Every parcel of land is unique. It takes time, effort, and exlporation to properly assess the pros and cons of each potential purchase. These are highlights from the process we use when evaluating a land purchase for a new home build.

Don’t start house plans before purchasing the land

People are understandably excited about their new home and are often eager to start designing before finding land. Because the attributes of the property so greatly inform both the layout of the home site and the design of the house, we always point out that a thorough evaluation of the property is the necessary first step toward designing your new home. What area of the site is the prettiest, has the best views, is the easiest to access, has room for a pool, barn, or guest cottage? Will tree cover enhance privacy or hinder views and solar opportunities? Will the county permit me to build here? All these questions should be considered - ideally before you purchase! 

 

Steps to purchasing the land

In summary:

Scout the property - Fall in love with it in-person, and not just on-line. I have really liked a piece of land on-line, but hated driving the road in, or realized that the views are not as good as the pictures because they shot them specifically to omit the eyesores. When possible, speaking with the current owner, realtors, or neighbors can give additional insight.

Negotiate terms with the current owner - Negotiate a sales price, earnest money deposit, and how long you have to research it. While it can be uncomfortable to commit, it's necessary. You need to have permission to access the land to do the proper research and you don’t want to invest your time and resources researching a property, only to have it sold out from under you. That’s happened more times than I can count.

Due Diligence research period - Survey for boundaries, setbacks and easements; septic and well evaluations; title search. These are the bare minimum. The goal is to prove that the land is buildable for your home goals. If the land only supports septic drainage (percolation or ‘percs’) for 3 bedrooms and you want 6, it may be a deal breaker. There are many other things you may want to research, like mineral rights exposure in mining areas or flood insurance rates in coastal areas. Every property has unique conditions you will need to research.

Closing the sale - Once you’ve completed all your research and the results show that the land is buildable, then move forward with closing. Don’t get pressured into closing if you are not comfortable with the results of your due diligence or if you need more time to finish the research. Closing dates can be adjusted. If possible, paying cash for the land may persuade the seller to negotiate more favorably, because they think you are more likely to close than with a financed deal. In addition, it may be easier to finance a construction loan on a free and clear property.

 

Scouting the Property - what to look for

Consider all elements that may adversely affect or enhance the property.

Things that add value to land

• Pleasing views or vistas greatly increase the value of the property.
• Water adds value. If it is pretty to look at from a porch then it adds extreme value. People love to be able to sit on their back deck and look at water. 
• Mature trees add value and privacy.
• Proximity to shopping and dining. How far is it to the grocery store? A lot of people want the privacy of land but the convenience of living close to shopping. A piece of property that provides both is more valuable.
• Utilities that are close to the building site are also advantageous.

Things that detract from the value of a piece of land

• Slope. Steeply sloping lots are more costly to build on. Albemarle County, where we most often build, has a Critical Slope map for the entire county that can be viewed at gisweb.albemarle.org. (You can find interactive gis maps for your area with a simple Google search.) The county limits you on where you can build based on slope. Figuring out things that can limit you from building are very important. This web site has an incredible amount of information on land and is a great starting point when researching a piece of land in Albermarle County. I’ll talk more about the costliness of slope at the end of this article.
• Power lines can be a major turn off for resale. Consider very carefully before buying near a power line.
• Railroad tracks can be another major adverse condition. 
• Streams, ponds and lakes come with a lot of rules and regulations and crossing them is expensive and difficult.
• Flood plains limit where you can build without flood insurance.
• Views into other properties’ backyards infringe on privacy and hurt value. Properties that have private backyards are much more desired than ones that are too close to neighbors.
• Bright lights at night. Consider the lighting at night surrounding the property.
• Noise. What can you hear when you are standing on the property? If you can hear the highway, it hurts the value.
• Smell. If you are close enough to something that has an odor, like a neighbors farm or the local dump, it will impact value.

 

Due Diligence

This is the time to do in-depth research, including hiring a professional surveyor soils engineer to help evaluate the land more closely.

• Get your own survey. Don’t take the survey the seller gives you as gospel. I always get a fresh survey of the property. Tell the survey company that you plan on building on the land and that you will be locating a house on it soon— ask them to quote both. The surveyor you hire is a very important starting point for the project. They can keep from locating the house in the wrong spot and are the starting point for building the foundation. Pick a good one you like and trust— don’t just shop by price. 
• Consider all utilities. The distance they are from the project will affect the cost of the project.If septic will be required, get a perc test to see what size system will be required and where it will go on the property.
  
  • How far away is water - the distance from the building site will affect the cost.
  • How far away is electricity - again, the distance will affect the cost.
  • Does the site have natural gas nearby or will propane tanks be required.
  • Does the site have fiber internet service.
• Consider the driveway distance to the project site. A long driveway can dramatically affect cost. This category can be much more expensive than a home built in a subdivision with short driveways. Don’t get blindsided by this after buying the property. Consider how far from the road you plan on building the house on the site before buying.
• Trees. Consider how heavily forested a property is and the area you plan on building. Get a quote on the cost to remove the trees from the site. If you have the right size property you can keep them on site and use them for firewood. 
• Dirt. Consider how much dirt will be created from digging your foundation and where it will go. Large foundations can generate a large amount of dirt. On larger sites the dirt can be used in other areas or to shape the land, and it is not very costly if you have a good excavator. The removal of dirt from the site in dump trucks will get very costly. 
• Rock. Look for rock out cropping or large pieces of rock sticking up out of the ground. Also, if you scrape ground cover to the side you may be able to see rock near the surface. If you hit rock when digging your foundation it can be costly. (The most costly rock removal project I’ve encountered on a house was $25,000. I’ve heard it's more expensive on bigger homes.) Boring samples in residential construction are not worth doing as the cost of the borings will often outweigh the cost of removing the rock. The cost of removing the rock from ground is not the only consideration. The cost of hauling it away from the site is also very costly. If your land is large enough, moving the rock to an area for fill or building a retaining wall with it are great options instead of hauling it away. The smaller the property the less options you have with extra site materials - trees, dirt and rock. 
• Run a title search and get title insurance! Don’t forget this step with any piece of property you buy. 

Topography or Slope 

Topography is another item that can greatly affect what you build, how you build it and total cost. Steep sites are more expensive than gently rolling sites or flat sites to build on. Heavily forested areas can hide steep topography. Make sure you walk the site and understand where you want to put the house. If that area is too steep to build on, it may not be a good fit. Generally, if a location falls more than 10’ across the depth of the house it will cost more to build on that site.

The diagram that shows a walkout basement with a 40’ deep house and the land falling about 10’ within that distance. This is a good way to evaluate land. Measure back on the site 40’, stand at the bottom, and see if the land is above your eye line. If so, you know it’s falling more than 5’ or so. Gently sloping land or a fall of 3’ to 4’ across the depth of your house can often accommodate a walk out by pushing the first floor up and taking the dirt and putting it in front of the house. I’ve also built on sites where the natural grade dropped 25’ across that same 40’ depth. This sort of situation can substantially increase your foundation costs.

 

Finding land is an exciting, effortful, but ultimately rewarding process. Make sure to protect your investment by doing the research, getting the facts and making a thorough and thoughtful evaluation of any land you are considering for purchase.