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Buying land to build a house is an exciting endeavor. You’ll be finally able to construct the home of your dreams and design it exactly how you want.
However, the process isn’t as simple as you might think. The raw land you choose needs to meet certain specifications. After all, it would be the base for the entire building process.
Whether you’re looking for a remote location with scenic views or after a lot right in the center of the city bustle, there are several essential things to consider. In today’s read, we’re sharing the top five tips you should have in mind when shopping for land.
Determine How Much Land You Need
When buying land to build a house within the city, it’s most likely that you will encounter some restrictions regarding the type and size of house you can build.
Be sure to check whether the parcel you’re eyeing will be suitable for building your desired home. It’s best to contact the local zoning office or HOA.
Moreover, before buying an oversized lot, consider whether you’ll have the time and resources to maintain it. Keep in mind that you’ll have to mow and water the grass regularly and maintain the landscape. This can be time consuming and might even require special machinery.
You Might Need to Pay for the Parcel of Land in Cash
Before starting to look for lots for sale, you should know that mortgage lenders are more reluctant to loan money for undeveloped land than for an existing house.
The reason behind this is that there are many unknown issues regarding vacant land. Therefore, be prepared that you might need to pay for the property in cash.
On the plus side, if you pay for the land outright, you could get a construction loan to build your house as the lender would consider your land ownership a down payment.
Hire a Real Estate Agent Before Making an Offer
You can certainly look for the right location and property on your own. Search the online land listings, drive around, or check land auctions. However, hire a real estate agent before making an offer on the piece of land. Working with a real estate professional will give you particular security.
For instance, you might find the plot of land you’ve been looking for so long, and you’re ready to purchase it. However, instead of bidding on it, call a real agent to ask them about the tract of land.
They would inform you about all the essential details, such as whether it’s located in a flood zone, the type of building restrictions in place, and whether there’s a utility connection in the area. Moreover, the agent could write up an offer that allows you to back out in case you’re not permitted to build a house or secure a construction loan.
Research the Value of the Homes in Your Desired Neighborhood
Did you know that the value of the house you’re going to build could suffer if the homes in its surrounding are of lesser value? This is because the house you own will have similar or lesser value than the houses in the neighborhood.
So, if your home’s construction project costs $300,000 to build but the average value of the nearby homes is $150,000, you might find it hard to sell your house for its actual worth.
But, on the other hand, if the actual construction cost for the house is $300,000 and surrounding houses are valued at $800,000, you’ll likely be able to sell it for a better price and make a profit.
Learn the Potential Drawbacks of the Land
Learning all about the potential drawbacks of the desired land is crucial. Finding the perfect plot won’t mean much to you if the zoning prohibits you from obtaining a building permit or constructing a driveway that connects you to the road.
Hiring a real estate agent could help you in the process but make sure to do your due diligence too. Find out as much information about zoning restrictions and local building regulations as possible before investing.
Investing in a real estate property is a big step. However, by carefully considering and utilizing the tips we’ve outlined here, you can make the best possible land purchase and start building your custom house confidently.
In the end, buying land to build a house will turn out to be the most challenging but at the same time most gratifying experience of your life.