What to Know Before Buying Land

Written by Posted On Tuesday, 16 May 2023 10:11
Things to know about buying land Things to know about buying land

Things to Research Before Making a Land Purchase

If you buy a building lot to construct your dream home, you must ensure you choose the right land. When buying a building lot, there are more things to know before buying land than you might expect. If you fail to find out as much as you should about the land, your home could cost more to build than expected.

Most people know the basics, like how big is an acre, but many other facts besides land size need to be investigated.

Before buying land, we will look at what to research so you don't make these mistakes.

How Will You Finance The Land?

Like buying a home, you will want your finances in order before looking at land. Do you plan to build immediately or hold the land for a while? The answer to this question will dictate the type of financing you choose.

A construction loan will be best if you build shortly after your purchase. You'll be able to finance the land acquisition combined with the cost to build the home in one loan.

A land loan will be a better choice when buying and holding. The owner of the land will also want a mortgage pre-approval to know you're qualified to purchase.

Location is Always Vital

Location is always important for property, which is a big consideration when buying a building lot.

There are many factors to consider, like the school district, proximity to friends, family, and your job, the size of the lot, and, of course, the cost. Prioritize the most important factors, and be ready to compromise on some of the others.

Can The Land Be Built On?

Even if you think you've found the right lot, it might not be as suitable as it appears. The soil conditions might mean more money needs to be spent on excavation, or the ground might settle after your home has been built, damaging the structure.

The soils must accommodate a septic system if no public sewer system is available.

Developed or Undeveloped?

There is a choice between developed and undeveloped land when looking for a lot to build on. The undeveloped land won’t have utilities available, and you might need to connect it to the road. A developed lot will have these things already, making it easier to build on, though it will cost more.

Whether the land is developed, you should know what utilities are available. Is water, gas, power, and cable available already, or will you have the expense of connecting them to the lot?

If the land is rural, water might not be available, meaning a well must be drilled and a septic tank installed.

What Permits Are Needed?

You will need permits to build your home, and you should find out about these before buying the lot. Some areas will have minimal requirements, though others will require a permit for everything you can think of.

Check with the building department for their permit requirements and the costs.

What Does The Zoning Allow?

You must determine what zoning rules your home must follow on the lot you want to buy. There might be restrictions on how far away from the property line the home has to be situated. There could be environmental issues that will affect placement on the lot as well.

You also want to look at the surrounding lots and find out about plans for using that land. Your real estate agent can find out about plans that could affect the value of your home or your experience living in it.

Are There Any Restrictive Covenants?

The land could have restrictive covenants that hold you to certain rules when building a home. These covenants could enforce rules about many different aspects of the home.

It might mean a limit on the maximum fence height, or the home might have to be a certain type of construction. It could limit home businesses or prevent home rentals as well.

If there are covenants on the title, you must find out how they will affect your project before buying the lot.

What Surveys Are Necessary?

During construction, the boundaries must be clear to ensure the home is in the right place. Iron pins should be marking the corners, but a property survey should provide the information if these can't be located. This might need to be updated to ensure the boundaries are where they are expected.

Are There Easements and Liens?

If there are liens or easements on the land, you will want to know about it.

An easement is a right someone else might have to use your property. This could be an easement in gross, allowing a utility company to access the property to service gas or power lines. Appurtenant easements could allow your neighbor to use your property for access to theirs.

A lien is a claim against the property. The previous owner could have an unpaid debt resulting in a lien on the title. This will normally need to be resolved before the land can be purchased.

What Are The Development Costs

When you know more about the lot you want to buy, the costs to develop your home will be clearer. This can help you decide between similar lots if one will be more costly to build on.

Final Thoughts on Buying Land

There is a more involved process when buying land compared to a home. Make sure you have real estate professionals assisting each step of the way.

It is easy to make mistakes when making a land purchase.

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