The Do’s and Don’ts of Buying Vacant Land

Building a custom home is hard work that is rewarded when you move into the home of your dreams. The first step is finding the perfect lot to build on. Before you purchase a lot to build on, be aware of these do’s and don’ts.

Do work with an agent to find the land. Your real estate agent can help to research the property and make sure that you are making a safe investment. Buying vacant land is different than buying a home; work with an agent who knows what questions to ask and knows how to negotiate on your behalf.

Do have your finances in order. You will need to have spoken to a lender who can lend on bare ground, and you’ll need to know exactly what percent of cash down you’ll need in order to qualify. Your agent (me!) can give you the information of trusted lenders I know that specialize in land loans, as well as the process of then phasing into a construction loan from there.

Do find out what utilities service the area. If you are looking outside of a developed area, you need to know what utility services are available already, or if any infrastructure needs to be added. This includes both power service being ran to the home (this can cost tens of thousands depending on location), gas access (propane tank or public), water (drill a well or public) and sewer (septic or public).

Do price the neighborhood, if building in a subdivision or densely populated development. Your agent can help you with a market analysis of the surrounding homes. You don’t want your home and land cost to be vastly higher than the rest of the neighborhood.

Don't expect to finance your entire lot. Lenders often don’t lend money for vacant land, and if they do, they may only lend up to 50-70% the land value. This means a hefty chuck of change is needed for the down payment at closing. This is why it’s so important to talk to your financial advisors before you start looking.

Don't skip the soil tests. You should have the soil tested to make sure there aren’t pollutants or foreign materials buried beneath the surface. If you will have a septic sewer system, you will need a percolation test to make sure the property is fit for a septic tank. In areas where sinkholes are common, a soil test can tell you if clay layers deep in the soil make your property more susceptible to foundation issues. This is a test that can be completed during the escrow process and before closing to ensure the land is the best building site for you. To chemically treat the soil before building can be incredibly costly, a soil test is much cheaper.

Don't forget to get a survey done. Before you purchase the lot, ask to see a recent survey or have one done to validate property lines and make sure other neighbors (if any) aren’t already encroaching on the lot with access roads, fencing, or structures. Having a survey done and pins being set, also allows you to see and mark your property lines if you plan on fencing along the property line.

Don't let neighbors know of your plans. Don’t get too friendly just yet. If the land you plan to build on has been enjoyed by nearby property owners for the view, for parking, or for recreation, your plans to build may be met with resistance.

Don't assume you can have property rezoned. Make sure you know the property zoning regulations for the property. If you are in a rural area and plan to have chickens or horses, make sure that is permitted. Be wary of sellers who tell you that you can subdivide the land or build two homes on one lot, as this may not be the case. Any plans to rezone or that are not apart of the current zoning, need to be approved by the county or local municipality prior to closing to protect you as a buyer. However, buyer beware, this can be a lengthily process with possible fees involved for applications and no guarantee of approval.

Don’t rely on a drive-by. You need to walk the property, no matter the size or your plans for its use. If you are buying multiple acres, don’t assume that the topography is consistent throughout with no hidden problems. Things to check for include flood-prone areas, environmentally protected-animal dwellings, trash deposits and neighbors that are involved in activities that may affect your enjoyment of the property, such as dog kennels or shooting ranges.

But, most importantly, don’t go at it alone. Although agents don’t have involvement in the building process after the land is purchased, we can definitely be your guide in pointing you in the right direction of who we know in the industry and the process you’ll go through to get your custom dream home built! If you’ve every thought about finding land and building on it, reach out and let’s talk. I’m happy to answer any questions you have!