The Dos and Don't Of Buying Land To Build A House

The Do’s and Dont’s of Buying Land to Build A House

These are the dos and don'ts when buying land to build

Do work with a pro who knows land

A real estate agent whose sold raw land before will be able to advise you as the finer details come in.  With my experience with builders, and in the title industry, I've seen just about every raw land problem there is.  You need an agent who can do the research and due diligence before you purchase your land.

Don't Expect To Get A Loan For Raw Land

Depending on the location and the use, normally buying raw land is handled as a cash deal.  You can apply for a construction loan later to build your house, but usually you must have some cash to purchase raw land.  There are exceptions for raw land purchases, and some have owner's financing, so it's not impossible.  But, you have a much better chance with a construction loan based on the future value of the land with the improvements.

Look Around Where You Want To Purchase To Make Sure The Existing Homes Are In Line With Your Vision

You never want to be the largest home in the neighborhood.  If the home you vision building is much larger and more expensive than the existing homes, you will not be able to get your construction loan funded.

Make Sure You Get A Survey And Environmental Tests

When you buy an existing home you get a home inspection.  When you buy land you need to know that it is free from soil contamination or boundary issues.  You don’t want to buy land only to discover it cannot perk for a well, or has contaminated soil from a previous business, or has boundary problems lurking in the title. 

Hold Off Making Friends With The Neighbors Until AFTER Your Home Is Built

When you are looking to buy a home, quite often many like to chat to the neighbors to get a sense of the community and the politics. When you are buying raw land and building, you can ruffle your neighbors feathers as they become busy bodies and try to interfere with your construction project.  It's better to steer clear from them and not to discuss your building plans.

Keep Your Vision Within Existing Zoning Laws

Don’t assume you will be able to get an exception for setbacks, or ocean front rules.  It's important that you understand your land rules before designing and building your new home.

Don't Buy Land Thinking It Can Be Sub Divided

I know a buyer who wanted to buy a two acre lot, subdivide it into two one acre lots, sell the one acre, and use the cash to build her home.  The trouble is there was a 3 acre minimum in the county, and the 2 acre lot was grand fathered in.  

It's important that you have a skilled and knowledgable real estate agent representing you when you buy residential or commercial raw land for development.  And it’s important to let your agent know everything you plan to do when building your dream home.

Linda Pelton Realtor® is a real estate agent in the Annapolis, MD area.  With over 20 years of professional real estate experience, I have contacts that can help you sell or buy your home.  These include lenders, lawyers, and title companies.

If you have any questions, such as how do you appraise my home, or how do I pay you to represent me when I am a buyer, please shoot me an email, or give me a call.  I will be happy to go over all your concerns.