complete financial privacy when buying land unless you have the ability to pay all cash for your land. A real estate agent is not being nosy but doing a good job when delving into your financial affairs. This is called "qualifying the buyer," and if you're serious about making a real estate purchase you must go through the process. When qualifying you, the agent needs to know your available cash on hand or at least how much you will make available for a down payment. Your current earnings, future income expectations, and stability all will point to whether you can sustain a payment schedule over the years. Also, the status of your credit is important as a seller may run a credit check on you when you make an offer to buy. Only after obtaining this information can the agent match you up with the right properties, ones that you can afford. It is inappropriate and a waste of time to show you properties that are less than you want or are far over your heads in price.

Although many people are uncomfortable sharing their financial information with strangers, remember: The real estate agent is a professional and won't divulge your private business to others. With this exception: When you make an offer to buy property the agent will tell the seller enough about you to make the seller comfortable with your offer. This breach of privacy is necessary. After all, the seller is taking a risk by selling to you on a contract.

If you plan on buying with all cash you simply need to let the agent know how much you are prepared to spend.

 Q. We want to sell our small farm. My husband wants to price the place higher than its actual value to leave room for negotiation, but I think we should price the place at exactly the price we want. Which course of action do you recommend? 

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