7 articles involving tips and important information to know
What to know when buying land, especially when you’re hoping to build a home on the property.
Key Takeaways:
- When purchasing vacant land, it’s important to hire a real estate agent who has experience negotiating land transactions.
- Most land deals are done in cash, so make sure you’re financially prepared before purchase.
- Consider access to running water, electricity and sewers, and don’t assume you can get the property rezoned (reclassifying land into a new zone with different restrictions and land-use rights).
Here are the do's and don'ts of buying vacant land:
- Do work with an agent to find the land.
- Working with a real estate agent when you purchase a home helps you navigate the finer details like negotiations, due diligence and closing the deal. But when you’re purchasing land, it's important to hire an agent who has extensive experience negotiating land deals specifically.
- Use an agent who actually has a track record of representing both buyers and sellers for land transactions.
- Don’t rely 100% on your agent – ask questions and do your own homework as well.
- Do have your finances in order.
- Do consider the value of homes in the neighborhood.
- Do take utilities and road access into account.
- It’s easy to take for granted access to running water, electricity and sewers when you’re buying an existing house, but with vacant land these are not always a given.
- Depending on how developed the area is around the land, you want to know if it’s going to cost money for infrastructure to be run to that land or if it’s already serviced.
- Do consider incentives.
- Don't expect to get a loan.
- Don't skip the environmental tests.
- Similar to a home inspection and background research on a house, a plot of land needs to be subjected to tests and checks to ensure you know what you’re buying and that you’ll be able to build on it.
- Environmental tests check the soil for contamination from previous use. The site of a former gas station or auto body shop is more likely to have contaminated soil, for example, and residential homes can’t be built there.
- The land's potential for flooding or its poor soil conditions for building are also a concern. These reports should be interpreted by a professional
- Don't forget the survey.
- You’ll also want to have a surveyor look at your property to identify the boundaries. Especially if the land is in a neighborhood and has been vacant for years, neighbors may have encroached beyond the property lines, intentionally or not.
- It’s best to buy land that already has a completed survey, geology and soils report
- Don't talk to the neighbors.
- discussing your plans to build on a vacant lot can easily lead to organized opposition
- it’s common for neighbors who are used to having raw land near their homes to get upset when the status quo is about change and seek to keep you from building
- Don't assume you can have property rezoned.
- But before you become a landowner, be sure to thoroughly research the plot of land to ensure the zoning, utility access and building code for the area will allow you to construct the property you want.
...learn about zoning, environmental, sewer, and other issues unique to this type of purchase
Before purchasing vacant land, you'll probably want to check into:
- What services will be available to you locally, including government entities
- Whether your plans will be incompatible with other local property uses
- What building permits you'll need, and
- Whether your plans will be limited by environmental concerns such as endangered species.
- Start by doing some information-gathering on the area where the land is located
- Is the local government well run, or will it make your life difficult when you need permits or variances
- What about nearby shops, parks, grocery stores, ...
- Investigate the immediate vicinity of the vacant land for concerns like landfills, noisy highways, or industrial uses.
- Maps and aerial surveys prepared by FEMA or Google or found on the town clerk's website can be helpful
- you might find that the plot is near conservation land or other protected resources, meaning you'll enjoy green space around you far into the future
You'll want to know whether you or your general contractor will need to obtain permits or approvals other than the building permit itself, most likely for:
- Sewer service. Many towns and villages provide sewer service. Ask the town clerk or local board of health. If a connection is available, how expensive will it be? If the property is far from the nearest sewer line, it might be more cost effective to install a private septic system. State and local health codes will likely govern the required soil quality, height of ground water, and distance from lot lines. If the property seller hasn't already pulled a permit for an engineered septic system, make your purchase contingent on having soils testing done and being satisfied with the results.
- Water. Public water hookups might also require a permit, as might private wells. Many towns require that private wells—even those on neighboring properties—be located a minimum distance from a private septic system
- Zoning. Virtually all towns have zoning bylaws regulating the kinds of uses permitted on vacant land, including how the lot can be developed. If building a home, make sure that your land is zoned residential! Zoning also regulates setbacks from lot lines and similar issues affecting home design, like the maximum length of a driveway
- Subdivisions. If the land is within an established subdivision, additional laws and regulations may apply. Speak with the town clerk about whether the subdivision was properly approved and to check that your land is actually on a public road. Check the subdivision plans on file for rules governing detention ponds and use of common rights of way within the subdivision.
- Regulated water resources. Building in or near wetlands, rivers and streams, ponds and lakes, and coastlines is governed by a complicated net of overlapping federal, state, and local laws. These can severely restrict the area available for building. If your land might contain protected water resources, have an engineer evaluate it.
- Hazardous materials. If, for example, your land is the former site of a large industrial plant, have an engineer perform preliminary research for you.
- Possible title issues. If you go ahead and buy, your attorney (or the lender's) will examine the land's ownership history. Even so, you can anticipate title issues by looking at the local paper or talking to neighbors. Are there rights of way or other easements that cross the property? Has the property been foreclosed on? Has the town begun proceedings to collect back taxes? Issues like this can often be resolved before or at the closing, but it can't hurt to know what to anticipate.
Both the federal and states' governments protect a number of endangered species and their habitats. Information from the U.S. Fish and Wildlife Service can help you locate federally protected endangered species near you, and explain the kinds of protections that the government will enforce...the U.S. government offers grant or loan programs to finance protection of endangered species and their environments during new construction. Many states protect a longer list of endangered species than the feds. Check your state's maps and lists.
Almost all government agencies enforce their endangered species regulations by granting or denying permits that are specific to proposed construction or other activity. If your land is home to an endangered species, you might need to obtain one or more permits before going forward.
It's wise to get legal and other professional help with this process. Even after the land sale has gone through, an attorney might be needed, to make sure you don't miss something important regarding:
- What title issues must be kept in mind during planning and building? Prior to closing escrow, you should have reviewed the title insurance preliminary report for potential issues impacting your plans. The attorney can help you revisit that report and further evaluate what kind of recorded restrictions affect the lot, such as environmental or historical designations.
- Whether previous land owners tried to build on the property. By reviewing your land's files at the local building and planning office, your attorney can find out whether previous owners attempted to build, and if so, why their plans weren't successful. Your attorney might also check with local courts for lawsuits involving the property or its neighbors.
Location
Location can be one of the most important factors in considering land value
Utilities
Are utilities, septic systems, or any wells available to serve the property? Although the cost of putting in utilities such as electricity varies depending on location, you can bet it's going to be somewhat expensive. So whether or not the property already has these modern-day necessities can affect the value considerably
Zoning restrictions
The more freedom a buyer has to develop their land, the greater the potential value. Local governments designate various zones for different uses of land. It's very important to know what the land can be used for. What's the soil like? Is it agricultural land that could be used for farming? Can you use it as hunting land or some type of recreational activity? Are there mineral commodities that can be mined?
Curb appeal
What do the neighboring properties look like?
Comparables
One of the most frequently used tools in determining the value of real estate is to find the comparables. It’s called the sales comparison approach in the appraisal field. This refers to the land parcels which were sold recently that are similar to your land parcel.
Comps are relatively easy to find when it comes to homes but can be challenging when dealing with land and other property types. LandSearch is an excellent resource to use when researching land comps
Flood zones
Whether or not land is situated in a flood zone
Property access
Accessibility is a vital element in valuing land. Does the lot have a way to get to it, and how easy is it? Are there any easements associated with the property? Clearing land and having access put in can get expensive
Availability
Supply and demand. Land is no different. If there's a large amount of land for sale in the region, it may be worth less than if available land is sparse
Topography
Topography is the shape of the land. The terrain of the land can dictate what the land can be used for just like zoning laws and deed restrictions
Timber or valuable minerals
Timber is an extremely valuable resource depending on the species, size, quality, growing conditions, and the local market. When valuing land, make sure to find out if it's considered timberland and what type of timber exists on the property. Take an accurate inventory along with finding out what the local market looks like
Easements
There are several types of easements that can exist on a property, but to keep it simple, they can grant someone else access through your property to get to theirs, or restrict what you're allowed to do with it
Soil composition
The type of soil that's prevalent on a tract of land can be a huge factor in determining what you can use the land for and as a result, affect the value significantly
Water features
In an effort to find the land value, pay close attention to whether or not there is a water feature on the property
A common mistake land buyers make is being unprepared. Knowledge is power. Researching a property by answering these questions can help ensure you make a good investment.
There are potential problems to watch out for and scenarios to consider before making an offer...it’s crucial to investigate and research the property before you buy it to try to avoid any surprise issues from arising in the future
These questions are general in nature and are designed to get you off to a good start as part of your due diligence process. The answers to some questions may warrant a lower offer, while the answers to others could lead to walking away from the deal.
A common mistake land buyers make is they enter into the process unprepared. Doing research on the property by answering the following questions can help ensure you make a good investment:
- Is the lot buildable?
- Has the property been surveyed and are boundaries clearly marked?
- Are utilities, septic systems, or any wells available to serve the property?
- How is the property zoned?
- Is it governed by a Homeowner’s Association?
- How is the property accessed? Is there access to a public road?
- Are there water features on the property such as rivers, streams, or lakes?
- Are the mineral, water, and timber rights conveyed with the property?
- Are there any liens, protective covenants, or deed restrictions?
- What is the topography of the property?
- Is the lot located in a flood zone?
- How is drainage on the property? Has a perc test been performed?
- Are there health, safety, or environmental hazards linked to the land?
- Are there any easements on the property?
- How was the property previously used?
- How do the surrounding properties look? Are there development plans?
- How soon can the current landowner close the deal?
- What are the annual property taxes?
- Is a clear title available in the form of a General Warranty Deed?
There will be other questions you’ll want to ask depending on what use you have in mind when buying land for sale. A key ingredient in a good investment is preparation and being a well-informed buyer. Knowledge is power. As you increase your knowledge of the property you're interested in, you decrease the amount of risk associated with it and can feel reasonably secure about your investment.
GREAT ARTICLE!
Unless you're content to use an outhouse, you'll want to find out whether a sewer system is available for the property, or whether you'll need to install one.
Question one before buying a vacant plot of land is whether it is already served by a sewer. If not, you'll need a septic system. The easiest way to find out about sewer access is to ask the seller of the land or a real estate agent, if one is involved. If there's no one immediately available to ask, you can look for clues on your own.
If you know that municipal water is available on the property, chances are the property is also served by a sewer system. Sewer systems typically exist in areas of high population densities.
On the other hand, if the land must rely on a well for water, or if it's outside of city limits in a rural or less populated area, you'll probably need to install a septic system (which handles the waste water from your property only).
If the piece of property is served by a sewer system, things are pretty simple. Your main requirement as the land owner is to construct the connection from the new home to the main system. (In fact, you probably wouldn't be allowed to "go rogue" and construct your own septic, or alternative wastewater treatment system, even if you wanted to.)
An experienced general contractor or plumber should be able to give you an estimate of the time and expense involved in following through on this. Commonly, the cost is somewhat less than what's required to construct a conventional septic system (and much less than to construct an alternative septic system, described further below).
Additionally, you'll probably need to pay a connection fee to your sewer service provider (usually the same entity that also provides water service to the property). Once connected, the provider will charge a periodic sewer usage fee, most likely along with your monthly water bill. You can find out the amount charged for sewer connection fees and get an idea of monthly sewer service costs by inquiring with the service provider, the property's seller, or an involved real estate agent.
If a sewer system is available, local regulations might require you to pay the sewer connection fees before being issued a building permit. Typical regulations also require that a professional contractor or plumber install the connection.
If you must install a septic system (because no sewer system serves the land), this will require more time and expense. Because failing septics are a major source of water pollution (due to bacteria infiltrating nearby water supplies), almost all land is subject to state and local laws governing installation and maintenance of septic systems.
You will need to ensure that your installation complies with applicable laws. Step one is most likely to obtain a septic permit, probably from the county in which the land is located. A site evaluation is usually required before a septic permit can be issued. Most site evaluations must include a topography assessment, as well as a soils test (including a percolation or "perc" test). These can be completed by the local health department or a licensed site evaluator or engineering firm.
The results of the site evaluation will determine whether you can build a conventional (gravity-fed) septic system or whether an alternative system will be required. Alternative septic systems are essentially modifications of conventional septic systems, specifically engineered to work with the soils and topography found on a particular property.
If the results of the site evaluation show that your land is unsuitable for a conventional septic system, an engineer or septic design professional must design an alternative system. For example, if the property has a high water table, a sand or mound system might be recommended and designed, or if soil permeability is an issue, a pump system might be an alternative.
Alternative systems can sometimes cost many times more than a conventional one. This is on top of the cost of hiring the professional to perform or review a site evaluation and draft the septic design.
Septic regulations also typically govern where on the property the septic system can be installed. Septic systems must be set back a certain distance from wells and other water sources, as well as from roads, driveways, buildings, other improvements, and property lines.
These restrictions can severely impact where you can build your home. You must ensure that there will be enough room to install the septic system in a suitable location, in addition to a well (if necessary), and still have room to build the home you desire in an acceptable location.
Since the results of a site evaluation can greatly impact the value of the property, it's wise to condition the purchase of any vacant land without sewer service on receiving an acceptable site evaluation. You'll want the ability to negotiate the purchase price, or even to cancel the contract, if the results of the site evaluation are unacceptable. An experienced real estate attorney should be able to assist you with creating such a contingency in your purchase contract.
Before you buy, determine whether the land is served by a public water source or a community well, or whether you'll need to dig your own well.
If the property you're considering is inside city limits, it will probably have access to public water. That means water from a central location, distributed through a system of water lines, and accessible for public use. Public water is commonly provided by a governmental entity or water company.
To find out whether public water is available, look at the details of the sales listing for the land or talk to the seller or a real estate agent.
If your research shows that public water is available to the land, your next step is to contact the local water provider or building department and ask about:
- The location of the main water line. (If it's far away, you might need a lengthy, more costly connection.)
- What procedures and permits you'll need to follow or obtain in order to connect to the main line
- Whether a connection fee is necessary, and if so, how much it is (connection fees can range from hundreds to thousands of dollars, depending on the location).
- What regulations and requirements govern new connections
- Whether you must purchase a water meter and, if so, at what cost
...an area of high population density, such as a suburb or a particular type of planned developments... NOT APPLICABLE, I'M ONLY INTERESTED IN RURAL
If a property has no access to a public or community water source, you'll have to dig an individual well to get running water for the land. The cost and success of doing so varies greatly, depending on the location of the property and the availability and location of underground water on the land.
Before you buy a piece of land that requires digging an individual well, find out as much information as you can about wells in the area. Contact a licensed well driller (or the county building department) to determine:
- What state and local regulations govern or restrict individual wells.
- The probability of finding a reliable, sustainable water supply.
- The depth and cost of a typical well in the area (a deeper well will cost more to drill).
- What types of permits are required, and
- Approximately how long the entire process might take.
You'll want to find out what regulations might affect a well once it's up and running. For example, due to water rights issues, many areas regulate the amount of water someone can remove from a well. How the well water is used might also be restricted.
In some areas, well water can be used only for household purposes. Many areas also require owners to perform periodic water monitoring to ensure good water quality.
Land use describes the relationship between people and land. It’s what it sounds like — how a piece of land is being used. A more specific land use definition is the characterization of actions people apply to land for various purposes.
If you’re a land buyer and you find the “perfect” property, it’s of the utmost importance to make sure you can do what you want with it.
Understanding how a parcel of land was used in the past is a pretty good indicator of how it’ll be used in the future. Also, how a property is being used will often tell you how adjacent properties are and will be used.
The major types of land use today are agricultural, commercial, recreational, residential, and transport.
- Agricultural land use: e.g., Standard crop farms, Ranches,
Homesteads, Hobby farms, Chicken Farms, Vineyards - Recreational land use: e.g., Hunting land, Ranches, Horse properties,
Camps, Fishing properties, ATV land - Commercial land use: Retail, Restaurants, Hotels, Offices, Factories, Storage, Hospitals, Industrial, Warehouses
- Residential land use: Single-family homes, Apartment complexes, Condos, Cabins, Tiny houses, Mobile homes,
- Mixed land use:
Residential property with a small business, Commercial property with a house, Hunting land with tillable acreage, Ranches with a home, farmland, and hunting opportunities
Vacant land is a type of real estate with no structures of significant value. It's also referred to as unimproved, undeveloped, or raw land. It has the potential to be a versatile, hands-off asset and often appreciates in value. Some vacant lots are buildable while others aren't depending on the topography and land use and zoning laws.
Although it’s sometimes called raw or undeveloped land, vacant land can be distinguishable from these. Vacant land may be improved with attributes like utilities, driveways, or septic and still be called vacant.
Undeveloped land is real estate without any improvements whatsoever. So this means no buildings, driveways, or public utilities. In other words, it lacks development of any kind. It’s nature in its rawest form without significant intervention from people. As stated above, it tends to appreciate in value due to limited supply and growing demand.
This type of land tends to be the most inexpensive.
ARTICLE: Steps in Sales Comparison Approach
...a valuation method to determine what your home/land is worth in the current market. This step happens before your home is officially listed for sale and helps ensure it’s listed for the right amount. Later in the buying and selling process, lenders require appraisals.
There are several methods that agents and appraisers can use to determine the value of a home. One of the most common is the sales comparison approach, which compares the home in question to similar homes that have recently sold.
The first step in the sales comparison approach is finding comparable homes that have recently sold, are currently under contract, or are listed on the market.
To more accurately value a home, it’s important to make adjustments based on differences between the home being valued and the comparables.
A weighted analysis allows agents and appraisers to determine a home’s value based on a weighted average of the comparable homes.
This article does not apply to me, more for agents, and it is about homes not raw land.