Buying Land and Custom Home Building

If you have ever dreamed of building your dream home on the perfect piece of property, then you may have toyed with the idea of buying land. However, if you buy land without doing your homework you may encounter more frustration than foundation.  Once you know what you are doing it is easy to look for red flags when looking for land, saving you time and money. Before you write an offer, consider the following:

  • Location –Land itself, even without a home on it, can be a good investment. The challenge is determining the true value by evaluating potential use and demand.  Location is paramount in determining value.
  • Zoning Laws – The value of land is impacted by zoning laws which determine what you can and can’t do with the land. You may be able to check property zoning online. Pay attention to the county’s long-term land use plans and scheduled road additions as these are indicators of future growth which will affect value.
  • Homeowner Associations – Is the lot in a subdivision governed by a homeowner’s association? If so, check the rules of what can be built and if there are restrictions regarding footprint, size, or style.
  • Ordinances and Covenants – Land is sold in subdivisions may have restrictions. There may be deed restrictions which are private agreements created between the owner and the buyer of the property. You may also have ordinances which you must adhere from the local jurisdiction.
  • Utilities – There will be costs to bring utilities to the property including electricity, phone lines, water and sewer (if available). If public water and sewer is not available, you will need permits for drilling a well and for installing a septic system.
  • Water – Up until 2016, a well for a single family home using up to 5,000 gallons of water per day was considered exempt from the Department of Ecology’s water availability rules. This is no longer the case according to a 2016 Washington State Supreme Court decision.  Be sure to understand the regulations in each county for drilling wells.
  • Critical Areas – Much of the land on the west side of the State is encumbered with some critical areas, such as wetlands, streams, hazardous slopes and more. King County has a CAO or Critical Area Ordinance which requires any critical areas be identified.  Sometimes sellers provide this information, but often the buyer is responsible.
  • Road Access – This is one aspect that is easy to overlook. The gravel path the property came with may not work as a permanent driveway driving the costs up. Verify the road you see can indeed be developed as a permanent path and the cost to do that.
  • Easements –Be aware of every easement on the property and understand what the easements mean for your use and enjoyment of the property.
  • Surveys – A survey will show you exactly where the property boundaries are as well as elevation possibilities for building. Never rely on an old survey – it may be outdated.
  • Flood Map – You will want to know if the property is within a flood plain and if flood insurance will be required.
  • Feasibility – When purchasing a piece of land, there is typically a feasibility period of approximately 30 to 90 days negotiated in the Purchase and Sale Agreement to verify that the land can be used as anticipated. During this time, the buyer may need to perform various feasibility assessments, such as septic feasibility, critical areas review and a survey.  It is important that you have a real estate broker, or someone knowledgeable in land, to assist with this process.

Once you have done your research and are ready to purchase a piece of land, your builder will want to take a look at it in order to learn about any engineering that needs to be done and to give you some rough ideas about what it will cost to develop.

If building your own custom dream home sounds perfect, let’s talk! I can put you in contact with great local builders who are ready to help and are up to the task. I can also tell you about how construction loans work and put you in touch with lenders who know what it takes to make a home out of land, some wood, and building materials. This is an exciting journey!