Explore Secluded and Urban Real Estate Opportunities with PrimeHomes
Do you crave the seclusion of country acres, a plot for your tiny home, or a buildable lot in the middle of the city? Buying land can be a more affordable path to homeownership than purchasing an existing property, provided it’s done with careful planning.
However, the process of buying land is different and often more complex than buying an existing home. Understanding how to buy land can help you determine if this is the right path for you. Here are some key questions to consider and a seven-step guide to the purchase process.
Understand Zoning Rules
How will zoning rules affect your long-term plans for the property? Zoning information is critical in determining whether you’ll be allowed to build what you want on the property. Each piece of land is zoned for specific uses such as residential, agricultural, or commercial. Local counties or cities establish these zones and the rules about what is permissible. Many cities and counties make these rules and zoning maps available online for public access.
Beyond your specific parcel, consider the immediate area and any future plans that could affect the property’s value or your ability to enjoy it. Local government agencies’ “general use” plans detail future developments over the next 5, 10, or 15 years. For instance, if you wish to build a home on a quiet rural parcel, planning documents can reveal whether future plans for a landfill, power plant, commercial zone, or new road might impact your living environment.
Check for Deed Restrictions
A deed is a legal document that transfers property ownership and includes any restrictions on property use. Deed restrictions, common in communities governed by homeowners’ associations (HOAs), must be adhered to alongside zoning rules. Common HOA-imposed deed restrictions include limits on vehicles, fences, types of pets, and home-based businesses.
If planning to purchase land in an HOA-governed area, obtain and review the association’s Covenants, Conditions, and Restrictions (CC&Rs). If you have questions or there’s no HOA, consult a real estate lawyer to obtain this information via a title search.
Determine Buildability
Can you build on the land? This seemingly obvious question requires careful consideration of several factors. Contact your local planning department for information about the parcel you’re considering. Key questions include:
- Is the land prone to hazards or in a flood zone?
- What is the land’s topography?
- How close to the property line can you build?
- Is the soil suitable for building?
A soil test or geotechnical investigation can determine if the ground can support a foundation. For rural areas without sewer connections, a percolation test can check soil drainage for a septic system.
Consider Adding Contingencies
When making an offer, consider adding contingencies that allow time to investigate the land’s suitability for your intended use. Common contingencies include zoning, septic system viability, a survey showing easements and property lines, and environmental tests. These contingencies protect your earnest money if the land doesn’t meet your needs.
Ensure Access and Utilities
Ensure the property has legal access, especially in rural areas where access might require an easement over another property. Verify the availability of utilities like water, sewer, gas, and electricity. In rural areas, connecting to utilities might involve drilling a well or installing a septic system, which can be costly.
Plan Your Purchase
How will you finance the land purchase? Not all lenders handle vacant land loans, so you might need to explore local banks or credit unions. If buying raw land, seller financing could be an option. If planning to build, consider a construction-to-permanent loan.
Steps to Buying Land
- Contact a Lender: Discuss financing options and get pre-qualified.
- Hire a Real Estate Agent: Choose an agent experienced in land sales.
- Shop for Land: Use various sources to find properties that meet your criteria.
- Research the Parcel: Evaluate zoning, setbacks, access, utilities, and soil suitability.
- Submit an Offer: Include necessary contingencies.
- Apply for a Loan: Formally apply once you know the cost.
- Close on the Purchase: Finalize the sale and secure homeowners insurance.
Conclusion
Buying land shares similarities with buying a home but requires extra diligence. Partnering with a trusted lender or advisor can guide you through the complexities of financing vacant land, especially if multiple loan products are needed to achieve your goals.
Explore ways to buy land by gathering information from online forums, local builders, and property searches in your desired area. This approach will help ensure you buy the right land for your goals.
