Buying Land to Build a Home

Building a new home

Sometimes it pays to consider purchasing land to build your new home, rather than finding an existing building. Here are the basics to consider as you contemplate the process.

Location:  This is the most important factor. Are you close to work, school, shopping, health care, and local amenities? How much privacy and tranquility will you have- how close are your neighbors?  Don’t forget to check out what the schools are rated, if you need them, and which one your child will be attending. What’s the lot’s orientation like- does it get a lot of sun? Once your home is built, what direction will the sun be rising from?

Lot Size: How big is the land and what are the boundaries? Will it be large enough to build the home you desire? What are the local setbacks and building codes?  Each town has their own set of standards for maximum coverage allowed which includes the home, any structures, driveways and walkways. Will there be enough space for a yard after construction? Are there any building code restrictions that will dictate how you can use the land?

Utilities: Are the utilities (water, gas, electric, sewer connection) already located on the property? If not, find out the cost to bring them onto the land. If there is no sewer connection available and you will need to install a septic system, have a percolation test done to see how fast the property can drain water and what type of septic system will be require.

Topography & Elevation: Is the lot already flat, do trees need to be removed? What is the cost to prepare the land for construction? Are there any drainage issues? Does it abut conservation land? Do you have any building restrictions or easements on the property?

Pricing: The cost of the land is typically 30% of the final cost of the finished home, although in some markets it can be less.

Financing: Is the builder supplying a construction package that allows you to finance both the land and the construction of the home? Some lenders will not subordinate a home loan if there is a loan on the land first, so make sure you check with your lender.

Vacant Lot: An empty lot is far easier and less expensive to build on, rather than demolishing an existing home and clearing the debris away. Make sure the land is buildable, doesn’t have poor soil and doesn’t have any flooding issues.

While there are many details to consider, when you find the right piece of property, you will be able to build a home that truly suits your tastes.