Unimproved Land in Real Estate

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Unimproved land in real estate is defined as land that does not have certain basic required services necessary to utilize it for other purposes. These include electricity, telephone, street access, or water available.

When listed in multiple listing services, generally the absence of electricity and telephone will cause the property to be listed as unimproved, even though there is road or street service to it.

Unimproved is Open to Interpretation

While the definition seems clear, there are different things potential buyers value in looking for raw land properties. Unimproved almost always means that there isn't an electric meter, phone box or natural gas meter on the property. However, that's a tight definition.

How far away are those things? In my Taos, NM real estate business, there was a lot of unimproved high desert and alpine land listed in two counties. My largest sale was a full section, 640 acres. That parcel was definitely unimproved by any definition. There wasn't even a public road into the property. Instead, a permit was acquired to use a U.S. Forest Service road and gate. There was no electricity, gas or phone anywhere within a reasonable distance to any of the property boundaries.

How we listed property was important, as listing it as unimproved definitely cut it out of all searches by people only wanting parcels with utilities at the property line.

However, many times they were available within a few hundred yards and there were easements in place to allow them to be brought to the property line. There was a field in our MLS for distance to utilities, which helped. I always advised my clients to search all improved and unimproved listings and check this field.

Mistakes by listing agents usually involve not getting all of the information about the land.  Also, there are at times survey mistakes.  In one case, the wrong survey was attached to the listing for a 5 acre parcel.  It was the prior survey of a much larger parcel out of which the one for sale was subdivided.  The buyer got the right survey during the transaction process, but it was embarrassing for the agent.

Another characteristic of that market was that many remote land listings would stay on the market for years. Days on Market were often between 1,000 and 2,000. It was a chore and a four wheel drive trip, but the listing agent really needed to go out and check the property at least once a year to see if:

  • there were any squatters living there in an old bus.
  • any signs you placed were still there and not shot full of holes.
  • there wasn't illegal full-blown dumping going on.

The owners are almost always out of state, and once they decided to list the property, they almost never visited it again.

Considerations in Buying and Selling Unimproved Land

I can't speak to every market, but in mine there were extra buyer concerns when shopping for unimproved land.

  • Squatters and Adverse Possession:  in most states someone can occupy land against the interests of the owner and without their knowledge and, after a specific period of time, actually take possession of the land legally.  Any buyer wants to do a thorough inspection of all of the property to make sure there are no squatters.
  • Can it be insured for title:  in my market there were large areas with dubious title history that could not get title insurance.  Before even executing a contract it's a good idea to check with a title company with the legal description.
  • How will you get utilities to the property line:  if you ever want to use the land for more than weekend RV or tent camping, you'll at some point want to bring in utilities.  Are there easements in place, or can you get them for the future?

Unimproved land can be a great investment, but do your homework before a purchase.