Buying Land to Build a New Home On? Don’t Forget These Important Considerations

August 12, 2020
Last updated:
December 10, 2021
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The more common way to buy a new home in WA, OR, ID, or CO is to purchase one already built, whether it’s an existing re-sale home or a newly constructed one that’s never been lived in. But you can also buy a piece of land to build on to custom build your own home according to your specifications. If you go this route, there are some considerations to make, which we’ll talk about in this article.

When most people talk about real estate, they envision buying an already-built house on already-landscaped property. However, buying vacant land and building a new home in Seattle or Denver is a great way to ensure that you get the home that you want in the location that you want.

It’s also a major undertaking, which is why you should take these three considerations into account before you buy any land for your new home.

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Location, Location, Location: It’s More Important Than You Think

People often hear the phrase “location, location, location,” which is a crucial component to the world of real estate. But it’s also a very prudent maxim with buying land, and not just existing homes in Washington or Colorado.

In addition to the area being of high value, the parcel of land that you buy should be in a good geographic location and on stable ground – which means there shouldn’t be any major water sources nearby (like a swamp) and hills should be minimal. Ideally, the flatter the land, the better, as it will be much easier to build on and will require less work and money to prep the land for construction.

Consider Your Budget

Prior to purchasing land to build a new home you must get a clear idea of building costs in your area. A cost of building a new home in Seattle, WA will be drastically different than building a new home in Boise, ID. Check with various builders and get a clear idea of the current cost per square foot based on your expected quality of build and home size you.

If you are building a custom construction home add 25% to the expected cost per square foot number in the event building costs move higher between the time you buy the property and when you complete architectural drawings and get through permitting. Tariffs, labor shortages or a pandemic can all result in building costs spiking in a short period of time as we’ve seen over the past few years.

How is the Location Zoned?

You’ll also want to consider zoning regulations that influence the acreage and other regulations that influence how you can and cannot use the land. For instance, you may want to build a residential structure that you live in as your primary residence, but perhaps that specific location is currently zoned for commercial activity, in which case you may not be allowed to build a residential home.

Not only does zoning determine how a property can be used, but it will also dictate the shape and size of the structure you intend to build. It will have to meet specific details in terms of how the home will fit within the particular setback for the structure you want to construct.

Setbacks refer to restrictions on where a structure can be built on a lot. For instance, there may be rules about how far away the home must be from the curb or the property line between your neighbor.

While there is always a chance of having an area rezoned, this takes a lot of work, time, and money, so it’s not an endeavor you will want to take on.

Building Restrictions and Permitting

Prior to purchasing a piece of land make sure you are aware of possible hurdles you will have to overcome to build your desired home. Every county and city has different restrictions and requirements so it is vital that you do your homework prior to closing on a property. In a perfect world just trusting your Realtor, architect or any other professional would be nice but in reality you need to do your own homework.

The last thing you want to do is purchase a property, pay for architectural drawings and other costs, only to find out there is a Critical Area Designation or Storm Water issue that prohibits you from building your desire home. This is why many builders when purchasing land will incorporate a feasibility contingency into the purchase contract giving them time to make sure they can build what they have planned for the property.

Utility Connections Will Be Your Responsibility

Your new home is going to have to be connected to water, sewer, electricity, natural gas, and so forth. When you buy an existing home or one that has already been newly constructed, these hookups are already taken care of and ready to go in the home.

But when it comes to buying vacant land, there’s a good chance that these hookups have not yet been made. New land tends to not have utilities laid out under or over the ground. If this is the case, you will need to invest in electrical, water, and possibly heat utilities for the home. For water, you will have to find out if you must drill a well, or if there’s a water company or a shared well agreement.

If there are currently no utility connections, you will need to find out how much it will cost to connect them to your lot.

This process involves communicating between the municipal government and utility companies so that the proper infrastructure is put in place. These costs and the implementation can be quite a headache depending on how isolated the land is from municipal or regional infrastructure. Since the costs to run water and utility lines  vary quite a bit based on how far they are from your home and what the municipality and power companies charge, you will want to verify these costs so you are not met with any unpleasant  surprises.

Access: Look Up Any Easements on the Land

Many homeowners may not realize how legal access to land can affect their purchase. This applies to both buying a home in Portland or Boise that has already been built and a vacant piece of land that you intend to build upon.

An easement refers to the legal right of other entities to use your land even though they do not own it. Not only does this include entities like utility companies, but it could also apply to neighbors who may need to access your land to get to theirs.

Before you buy land, you and your lawyer should investigate whether or not the land has easements, and whether or not these easements may interfere with your goals for the property.

These are just a few of the major considerations you need to make when you buy land. Purchasing a plot of land in Oregon or Idaho is quite a bit more complicated than buying a house, and if you’re not prepared, it can easily turn into a nightmare. When properly planned, though, buying land can give you a great backdrop on which to build the house of your dreams.

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Need a Mortgage in WA, OR, ID, or CO?

Interest rates are working in your favor right now, so let’s connect to move your homeownership goals forward today. Sammamish Mortgage is a local mortgage company serving the broader Pacific Northwest region, including Washington state, Idaho, Colorado, and Oregon. We have been offering a wide variety of mortgage programs and products with flexible qualification criteria since 1992. Please contact us if you have any questions or are ready to start the mortgage application process.

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