Mistakes to Avoid When Buying Land in Iowa
Return to BlogGet cash offer for your land today!
Ready for your next adventure? Fill in the contact form and get your cash offer.
By
Bart Waldon
As average farmland values across Iowa rose over 7% last year to surpass $9,000 per acre statewide according to 2022 USDA data, competition continues intensifying for available quality parcels. With proper soil conservation and crop management, Iowa’s rich black dirt remains capable of impressive yields. This keeps farmers, developers and individual buyers vying for land.
However, Iowans seeking property must avoid common mistakes and pitfalls - or risk buying undesirable acres and losing hard-earned money. Heeding local wisdom and best practices remains key. This article outlines key errors to sidestep when purchasing Iowa land for farm, recreation or investment uses.
Top Mistakes to Avoid When Buying Land in Iowa
Not Checking Flood Zone Designations
With river and stream floodplains crisscrossing Iowa, assuming a beautiful bluff or bottomland is risk-free could prove costly. According to Iowa Homeland Security statistics, flooding causes around $640 million in annual damage statewide. Review Flood Insurance Rate Maps from FEMA to see if the parcel falls into a high-risk 100-year floodplain. This determines eligibility for federal flood insurance.
Ignoring Easements
Failing to note utility or access easements on a parcel can hamper plans down the road. Always verify details recorded on plat maps on file with county clerks. Mortgage companies will investigates these aspects later. But informed buyers confirm easements on the front end so there are no unwelcome surprises that could restrict buildability or access later.
Skipping Soil Sampling
With prime cropland fetching up to $15,000 an acre in regions like Northwest Iowa today, farmers scrutinize soils closely before purchase. Yet even those buying land for recreation should test drainage capacity, pH and nutrient levels. State universities provide affordable testing to determine limitations that could require price negotiations or influence land usage.
Not Prioritizing Mineral Rights
In some cases, existing gas, oil or mineral rights leases transferred decades ago still encumber parcels for sale. If exploration occurs, surface rights holders may receive impact payments. However, the mineral leaseholder typically earns royalties. Carefully assess documents to understand mineral right status beforehand.
Assuming All Acres are Equally Valuable
General land value estimates get quoted statewide and countywide in Iowa. However, micro conditions influencing productivity and yield capability cause huge variability between fields. The saying "location matters" applies heavily with land. Roadway access, power and farm building availability also sway price suitability for different buyers’ needs.
Focusing Only on Price Per Acre
Fixating purely on price per acre distracts from weighing other positive or negative land aspects mentioned. Considering total cost is wise, but determining overall utility and "effective price per usable acre" based on property limitations enables apples-to-apples comparisons between parcels under consideration. What acres truly merit your money?
Not Inspecting in Person
Online land listings provide helpful preliminary search tools. However, until entering the field and walking terrain in-person, perusing high-resolution aerial photos even through drones provides limited perspective. Assess exact conditions site-edge before purchasing Iowa land, whether for farming, recreational or development purposes.
Believing All List Prices are Negotiable
While some motivated sellers will consider reasonable offers under list price, Iowa’s competitive land market affords slimmer bargaining power compared to past decades. High-quality parcels often trade swiftly at or above asking prices when multiple bidders compete. Tempering expectations about deep discounts proves prudent in 2023.
Assuming Fast Sales Timelines
Despite vibrant demand from buyers, Iowa’s land market generally requires patience for sales to close due to financing complexities and stringent title conveyance procedures. Even buyers paying cash cannot force rushed timelines. Averaging 6-12 months from offer acceptance to closing remains commonplace. Account for this in financial planning.
Not Confirming Tax Basis Post-Purchase
Understanding a land parcel's tax basis before submitting offers allows projecting carrying costs sensibly through ownership. However, official assessors' acreage valuations and tax estimates should be re-checked post-closing to avoid unexpected bills later. Upfront due diligence reduces stress.
Key Reasons to Buy Land in Iowa
Beyond gorgeous sunsets over undulating fields, Iowa offers many compelling reasons to purchase land including:
- Strong annual returns on investment for leased farmland
- Access to some of America’s most prolific hunting and fishing
- Vibrant future development potential around expanding cities
- Rising property values over past 20+ years
- Tight land supply and steady investor interest
With proper vetting beforehand through legal and agronomic experts, buying land in Iowa provides hard asset diversification and site control for varied goals. Mistakes mainly arise when acting impulsively without fully investigating all factors that determine land quality and value alignment with your needs and risk tolerance. Patience pays with land.
Tips for Buying Land Wisely in Iowa
When preparing to buy acreage across Iowa, utilize these tips for avoiding pitfalls and maximizing success:
- Inspect any flood zone designations on the property
- Verify details of all access easements on plat maps
- Conduct soil tests to understand and negotiate limitations
- Research mineral rights status before buying
- Compare effectiveness of usable acres between sites
- Walk the land in person when possible
- Budget 12 months to closing as expectation
- Seek second opinions from local real estate lawyers
No perfect parcel exists. However, following prudent procedures gives Iowa land buyers and investors the insight needed to avoid regrets and build future-focused value.
Final Thoughts
With Iowa farmland values reaching new highs in 2024, thoroughly researching land limitations around flooding, easements, soils and actual usable acres becomes critical before buying. Assuming all acres hold equal productivity or appeal based on list prices or program recommendations alone often proves unwise in reality. Savvy buyers seek trustworthy local guidance inspecting parcels firsthand to determine suitability aligning with their goals and risk limits before closing deals. While online land listings offer helpful search tools, making land buying fortunes still requires old-fashioned boots on the ground. There are no shortcuts when undertaking careful due diligence required for securely gaining your slice of Iowa's famed fields and landscapes.
Frequently Asked Questions (FAQs)
What are some top mistakes people make when buying Iowa farmland that I should avoid?
Some major mistakes to avoid are not verifying flood zone designations, ignoring easements on plat maps, failing to conduct soil tests, not researching mineral rights, overpaying without comparing usable acre effectiveness, and not inspecting the actual land in-person before purchasing. Research all limitations.
How can I determine if land I’m considering buying lies in a high-risk flood zone?
Consult official Flood Insurance Rate Maps available through FEMA online by entering the property address. This shows designated floodplains levels across Iowa. Being located in a 100-year floodplain signals high risk and could require purchasing flood insurance if developing buildings later. Always research flood history on parcels.
What types of easements could restrict my land plans if overlooked?
Common easements that could impose land usage limitations include public utility easements granting right-of-way access for power lines or pipelines crossing parcels and shared private drive easements guaranteeing neighbors access roads or lanes. Review all plat map details.
What is involved in testing my potential land’s soil quality and drainage?
Contact your local Iowa State University extension office for affordable standard soil testing procedures analyzing drainage capacity, pH balance and nutrient levels. Or order basic tests online through private labs like WayPoint Analytical. Soil productivity directly impacts property value for farming, so test before buying acres.
How can I research the mineral rights status for land I am considering buying?
All recorded mineral right leases should be detailed on the abstract available from the county clerk or recorder office where the parcel is located. If existing rights are encumbered, the lessee typically holds royalty rights for any potential gas, oil or mineral exploration, while surface level usage rights remain with land owners.
What tips can help me avoid overpaying for Iowa land?
Avoid overpaying by verifying all effective usable acres considering limitations, directly comparing similar sized parcels in the vicinity, and negotiating based on average per acre values for the specific county rather than statewide generalizations. Inspect any results differing greatly from comps.
Related Posts.
