July 26, 2022
Tips for Buying Land to Build a New House
Lets face it, the housing market has experienced the lowest housing inventory ever.
As a buyer, in almost every price point, it is next to impossible to purchase without engaging in competition.
If you are looking to buy a home, choosing a different route may not be a bad idea.
Shopping for vacant land for sale is a slightly different process than shopping for an existing home, ergo it is important to be well informed and prepared.
This logic applies equally if you’re looking for rural land and if you’re looking for a vacant lot in a more urban area.
What is a vacant lot? A vacant lot is a parcel of property without any buildings on it.
A Lot is a vacant land meaning. Doing your due diligence ahead of time makes the process much easier to find the right lot for your next home to be built on.
A simple vacant land purchase agreement is where it starts.
I have a couple tips and tricks to help you. Here's what to look for when buying land to build a house.
Location, Location, Location
Location is naturally the most important characteristic with all real estate, therefore it should be the chief determining factor of where you should build your house.
In addition to the location of the lot, the position of the lot is very important as well; how it faces the road, how it slopes and where on the lot could realistically be located.
As to any consideration of your future home, the commute times to where you and your family frequent is also important.
At any rate, location undeniably impacts price, so consider school districts, shopping, neighboring attractions, the desirability of the community, and anything else that may impact the value of the dirt and if its quality vacant land.
Finding the right neighborhood is just as important as building the right home.
The neighborhood where the lot is located can have a big impact on your lifestyle, so consider neighborhood amenities, what you could possibly do for fun and, of course, your neighbors.
If there is a particular attribute you need from your new neighborhood, make that one of your top priorities while shopping for lots.
Zoning Ordinance and Land Use Restrictions
When purchasing a lot to build on, the last thing that you want is to purchase it only to find out that the single family zoning laws and/or land ordinances restrict you from building the home you’ve anticipated building.
Luckily, all of the zoning and land restriction information is public record and your agent should be able to help you find that information before contracting a vacant lot.
Do your due diligence and research not only the lot you’re looking at purchasing but research the neighboring lots as well. Determine if the restrictions of lots could deter your interest.
Private or Public Utilities
When determining a viable lot, consider how the utilities will be pulled into that lot.
It can be much more difficult if the lot is in a rural area. Rural areas often don’t have access to city water nor city sewer.
Well and septic will need to be identified, tested, and budgeted before going under contract.
Soil quality and soil stability could impact the possibility (if any) on installing a septic tank.
If within the city lines but there are no public utilities nearby, the costs of pulling those utilities to the lot vs.
installing a septic system (and digging for water) needs to be analyzed before contracting for a lot.
If you want to know more guidelines regarding utilities in the Triangle, follow these links:
- Utilities in Wake county
- Utilities in Durham County
- Utilities in Chatham County
- Utilities in Johnston County.
Each of these will breakdown the guidelines regarding utility services in these counties.
Options for a Construction to Perm Loan
Just like with buying a house, when building a home, it is ideal to start researching mortgage options early.
What is a Construction to perm loan? Construction-to-Permanent financing is a type of mortgage loan which allows the borrower to build or renovate the home.
When the construction process is completed and a CO (certificate of occupancy) is issued, the loan automatically rolls over into a traditional mortgage without having to complete another closing.
The borrower only has to pay for one set of closing costs. It can be easier to secure a construction to perm loan for partially developed land with utilities in place, but there are other loan options available for unimproved lots also.
Do you need a Realtor when building a custom home?
It is almost impossible on your own determining what to know when buying land to build on.
Regardless if you’re purchasing a resale property or if your house will be a new construction, working with the right real estate agent will simplify the process and reduce a lot of potential headache.
Don't be hesitant about interviewing multiple agents.
Know beforehand the questions to ask when buying land to build a house. Ask specific questions about the process to the agent for clarity and confirmation before choosing who to work with.
By choosing the right location, understanding the process, selecting the builder that can deliver your vision, selecting the right real estate agent and planning ahead, you can achieve the best experience for building your dream home.
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Speak to an actual person.
If you have any questions regarding real estate transactions, drop us a line.