I took another leap in my understanding of an LA land purchase over the last week. After identifying four properties that I thought could work for me. I visited each, climbed them and took pictures. Two were better than the others, and I felt I was ready to take the next step. After contacting a realtor, Sabina Yi at LA Land Man (don't let the cheesy logo fool you, they are Keller Williams Beverly Hills, and have been extremely knowledgeable and helpful in answering all my dumb questions), they were able to get me all of the documents that already existed on the properties. One only had a survey and elevation map, the other had the survey, elevation map, site plans, geology report, soil report and a bunch of pre-permit work done. Price-wise there was about a 100K difference between the properties. This made sense given the amount of information available on the one parcel, along with its views. A basic survey alone could run over 2K, so add in all the other documentation available, the value was probably close to 25K of work already done. My biggest problem was figuring out what it all meant. There were close to 100 pages of reports, plans, etc. for that one property - some dating back 15 years - and much of it seemed to raise issues that looked resolved.
This is where a realtor is not much help. They sell, can give you advice based on location and market conditions, and are usually a great negotiation partner, but it really is up to you for any investigation needed to feel good about what you're thinking of purchasing. I was aware of agencies that help expedite planning and permits, but I asked my realtor if there were any that helped people research properties – they had several recommendations. This service, like everything else in this process, is not cheap. It was $2,500 for a 'due diligence report' on each property I was interested in. Was it worth it? Well kind of...
The property that was my number one (the more expensive one, of course), that had all that documentation and planning already done on it, actually fell to the number two spot after I received the report back (each report took about a week). So beyond analyzing the current documentation, other things were discovered. This new information included the town requiring the owner to widen the road by 2 feet if they are to build on the site, installing a fire hydrant on the street, a restriction on how much soil could be removed from the site, and a large number of objections filed from neighbors of the proposed plan. None of these were show stoppers, but given that this piece of land was already near the top of my budget - it seemed like all the extras I'd be responsible for and some opposition might add substantially to the cost and overall timing of my project.
By comparison the other property, which had almost no documentation, came back fairly clean in its report, with the majority of restrictions due to its proximity to Mulholland Drive and having to conform to the Mulholland Scenic Parkway Specific Plan (that was new information for me). With all this in hand, I decided to pull the trigger on this property and put in an offer.
Was hiring the research firm worth it? For the 5K - I was able to make a decision between the two properties, it did surface information I was unaware of, and I had a much better sense of what was needed going forward. However, I don't think I'd use this service again if the current property doesn't work out. As I learn more, talk to more people, make time for on-line research and get comfortable with the process, I think I can reach a level of confidence in a property without incurring that cost.