Comparing Residential Lots
One of the early steps in home building is selecting a residential lot to build the house on. Settling on a lot often involves making a decision between several lots. Sort of like choosing a new car. It costs a lot and you know you're going to be stuck with it for a long time!
Comparing lots may not be a problem for many owner builders. You may only be considering two or three, and the choices are pretty clear-cut. You may, however, find yourself with a bewildering number of considerations between many seemingly acceptable lots.
We have developed a way of methodically looking at those characteristics of each lot which should affect your evaluation of the lot, in such a way that the lots can be compared statistically . . . with numbers!
Click here for a list of criteria to be considered in the selection of any residential lot, so that you will have a checklist to go by, and to make sure you don’t forget anything. Of course all of the things on the list are not equally important to you.
Also, the factors vary in importance from buyer to buyer. For example, it may be very important to you that your future home lie within a certain school district. Another couple may insist that their home be convenient to the public transportation route.
Just remember when analyzing the lots, to give more consideration to those criteria that are the most important to you. In fact, you may want to make your own list, reordering the criteria so that the one most important to you is at the top, the next most important is second, and so on.
Here is a simple method we have developed to do a statistical comparison
between the lots you are considering.
1. Select those criteria that you feel are important.
2. Put them in a list in order of importance - most important at the top to least important at the bottom. This is called ranking or prioritizing the list.
3. Number the list from bottom to top. The least important item gets number one, the next up the list gets number two, etc.
4. Now you can use this list to evaluate a lot. Try to decide how well the lot you are evaluating satisfies each one of the criteria on your list. Rate the lot on a scale of one to five for how well it does on each item.
5. To arrive at the total score for a particular property, multiply each item’s number by its rating, then add the scores all together for a Total Score (see the example below).
This is a very simple example. Your checklist will have more items. Notice in the example that number 5 (Location) is the most important criteria. Residential Lot 1 was given a rating of 4 on “Location”, which means “good.” Location’s number (5) and its rating (4) were multiplied together to arrive
at a score of 20 for “Location” for Residential Lot 1.
Each criteria in the list was rated and scored in a similar fashion. All of the scores were then added together to give Lot 1 a total weighted score of 54. This number becomes useful when the same exercise is performed on each of the residential lots you are comparing. The lot with the highest score theoretically best suits your needs.
One of the problems with this system is that you may have a residential lot which scores 5’s on all the least important things to you and 1’s on all the most important things. This conceivably could give it a higher total score than a more desirable property, or at least place it in the top two or three contenders.
A way to avoid this would be to compare the totals for only the top five criteria for each lot. Then you could use the other numbers to help you decide between your top two or three choices.
If this seems like a lot of work, or too much trouble, just relax. Have fun with it. These are things you really need to know about your residential lot. You’ll know them all sooner or later anyway. Why not find out before you commit yourself to what may turn out to be less than an ideal situation?
YOUR FINAL DECISION
In the end, your choice of lot will by and large be a “gut level” decision. Don’t worry about that. Just make sure you look at all the factors before you make your gut level decision. It’s OK. If you have one residential lot that scores 412 and another that scores 528, but you instinctively feel the one that scored 412 is the best choice.
We are providing a blank Residential Lot Criteria Rating Form that you can use to apply this statistical comparison. Just plug in your prioritized list and fire away. Click here for the form. It’s ready for you to print.
Once you've chosen your residential lot, it's time to make your offer. Click here to find out more about purchasing your lot!
For additional insight to comparing lots,
see Lesson Three of our online course
Successful Home Contracting.
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from Comparing Lots