Many people view land as an exceptional investment. Property tends to be a valuable commodity, especially in areas with rising housing prices and increasing rates of development. The issue is, once you buy vacant land, you’ll have to shoulder some substantial costs. In some cases, the expenses can be so high that it might have you scrambling to figure out how to sell land without a realtor. Most vacant landowners aren’t aware of the potential costs. As a result, they’re pretty surprised when they see how it hurts their bottom line. Here are five ways that holding onto vacant land in Canada may be costing you and why it may be a great idea to figure out how to sell land without a realtor.
5 Ways Vacant Land in Canada Costs You Money
Property taxes in Canada can be a bit steep. While taxes on vacant land are typically lower than similar lots with established structures, they can still add up quickly. You may be paying hundreds or thousands of dollars every year. Over time, the total amount you spend on taxes can be startling.
Depending on the location and condition of the vacant land, increases in the property value may not offset the taxes, too. That means you’re losing money on this investment. You aren’t recouping what you’re spending in taxes, causing you to effectively fall behind.
By selling your vacant land without a realtor, you won’t have to worry about property taxes devaluing your investment. Instead, you can capture as much of that value as possible.
While it may seem that vacant land in Canada isn’t expensive to maintain, that isn’t necessarily the case. Municipalities may have standards you need to follow when it comes to the condition of your property. If you don’t meet the requirements, then you might face a range of penalties.
Avoiding the fees means dedicating time, effort, equipment, and supplies to upkeep. Along with handling the landscape, you might find that other people turn your property into a makeshift dump since it’s empty. If that happens, you’ll have to pay to get rid of other people’s trash. Depending on what they leave, that can be startlingly expensive.
When you sell your land without a realtor, you’re no longer responsible for that property maintenance. Plus, you won’t have to worry about any fees that can come with failing to meet local standards.
If you bought undeveloped vacant land as an investment, there is a good chance it doesn’t have some key infrastructure, like utilities and road access. Getting those services in place can be incredibly costly, especially if neighboring properties are undeveloped.
This may not be an issue if development isn’t needed. For example, certain recreational style lots that aren’t meant to have a home or business on them may not require the infrastructure.
However, not moving forward with the improvements can hurt the value of your land if the development would ultimately be the goal. Fewer buyers are willing to deal with the headaches of bringing in the necessary infrastructure. As a result, there will be less competition for your vacant lot, leading to a smaller selling price.
Otherwise, you would need to pay to get the infrastructure in place. Depending on where your land is located, that may cost far more than you’d expect. Plus, you may not fully recoup that money when you sell, leading to a loss.
When you purchase a vacant lot, you usually spend time learning about any rules regarding its potential use. Every piece of the property falls under zoning or land-use ordinances. While those might seem permanent, that isn’t the case.
If you hold onto vacant land that’s near a developing area, it’s possible the zoning rules could change. If the land-use regulations become more stringent or limiting, it reduces the potential of the lot. When that happens, its value could decline.
By not figuring out how to sell land without a realtor before that happens, you miss out on an opportunity. You can’t sell for the same amount if the zoning becomes unfavorable. In some cases, this leads to significant losses, making what once looked like a good investment a dud.
Plus, that isn’t the only potential missed opportunity. Vacant land isn’t eligible for the same tax benefits as you may receive with other kinds of properties. For example, by adding a home and renting it out, you could be eligible for a deduction. There are also tax benefits for commercial properties, something you’re not necessarily capturing either.
Shifting Market Conditions
While people generally believe that market conditions will move in their favor, that’s never guaranteed. Land values shift regularly and for a number of reasons. Supply and demand play a role. New developments nearby are a factor. Changing economic conditions, mortgage interest rates, and tax changes also cause fluctuations.
If market conditions aren’t favorable, you may be losing money by holding onto the vacant land. Remember, taxes, fees, and maintenance costs add up.
If you’re spending more than the land is appreciating, you’re losing money by keeping the property. That’s why figuring out how to sell land without a realtor is critical, as it lets you get out of what may be a poor investment.
Ready to Sell Your Land Without a Realtor in Canada?
When you’re ready to sell your vacant land, selling without a realtor can be a great move. Not only will you not have to pay a commission, but you also don’t have to pay tax on that commission. Plus, you can complete the process faster, allowing you to limit your holding costs and get more from your investment.
No matter what your situation, if you own land in Toronto, ON, call GTA House Buyers at (647) 848-7790 or send us a message to discuss the ways holding onto vacant land is costing you and what you can do about it.