What to Do After Inheriting Land in Arizona

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What to Do After Inheriting Land in Arizona

Bart Waldon

Receiving word you’ve inherited property or land can certainly come as a surprise. However, nearly 357,100 acres changed hands in Arizona just in 2022 alone according to the latest data from the USDA – and a portion of that comes from family or estates passing down real estate assets. While inheriting vacant land might seem like a windfall at first glance, the reality poses complications from legal wrangling securing deeds to the ongoing responsibilities tied to ownership. Taxes, maintenance fees and liability burdens stack up fast, especially for out-of-state heirs now tasked overseeing rural acreage that offers little strategic value to their lives. 

Fortunately, reputable land buying companies offer a viable solution for inheritors across Arizona seeking to cleanly sell unneeded land handed down for cash offers without the wait. This guide examines smart considerations helping heirs weigh options making the most of unexpected property ownership.

Get All the Paperwork in Order

The very first thing you’ll want to do upon inheriting land is get organized. Request the deed, property tax bills, mortgage documents, survey maps, easements agreements, lien information - basically anything the previous owner or estate has on file related to the property.

Go through these documents carefully to understand exactly what you have inherited: the property boundaries, any buildings/resources on the land, encumbrances, mineral rights, etc. Having all the facts in one place makes valuing the land and deciding what to do next much simpler.

Determine the Land’s Fair Market Value

Land can be an incredibly valuable asset depending on location, resources, and market conditions. To properly assess what the inherited property is worth, have it appraised by a professional appraiser. Make sure they look at both the land itself and any structures on it.

Appraisal values can vary widely, so consider getting a second or even third opinion if the price seems too high or low. Paying for quality appraisals upfront protects you from selling yourself short or overpaying taxes later on.

Decide Whether to Keep, Sell, or Develop the Land

Once you know what you’ve inherited and its market value, the next big decision is what to actually do with the land. There are a few key options to consider:

Keep It

You may want to keep the inherited land for personal use - as a vacation property, future retirement home, hunting land, or family legacy holding. The location, amenities, and emotional connection may make keeping it worthwhile despite the costs and responsibilities that come with land ownership.

Sell It

Selling the land can provide a clean break and injection of cash from your unexpected windfall. But it takes time to sell at full market value. Land buyers like Land Boss offer quick cash sales, though often at a discount.

Develop It

If the land has potential for residential plots, commercial buildings, mining, agriculture, recreation, or other money-making uses, you may want to keep it and invest in development. Rezoning, permits, site work and marketing take time, but profits can be large.

Carefully weigh the pros and cons of each option - don’t rush into a decision. Selling land you later regret giving up is difficult.

Pay Off Any Mortgages, Liens, or Loans

If there are any outstanding mortgages, liens, or loans secured by the inherited property, resolving these should be a top priority. The last thing you want is unexpected foreclosure or legal issues.

Review all paperwork for amount owed, interest rates, and minimum payments. See if you can negotiate lower payoff amounts with the lenders. Use sale proceeds or available funds to satisfy these debts in order to get clear title.

Handle Maintenance, Insurance, and Other Ownership Costs

Owning land comes with ongoing expenses - property taxes, maintenance, liability insurance, HOA fees, and more. Make sure to handle any bills coming due and budget for future costs. Also inspect the property periodically for needed repairs or hazard removal.

Consider liability insurance to protect yourself from lawsuits should injuries occur on the land. Look into leasing out the land to offset costs. But have proper lease agreements in place.

Explore Options to Maximize Value

Simple steps like removing old structures, fixing damaged fencing, clearing brush, or improving road access can sometimes increase land value at minimal cost.

More complex value boosting options are rezoning unused land for development or subdividing large parcels into individual lots. While this involves permit applications and survey fees, profits from selling rezoned parcels or multiple smaller lots can greatly exceed the raw acreage value.

Pay Taxes to Avoid Penalties

Don’t let inherited property be seized over unpaid taxes! Verify if any taxes are delinquent and make payments to get up to date. Review estimated future tax bills and understand how property taxes will be prorated if you sell.

Inheriting land may also trigger capital gains and inheritance taxes when sold. Connect with a tax professional to minimize obligations. You may be able to defer taxes through an IRC 1031 exchange.

Weigh Different Sale Methods if Selling

If you decide not to keep the inherited land, you have several options for selling it:

Traditional Real Estate Listing – Hiring a real estate agent to represent you is the most common approach. The convenience comes at the cost of agent commissions.

For Sale by Owner – You can potentially save on commissions by selling the land yourself. But this requires expertise on pricing, marketing, screening buyers, and negotiating.

Auctions – Auctioning land can bring in multiple competing bids to drive up the final price. Make sure to set a minimum acceptable bid you’d be willing to accept.

Direct Sale to a Company – Land buying companies like Land Boss offer quick cash sales, removing hassles of traditional listings or auctions. However, prices are often below full market value.

Handle Closing Details When the Sale Goes Through

Once you have a buyer under contract, take care to handle closing properly:

  • Order any required last-minute surveys of the property boundaries.
  • Review closing documents to ensure legal title will transfer.
  • Pay applicable closing fees, recording charges, and outstanding taxes/liens.
  • File sale documentation with the county recorder’s office.
  • Distribute remaining sale proceeds according to inheritance terms.

Proper closing procedures satisfy all legal obligations so title transfers smoothly. Keeping your earlier paperwork organized simplifies this process.

Get Help Making the Best Decision for You

Inheriting land in Arizona can be an exciting windfall or stressful burden depending on your situation. While the steps and considerations may seem complex, the right real estate guidance can help you turn inherited land into a valuable asset.

Companies like Land Boss offer complimentary consultations to discuss your needs and the pros and cons of keeping versus selling. Their years of experience make it easy to weigh options and maximize your return from inherited land.

With professional assistance, proper planning, and strategic investing, that surprise land inheritance can transform into an amazing opportunity. The keys are getting organized, understanding your options, and aligning the land’s use with your personal financial goals.

While inheriting property may feel intimidating at first, following this checklist will help you take control and unlock the full value of your inherited asset.

Final Thoughts

Getting that unexpected news that you've inherited land can definitely feel overwhelming at first. But take a deep breath - with the right game plan, this surprise windfall could turn into an amazing opportunity! Now that you've got the inside scoop on what steps to take, from getting your paperwork ducks in a row to exploring whether to keep, sell or develop the land, you can make smart choices that work for your situation. Sure, inheriting property comes with some hassle and responsibilities. But following this checklist will help you turn that burden into a valuable asset and unlock the land's full potential. Having the proper guidance from real estate pros can give you the confidence and insight needed to maximize your return. So don't stress - with some strategic planning and effort, that surprise inheritance could just become the golden ticket to lasting financial gains!

Frequently Asked Questions (FAQs)

Do I really have to accept that land I inherited in Arizona?

Nope, you're definitely not required to accept land or any other inheritance you don't want or that feels like too much hassle. You can formally disclaim or refuse an inheritance within a set time period after being notified. But keep in mind that disclaiming land means losing out on a potential asset. So maybe don't make any rushed decisions before understanding what you've inherited.

This is my first time inheriting land - how long will it take me to sell it?

Great question! For vacant land like raw acreage with no developments or buildings, it typically takes 1-2 years minimum to sell at fair market value. You've got to find the ideal buyer who is interested in that particular property. If you need to sell quickly, land buying companies will purchase inherited land for cash fast, but often at a discounted price.

What kind of taxes am I looking at on inherited land?

Inheriting land can trigger both inheritance tax and capital gains tax when you eventually sell the property. The estate may also still owe any back taxes. Work with an accountant or tax professional to minimize your obligations through things like 1031 exchanges. Closing costs and recording fees when you do sell usually range from 1-3% of the sale price.

Should I rezone or split up the land I inherited?

If the land is currently agricultural or vacant acreage, rezoning part or all of it for residential or commercial development use can massively increase the value. Same goes for splitting a large parcel into individual lots. But keep in mind this involves permitting costs, site surveys, legal work - it's a big undertaking before you can cash in. Think through the costs vs. profit potential before going down this path.

How do I cover all the ownership costs while I'm trying to sell this land?

Excellent question. Those ongoing expenses like property taxes, liability insurance, maintenance fees, and any loan payments or liens don't stop just because you've inherited the land. Consider options like leasing it out for farming, recreation, mining, or other uses to generate income to offset the costs. Just make sure lease terms protect you from any liability issues.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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