If you find yourself in a market where home availability is sparse, maybe buying land is a good option for you. There are many reasons why you should, or could, consider land. Among them is that you may find undeveloped land in an area you most desire offers options that you can build upon when homes in the same area are just not for sale.
Rather than going into seek mode to find a home that already exists and matches the vision in their mind’s eye, many people who enjoy the planning process find that it is more fulfilling to work through the details of building their dream home from the ground up.
Not that one option is better than the other mind you. It’s just that buying land and building on it is an option that oftentimes not considered. Realtors/Firms will be more than willing to shift from house hunting to identifying that perfect piece of land for you if you just ask.
Let’s assume that you have opted to begin with a land purchase for the purpose of building. This brings me our 5 quick questions when buying land. When buying land there are many things to consider, but in my opinion, there are five things I would consider to be the top of the list.
Buying Land? Think Location, Location, Location.
- Is the intent for the land to be your forever home or an investment?
- If it is a forever home, you will not be so worried about about resale value.
- If it is ultimately to be sold, then consider the amenities and overall desirability.
- Is the property in a location where your planned home will be the largest or the smallest? The largest home in a neighborhood is often devalued because of the other homes in the neighborhood. The opposite is true for the smallest home in the neighborhood
- A home too large for the area will be worth less than comparable properties elsewhere. You can overbuild for the neighborhood. The average home value in the neighborhood will have an adverse affect on the property if you overbuild for the neighborhood (unless the rest of the neighborhood follows suit).
- A home that is smaller or less detailed than the other homes in the area will potentially be worth more than comparable properties elsewhere because of the value of the neighborhood but may lack desirability long term. It may be purchased with the intent of tear-down and rebuild or for major renovation. You will be looking for a buyer that is willing to invest in their purchase further.
- Does the property exist in a flood zone? Locally there are many rivers and streams on which people find it desirable to live.
- If it does, you may want to purchase additional flood insurance, and if it is financed, you will be required to pay for the coverage.
- You may consider a higher elevation near a river, with a view of a river or stream that doesn’t require flood insurance.
- How buildable is the property and what affect could the property have on building costs?
- Will it require a more involved foundation, how difficult will it be to create a driveway etc.? (Height, length, and slope can increase cost)
- Is there a location for a well?
- How difficult will it be to install a septic system?
- Is water and septic connections available from a municipality or provided by the subdivision?
- What restrictions, setbacks, and easements apply?
- Do these things help or hinder your planned use?
- If there is an easement, does it exist on the property for someone to use or is it to allow access to your property?
These are a few questions one must consider when considering the land/build option when buying real estate. In the end, the opportunity to have the view, acerage, privacy, and custom home design can outweigh the extra effort the process requires.
In our next article we will discuss the pros and cons of buying an existing home and renovating vs. the process of buying land and building your dream home from scratch!
In the meantime, feel free to reach out to any of our expert real estate brokers to help walk you through more of the details to consider and help make this decision.