What to Consider When Buying Land to Build a House

February 1, 2021

Many dream of buying a piece of land and building a home. We frequently hear of the desire to spread out from neighbors, avoid a homeowner’s association or to live on acreage. Many of our homebuyers look for advice while beginning the process of building a home on their own lot. We thought it would be beneficial to highlight some points to consider while searching for land.

Keep Zoning in Mind
Zoning is the local planning authority’s determination on how a piece of land can be used. Before purchasing a piece of land, be sure it is zoned appropriately. Confirm the land is approved for residential use and not industrial or agricultural. Keep in mind, it is very difficult to rezone!

If you are considering a particular floor plan, research whether there are any land restrictions or setbacks and whether your future home will work.

Utility Due Diligence
When purchasing outside of a developed neighborhood, completing utility due diligence will confirm whether building on the land is feasible. It is critical to determine whether utilities are already on site.  Does the parcel have water, sewer, gas, cable / internet and electrical? There may be significant costs to connect or extend these services to the vacant lot -- especially if it is large or in a rural area.

If a municipal sewer is not available, the lot will require a septic system. It is very important to inquire whether the soil has passed a percolation test or “perc test.” This measures the absorption rate of the soil where a septic system would be installed. Failing a perc test may prevent you from being able to build on the site at all.

Budget Considerations
Mitch recommends the property price should not exceed a quarter of your total home building budget. It may be beneficial to keep it even lower to account for the current cost of building materials and potential unforeseen circumstances during construction (such as the need for extra fill).

We encourage you to visit our “Build on Your Lot” page to learn more and review our frequently asked questions.

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