How to Buy Land to Build Your New Custom Home
5 Top Tips for Securing the Property You Need Before Construction Begins
On the surface, buying the land you need for your custom home seems pretty straightforward. You find a plot you like in a really great location, you make sure it’s big enough for the home you want, and then you buy it. The hard work will be left up to the construction firm, since they’re the folks who have to fit your new house to the property.
But that initial impression would be woefully incorrect. In fact, you might put more time into finding the right piece of land than it actually takes to construct your eventual home. We asked our real estate team, and their rationale is simple:
If you find anything – ANYTHING – wrong with the property after you start building a house, you’ll blow out your budget, and the whole project will be ruined.
The more time you invest into choosing your plot of land before you actually buy it, the less chance you’ll run into any problems during construction. Besides, if you’re going to build your dream home on this spot, you really should want everything to be perfect.
We’ve assembled 5 core areas of concern you should look for when buying land to build a new house. Use them as your guide and surround yourself with the knowledgeable professionals we mention.
1) Determine What You Want from Your Property
This is the easiest part. Start by assembling a list of what you’d like in your custom home, and then think about what sort of property might fulfill everything on it. We recommend considering the following factors:
- Location – urban, suburban, rural, etc.
- Privacy – wooden, proximity to neighbors, type of neighborhood
- Acreage – size of home, outdoor living spaces, amenities
- Seller – government, private, broker
- Type – raw land, prior construction, prior development
It’s your custom home, so the sky should be the limit. What matters is what you want, so you need to start your property search with clear guidelines in mind.
The Expert You’ll Need: A Real Estate Agent or Broker
We recommend that you work with a savvy real estate agent or broker, specifically someone who’s an expert in the area where you want to buy property. All real estate agents are not created equal, especially when it comes to property sales. Look for an established agent with a long track record of success, as there’s a good chance this person will already have a collection of properties in mind when you come calling. You prefer working with experienced professionals for everything else in life, and that should include finding the perfect piece of land.
2. Understand the Land’s Capabilities and Limitations
After you’ve whittled down your choices, you’ll need to spend time digging into the details of each property. And by digging, we mean working with experts who can literally dig into the ground to determine its quality. Unless you’re looking to build a first-of-its-kind floating home, the house will be built on the ground. So, you should hire people to determine if the property is in good shape.
You also have to pay attention to the context of the property – where it sits in relation to other homes as well as the rules and regulations pertaining to your location. This is just a long way of saying “zoning.” Created by your local city government (as well as any relevant Homeowner’s Association), these are the laws that determine what you can and cannot do on your property both in terms of your behavior and your home’s features.
The Expert You’ll Need: A Land Surveyor
If you chose an accomplished real estate agent with a strong track record in raw land sales, they probably have a soil expert they work with on a regular basis. This person should have a good working knowledge of local soil conditions, as well as access to a laboratory to promptly test samples. You could hire an independent land surveyor, but they’d need to be from the area to ensure you’re working with someone with the local expertise you need.
The Expert You’ll Need: A Zoning Expert
This person might be a bit harder to corral, but the right real estate professional can point you in the right direction. This person will inform you on what you can and cannot do on your property. Such considerations include concepts such as:
- Exterior decor
- External buildings
- Street access
- Size of your home
- Future zoning – what city officials are planning to do with the surrounding area in five to 10 years
Whether you’re considering geography, topography, or even the politics behind the property, you need to know the capabilities and limitations of your land before you assemble your offer.
3. Examine Your Needs
So, you’ve found an excellent piece of land that serve as a superb spot for your home for years to come. It’s structurally solid and in a stellar location. Now what? Buy? Not quite. Before you go all in with the purchase, take some time to dream again. Consider whether the ideas you have for your dream home can realistically come to life on this property – no matter how perfect it might feel right now.
The Experts You’ll Need: Utilities & Other Services
Specifically, we’re referring to the perks and amenities you think you’ll want, because they will impact the utilities you need to install. This is especially pertinent if you’re building on vacant land, as your builder must determine if they can install the necessary lines for water, electrical, gas, and internet – plus getting their equipment to your plot of land. The more you can determine what you want to see in your house, the better you can confirm that the land you’re considering will meet those needs.
The Expert You’ll Need: A Design-Build Firm
A crucial part of the whole “buying land and building a house” process is finding the perfect homebuilding company. That’s right – you need to find the people who will create your home before you buy the land. You want to ensure that their services and capabilities can match your potential property, because even if you have high-quality soil, the topography might be too difficult for some builders.
And by “homebuilder,” we definitely mean a design-build firm. Such companies take care of everything for you in-house, from architecture and interiors to development, construction, exteriors, and more. Since a design-build firm is a one-stop-shop, you save time and money by not worrying about third-party contractors or delays caused by poor communication. This is the perfect solution while you’re purchasing the land because they can walk you through exactly what they can and cannot do on your proposed home site.
4. Organize Your Finances
It’s now time to buy! Good land is hard to find, especially property that matches exactly who you are and what you want to build in a custom home. But before you purchase, you must be aware of a few key facts about the land-buying process:
- It’s hard to get a full loan for raw land.
- Not all lenders even offer mortgages for vacant property.
- Some lenders want a 50% down payment, while others want only 20%.
- You will face a high interest rate if you do secure a loan.
- You need to have well above-average credit.
- Be prepared to buy in cash.
In other words, you need to have your ducks in a row, so it would help if you had someone you could trust for this process.
The Expert You’ll Need: A Financial Advisor
This person could be the expert your family always uses for financial decisions, but you can also consider the advice of your real estate agent or design-build firm. They could recommend lenders, financiers, and other professionals who specialize in buying and purchasing land. These are the people who put your finances in order so you can first buy the property you need and then take out the construction loans you need for your house.
5. Do Your Due Diligence
This is a phrase you’ll hear often from people when you’re buying land and building your luxury custom home. It’s real estate industry jargon for “pay attention to everything and don’t cut corners.” It seems so obvious, but it’s easy to circumvent the spirit and the letter of the law.
Even though we discussed them earlier, we encourage everyone to dig deeply into following key factors as you shop for the land for your new home:
- What you really and truly want in your house
Take advantage of the long spaces in between each step to examine each and every factor imaginable. Don’t take for granted that you’ve hired experts to do the work for you. Such specialists should be ready, willing, and able to educate you on what you need to know about your potential property – and if they aren’t, then find those who will.
Buying land for your custom home is a lengthy process, but it’s one that will ultimately prove rewarding the day you step into your completed house, ready to enjoy the rest of your life. By adhering to these five principles, you’re setting yourself up for domestic and financial success.