How To Buy Land To Build a House On

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Essential Steps, Important Considerations & Tips For Finding The Perfect Lot to Build Your Dream Home

Buying land to build a house on is an exciting and rewarding endeavor that allows you to create a home that perfectly suits your needs and preferences. However, it’s crucial to approach this process with careful planning and consideration to ensure that you make a wise investment. In this comprehensive guide, we will walk you through the essential steps to buying land to build a house on, along with tips for buying land to build on and information to consider to ensure you find the right property for your needs and lifestyle.

Steps To Buying Land To Build A House On

1. Define Your Budget

Before you begin your search for the perfect lot or piece of land, establish a clear budget that takes into account not only the cost of the land but also other expenses like permits, utility connections, and construction costs. The cost of the land can be upwards of 25% of your cost to build a custom home, so it’s essential to have a realistic budget for land purchases before you start shopping. Doing so enables you to maintain your overall home building budget and avoid any financial surprises along the way.

2. Hire a Real Estate Agent

Engaging the services of a qualified real estate agent with experience in land transactions can be immensely helpful. An agent who has experience specifically with buying and selling land can make the land-buying process much, much easier for you. They’ll typically have insight into zoning regulations, neighborhoods, and financing for land purchases. They can also help you identify suitable properties, negotiate the purchase, and navigate the legal aspects of buying land.

3. Determine Your Location

Choosing the right location is paramount when buying land to build a custom home on. Consider factors such as proximity to schools, workplaces, healthcare facilities, and amenities like parks and shopping centers. Think about the lifestyle you want and whether you prefer a rural, suburban, or urban setting. Additionally, research the area’s property values and potential for future growth to help you understand where things are headed in the locations you are considering.

4. Research Zoning Regulations

Understanding local zoning regulations and land-use restrictions is crucial. These regulations dictate what you can and cannot do with the land. Before making any purchase decisions, check with the local planning department to learn about zoning laws, setback requirements, ADU restrictions, and any other restrictions that might affect your building plans. 

For neighborhoods with an HOA, find out if there are any restrictions in place that impact the type of house or the style of the home that you want to build. For example, some neighborhoods may dictate the style of the homes built all need to be similar. In other areas you may not be allowed to build over a certain elevation. Learning about these regulations and restrictions before you purchase land to build on is essential to being able to build the home you want on your land.

5. Conduct a Thorough Site Inspection

Never buy land without inspecting it in person. Visit potential properties to assess factors like the topography, soil quality,  and drainage. Additionally, consider the orientation of the land, as this can affect energy efficiency and natural lighting for your future home.

A site inspection should include research into the property history and environmental tests to make sure the land you want to build on doesn’t have any hidden hazards or pitfalls that wouldn’t allow you to build on the land. Consulting with a local home builder can also help you to understand what to look for given the home plan you want to build.

Research Property History

As part of your inspection, Investigate the history of the land you’re interested in. Check for any existing easements, encroachments, or land disputes that could complicate your plans. Also, inquire about previous land uses. A property previously used for something like an auto mechanic, may have impacted the quality of the soil and therefore, make the lot too hazardous to build on.

Perform Environmental Tests

Make sure there is nothing that would prevent you from building on the land, such as a conservation easement or restriction, floodplain restrictions, or a bedrock that won’t allow you to build your custom home where you want to or will cost you significantly more to do so.

Obtain a Property Survey

A property survey is essential to determine the exact boundaries of the land and confirm the size of the parcel you’re purchasing. This survey will also help you avoid boundary disputes in the future and it will help you understand if there has been any encroachment, unintentional or otherwise, that you may need to deal with.

6. Check Utility Access

Utility access can have an impact on your ability to build on your land and the cost to build a custom home, so it’s important to understand if the land you are buying to build on is already connected to these essential utilities. If utility access for essentials like water, sewage, electricity, and gas is not already connected to the land you want to buy, find out if it’s possible to connect them and what it will take to connect to them before you purchase the land to build a house on. 

Doing this due diligence, before you buy land is going to save you from purchasing a piece of land you can’t actually hook up to essential services. Similarly, taking the time to research the cost to hook up utilities before purchasing, will also save you from a large budget surprise later on when you start to build and realize that it is going to cost more than you expected to hook up utilities for your home.

7. Consider Road Access

If you are buying a lot to build on in a pre-zoned neighborhood, road access is not likely to be a concern. However, if you are buying land to build on outside of a zoned neighborhood or that is in a rural area or larger in size, you’ll want to consider road access in your purchase decision.

When road access isn’t already in place, you will want to determine the cost to connect with existing roads as well as the cost to connect your land to the location where you want to build your house on the property. If you want to build further from your property line or there are obstacles that need to be cleared, these are things that can increase the cost of building on the land you buy.

If land is surrounded by other land parcels without road access it may be that you are unable to access the property to build for residential purposes unless you can secure an easement. 

You’ll also want to consider if the road access is via a private road that you’ll need to maintain or a municipality-maintained road, like a county road. Understanding road access and associated costs upfront will save you from unexpected costs when you start to build a home on your land.

8. Secure Financing

Once you’ve found the right piece of land, you’ll need to secure financing for the purchase. Land loans typically have higher interest rates and shorter terms than traditional home mortgages, so be prepared for this when working out your budget. You may also need to put down more than a traditional mortgage for a land loan as a lender may be less likely to finance an undeveloped land purchase. Working with an experienced lending professional can help you understand your financing options and secure the best financing for your property purchase. 

9. Negotiate the Purchase

Work with your real estate agent to negotiate the purchase price and any other terms of the sale. Be prepared to negotiate on contingencies and timelines, especially if you have specific plans for the land. At this point, you should have performed all your due diligence working with the help of your agent and other land surveying and testing professionals. You’ll also want to make sure that you’ve gone through the other important considerations below to help you make the right land purchase decision.

10. Close the Deal

Once all contingencies are met, and you’re satisfied with the land’s condition and potential, proceed to close the deal. This involves signing the legal documents, paying the agreed-upon purchase price, and transferring land ownership. Once complete, you’re one step closer to having your dream home built on your land.

Considerations & Tips For Buying Land To Build A House On

There are several other considerations you’ll want to be aware of before you buy land to build a house on. These include opportunities for financing and things to think about related to the surrounding properties and neighbors that can impact your lifestyle.

Research Incentives

In some cases there may be financial Incentives from local governments and municipalities for areas that have been damaged, are in need of development, or are in important conservation areas. These incentives are likely more of a consideration for those who want to build right away, rather than purchasing the land to hold or build on in the future as these incentives can be time-based.

In Idaho, there are incentives such as tax incentives or grants for developing land with respect to wildlife and conservation efforts. For more information take a look at this list conservation-related incentives by state. These will likely come with implications for how you use your land, but if they are compatible with how you want to use your land, may be beneficial in financing your purchase or custom home build.

Consider the Neighborhood

The neighborhood and neighbors in the area you are buying land to build on can have a significant impact on your lifestyle, the home you build, and the value of your property. Think about the style of house you’d like to build and the style and value of the homes in the same neighborhood. If the home you want to build is much larger than other area homes, it may make selling your home in the future more of a challenge.

Before you purchase land to build on, find out how neighbors use their properties and how adjacent properties are zoned. For example, if your neighbors operate a shop with heavy construction vehicles going in and out regularly, noise may negatively impact your property if you are looking for a more peaceful area to build your home.

Similarly, if one of the neighboring properties is raising livestock commercially, there may be undesirable smells that make their way onto your property. These are elements you want to consider when buying land to build a house on.

Don’t Count On Changing The Zoning

When looking at zoning for the land you want to purchase to build on, it can be tempting to think you can simply change the current zoning. Changing zoning restrictions isn’t something you should count on. It can be a complicated and time consuming process, and it may not always work out. Rather than run the risk of not being able to use your land how you’d like, it’s better to find a property that is already zoned for the use you need.

Find Out About Future Development

Another important consideration is to research any planned development. Future development in the area can have a huge impact on your property. For example, if you buy property for the views but there is a development planned that will eventually block your views you’d probably want to know this beforehand. Taking this extra step to find out what development plans may look like can be really beneficial in finding the right piece of land to build on.

Consider Alternative Options 

If you are having trouble finding land to build a house on that meets all your needs, it may be worthwhile to consider buying a lot with a house already on it. Once you’ve purchased the lot, you can tear down and rebuild your custom home on it. This route provides you with options in neighborhoods that might not have empty lots available. 

Another option to consider is looking for homes that are on large lots that could potentially be subdivided. This requires that the current property owner is willing to subdivide and sell you the subdivided piece of land. If options are scarce or non-existent where you’d like to live, it may be worth looking into.

Conclusion

Buying land to build a house on is a significant investment that requires careful planning and research. By following these steps and working with professionals like real estate agents, surveyors, and lawyers, you can make informed decisions and embark on your journey to build the perfect home that reflects your vision and lifestyle. Remember that patience and due diligence are key when buying land to build on. Both can save you from costly mistakes in the long run.

If you are looking for land to build a home on in southwest Idaho, we’d be happy to help you in your search. Contact us for a free consultation to find out more about building a home on your land.