Residential Land Buying Guide

Residential Land Buying Guide

Residential Land Buying Guide
Buying a plot of land and building a home is a dream for most Americans. With an abundance of residential land for sale, it’s possible to make your dream come true, but the process is a bit more complicated than purchasing a pre-existing home. Before you take the plunge and buy a piece of property, it’s important to understand how the buying process works and what you need to consider before signing on the dotted line.

What Residential Land Services are Available?

The first and most important thing is to consider what services are available. If you’re planning on building a home or developing the property, you’ll need to make sure that your property has:

- Road access

- Electricity

- Water

- Sewer

It’s possible to run lines for utilities if a property does not yet have them, but be prepared to pay for it. You’ll also want to consider other services, like Internet access, garbage collection and snow removal.

To avoid unwanted costs and pitfalls, it’s best to purchase property with these residential land services already in place. Finding buildable lots for sale in a great location will help make your project run smoothly.

Do You Need a Residential Land Survey?

Another thing that you need to consider is whether or not you want a new survey. Surveys are not necessarily required, but they’re always a great option as they can prevent boundary problems.

If you plan on financing your purchase, the bank may require you to get a detailed property survey. If the property was recently surveyed, you may be able to avoid this cost. However, if the survey is old and outdated, you may be required to get a new one.

Although it may seem like an unnecessary expense, surveying will clearly define your property’s boundaries, help developers make precise elevation determinations and help you plan out the appropriate dimensions of your home when buying residential land.

Survey costs vary greatly and largely depend on:

- How large the property is

- How long it takes to survey the land

- How much research the surveyor has to do

- The type of survey

Typically, floodplain surveys cost the most, but they’re a worthwhile expense. Once you’ve determined whether or not a survey is necessary, you can start considering your buying options.

Obtaining a Residential Land Loan or Construction Loan

If you find a piece of property that you love but you don’t have the cash to purchase it outright, financing options are available.

If you’re ready to buy a plot of land, but you’re not quite ready to build, a land loan is the best option. Land loans are harder to come by and they often come with less-than-ideal terms. These are shorter-term loans that require higher down payments, additional borrower commitments and higher interest rates. However, it’s your best option if you want to purchase land and build on it later on down the road.

If you’ve found a plot of land and you’re ready to build, a construction loan or construction-to-permanent (or All-in-One) loan may be your best option. This type of loan will cover the cost of purchasing the land and building your home. Once construction is complete, the loan converts into a permanent, long-term mortgage. All-in-One loans help you avoid two closings and ultimately avoid having to pay high transaction costs.

The Residential Land Development Process

If you’re ready to build, you’ll need to first create a design for your home. You have several options here:

- Work with a builder: Builders often offer their own floorplans that can be customized to your liking.

- Hire an architect: If you’re looking for a unique design or you have an idea in mind, hiring an architect may be your best option. While an architect can bring your ideas to life, their services often come at a major expense.

- Purchase a floorplan: Floorplans can also be purchased and provided to a builder of your choosing for a fee. These floorplans can range anywhere between $1,000 and $2,000 or more.

Oftentimes, selecting a floorplan from a builder is the simplest option. Hiring an architect or purchasing a floorplan from a third party is a better option if you have a distinct vision for your home.

Once you have a design for your home, you can select a builder. Hiring a builder is not something you should take lightly. The company you choose to work with should have a great reputation and you should take the time to view their portfolio of past work. Hiring the wrong builder can make the entire process a complete nightmare, so taking the time to find the right professional will save you time, money and (most importantly) stress.

Buying land and building your dream home can be exciting. Finding a plot of land in a location you love is the first and most important step. If you’ve inherited a piece of land, you can start finding a builder right away and apply for an all-in-one loan.

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