How Much Does It Cost To Buy A Ranch?

Now more than ever, Americans are flocking to buy their very own piece of land. The idea of owning a ranch is increasing in popularity, and so is the demand. But buying land isn’t as simple or as easy as buying a typical single-family home. There are many things to keep in mind, and one of the most crucial factors of buying a ranch is the cost. Here are some of the extra costs to keep in mind when buying a ranch.

Property Value

The most important thing you want to establish is the baseline cost of the property itself. How much can you expect to pay for your own piece of land? This cost will obviously vary depending on your purchase location (think Texas vs. California), property features, land improvements, zoning rights, the intended use of the land, and property acreage. All of these factors can affect land valuation. Other aspects of the property’s location, such as road access, proximity to town, elevation, weather, and the growing season will also contribute to its value as well. You can expect to pay more for a property that has already been built upon, has access to natural resources such as streams for fishing, and is in a high-demand area.

Because ranches can vary greatly in size and cost, the best option is to talk to a qualified real estate broker who specializes in ranches to narrow the field. Smaller ranches can often be purchased for under $1million while large ranches with desirable features can pull in tens of millions of dollars.

Site Development and Site Improvement

In addition to the potential costs of adding your own site improvements, such as a home and outbuildings, you will typically need to budget for plans, permits, and other legal costs or local fees. These fees can run anywhere from $10,000 to $20,000 in some areas such as Colorado or California. Some communities add impact fees as high as $100,000 in order to discourage development. In addition to the costs of building the structures themselves, keep in mind the potential costs for land surveys, soil testing, utility hookups, septic system costs, excavation, land clearing, well drilling (if needed), landscaping or paving, and more. You will need to work with your realtor and other professionals to have a good idea of the costs involved before making your land or ranch purchase.

Appraisal

Rural appraisals are typically acquired by the buyer of a property in order to determine the true land value and negotiate a deal. Due to federal law, all lenders will require an appraisal before closing a real estate deal. Rural appraisers may run a cost analysis of the land value along with the buildings and any needed improvements, perform a sales comparison with comparable properties in the area, or configure a property value using the projected net income of the site. It is highly recommended that you hire a rural appraisal specialist who is familiar with the area and property type you are looking to buy. According to HomeAdvisor, the average cost of a land appraisal is $1,000 to $3,000, but you can expect to pay as much as $8,000 for an expert opinion in some areas.

Closing Costs

Closing costs are the typical expenses incurred by both buyers and sellers during the sale and purchase of a property. The closing costs can be a large chunk of change, and ranch or land purchases are no exception. When using a lender, there will be many fees and charges, including origination fees, credit report fees, attorney fees, document fees, land surveys, title search costs, title insurance, inspections, and escrow account funds. In addition, there are some statutory costs involved, even if you are paying for your property entirely in cash. These include transfer taxes, deed recording fees, pro-rated local taxes, and other state or local fees. Generally speaking, you can expect to pay anywhere between 3 and 5 percent of the total purchase price in closing costs.

Final Thoughts

Choosing to invest in a ranch property is a wise decision that can bring many rewards to you and your family for generations to come. With the right research and considerations, you can make an informed purchase decision that will add to your legacy and result in enjoyment for many years. At Mirr Ranch Group, we are experts at buying and selling all types of ranches across many U.S. states. If you need assistance with purchasing your new dream ranch, don’t hesitate to give us a call today!