When you’re making plans to build your dream home, one of the first things you will need to consider is land: Where do you want to live? Do you want to be in the city or the country? How much can you budget for your land purchase? What size property should you buy? Your answers to these (and other) questions will hugely impact other factors, such as the type of home you build, your happiness with your new home, and your home’s worth.
Let’s take a closer look at how you should go about finding and buying a good piece of property:
Nothing is worse than falling in love with a piece of land, only to find out it’s way out of your price range. Whether you are paying for your land with cash or have secured a loan from the bank, know your limits before looking at land. Many experts agree that, as a rule of thumb, you should not spend more than one-quarter of your overall budget on land. After all, if you blow your entire budget on the perfect piece of real estate, you won’t have any money left to build your perfect home.
First off, answer a few questions for yourself:
- Will this new home be your primary residence or a vacation home?
- Do you prefer to live in the city or the country?
- Do you want a home in an area with very hot summers? What about harsh winters?
- Do you want to live close to work?
- Do you wish to live close to family and friends, or as far away as possible?
Once you’ve answered these questions, you should have a basic idea of where you want to build your home. You can then begin looking for lots that are both in your price range and in your chosen area.
There are a number of ways to go about your search. Looking in the classified section of the newspaper is always a good place to start. These ads are often lots sold by the owner, so you can get answers directly from the source.
You may choose to look online for properties listed in your area. This is often the most efficient way to begin, as you are able to get information about many lots without spending a lot of time and money driving to each individual location.
You may choose to use a real estate agent. This is a good way of finding out about the area in which you will be living, as well as the available lots. Real agents will act as liaisons between you and the seller, which could help in the negotiating process.
If you are already familiar with the area in which you intend to build, word of mouth is another good way to learn about available land. Friends, family, and coworkers can provide a wealth of information and are usually thrilled to help with the search.
If you have time and enjoy the “thrill of the hunt,” some good, old-fashioned exploring may be just for you. Take a drive through the area. If you see properties for sale, call the owner and ask them questions. If you see land you like but don’t see any “For Sale” signs, try to find the owner and ask if he/she would be interesting in selling. It never hurts to ask!
Once you’ve found a few lots that are in your price range and look good to you, take the time to walk the lot. If you have hired a contractor or are working with a real estate agent, make sure they walk the lot with you. Take photos, find the boundary lines, look for water sources, etc. Try to imagine where your home would sit on the lot. Is it large enough to accommodate your home? How difficult would it be to gain access to the property? What would be your proximity to your neighbors? How much excavation would have to be done to accommodate your house plan?
You can gain a great deal of knowledge by exploring the land, especially if you have a contractor or real estate agent present to give you their perspective and advice.
Once you find a lot you like, research the property. Look at zoning ordinances to determine whether you will be able to build the type of home you want. Look at public records to find out the land’s appraisal value. Determine the cost to get utilities into your land.
Research whether you will need a well or a septic system. Drilling a well can become a very expensive endeavor. You should be able to determine whether a well is already in existence, and if it isn’t, where on the land you should look for water, and at what depth you should find the water.
It may be helpful to get a satellite, or aerial, photo of the property. This different view will help you determine the openness of the land, its proximity to neighbors, and its basic topographical layout. These photos are often available online.
Once you’ve found the land you want, make an offer. Remember to start low. Offering a low amount will give you plenty of room to negotiate. Realize that the first offer is rarely accepted, so be prepared for the seller to return with a counteroffer.
Avoid getting so attached to a piece of property that you become desperate and are unwilling to walk away. Remember that there are many other good lots available. If negotiations stall or collapse, it’s okay to look elsewhere.
Once an offer has been accepted, thoroughly review the contract. It is best to hire an experienced third party, such as a lawyer or title insurer, to go over the contract with you. If everything checks out, you are ready to close on the deal!
It is important that you find the right piece of land. By taking your time, planning effectively, and following the steps above, you will be well on your way to buying your own little piece of terra firma.