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How to Buy Land to Build a House: The Ultimate Guide

Bill Gassett's picture
How to Buy Land to Build a House

Tips For Buying Land

If you’re looking to buy land to build a house, you’ve come to the right place! In this article, we’ll outline everything you need to know to make the process as smooth as possible.

We'll cover everything from finding suitable land to negotiating the best deal.

Finding the right piece of land to build your dream home on can be a daunting task. Like finding a home, location should be at the top of your list. But don’t worry, we’re here to help. Here are a few tips to get you started:

First and foremost, you must ensure that the land you choose is suitable for building. This means checking the zoning laws in your area and any zoning changes that may have been made recently. You don’t want to choose land currently zoned for a different use.

Once you know the land is suitable, your next step is to find a real estate agent who can help you find exactly what you’re looking for. An experienced agent will be able to guide you through all of the available properties and make sure that you are getting a good deal.

Once you have found an appropriate piece of land, it’s time to negotiate a deal with the seller. Remember that price is only one factor when negotiating; other important factors include the size of the lot, access to utilities, and other amenities.

How Big is The Land?

Understanding how big a property you want is critical. One of the more popular questions is how many square feet in an acre of land. When looking for land to build a house, you're bound to see land described in acres. You will also see fractional acres when the land is less than one acre.

For example, a half-acre is likely to be described as .5 acres. Three-quarters of an acre would be .75 acres. If you are building a larger home, it is likely a more considerable lot will be necessary.

Is The Land Buildable?

The most vital information you need to find out when buying land to build a house is the feasibility. In other words, can you even build on the lot? A piece of land could look beautiful, but that doesn't necessarily mean it can be built on.

You need to find out if there are any restrictions with the city or town. Does the land meet zoning requirements for the type of home you would like to build? Are there any wetlands that could restrict your ability to build?

These are all questions you need answers to before moving forward.

Are There Appropriate Utilities Serving The Property?

Another critical question when purchasing land to custom build is finding out what utilities are available. Does the lot have a public sewer, or will you need to install a septic system?

If no public sewer hookup is available, you'll need to determine if a septic system can be installed. Please don't assume it's possible. It will be necessary to test the soils. Engineers do a perk and deep hole test to design a septic system. It's possible that the soils are poor and don't support the construction of a septic system.

Even if there are passing soils, they may be cost-prohibitive. Septic systems can range in price from $10,000 to over $50,000. Have you budgeted for this properly?

Is public water serving the land, or will you need to drill a well? Again, drilling a well can be a significant expense that should be planned for.

Financing a Land Purchase

Once you have determined the land is buildable and will fit your requirements, planning for financing will be essential. Do you plan on building right away, or will you hold onto the land for a while? The answer to this question will determine how to finance the project.

If you are holding off on building for a while, you'll want a land loan. A land loan allows you to finance the purchase of the land and nothing else.

On the other hand, if you plan on building immediately, a construction loan will be your best choice. With a building loan, you'll be able to roll the cost of the land purchase with the cost of constructing the house into one loan.

The construction loan lender will set up monetary draws to pay contractors as you move along. For example, when the foundation is installed, the bank will inspect to see if the work has been completed and then release funds to you.

Finding Land to Build a Home Isn't Easy

Depending on your location, you may quickly discover that finding land to build a home isn't straightforward. In some places, it is like finding a needle in a haystack. If that's the case, plan on paying a significant premium.

Your best bet when locating land to build is to work with a local real estate agent. Hire a buyer's agent to help find the type of land you desire. Sometimes agents will hear about potential land sales by word of mouth. Try to find someone connected to the community or who works with new construction.

It is more likely those real estate agents will hear about potential land sales. You can also look at some of the best websites for finding a property, and you might get lucky.

There are also excellent apps you can use on your phone to find real estate as well.

Final Thoughts

Buying land for home building takes an abundance of careful consideration. It would help if you were prepared to do more due diligence than purchasing a home. It is easy to make mistakes when buying land. Keep this in mind as you move forward, finding your dream lot. Best of luck!

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