Home building starts with the selection of the perfect residential lot. It is one of the most important decisions you'll make in your owner builder project. If you haven't found it yet, here's some great material to help you ask all the right questions before putting down your cash!
60% of the people seriously visiting this site already own a lot! If this is you, you may want to skip this page and go directly to Plans and Specifications.
If you find yourself going through the process again in the future, you'll definitely want to come back and digest the material on this page and it's links. It just might save you some heartache and money.
Let's start by taking a look at ways of finding and comparing residential lots. Then you'll find a list of criteria you'll want to consider in evaluating a lot to see if it meets your needs. And finally, we will look at buying your lot - parts of the offer to purchase and so forth. But first. . . a caveat:When you start to look for your lot remember this - whatever size home you plan to build,
DON'T OVERBUILD THE NEIGHBORHOOD!
This is especially true if you are building the home for sale.
And no matter how much you think you'll live in this house the rest of your life, chances are you'll end up selling it some time in the future.
Also, it will be helpful if you have made some decisions about exactly what it is you are looking for in a residential lot. In other words, what is your Lot Selection Criteria? Click here for some help in nailing down your criteria.
Finding Your Residential Lot
Residential LOTS AND SUBDIVISIONS
We're assuming that most of the people who landed on this page are interested in building on a residential lot in a developed or developing neighborhood.When raw land is broken up into residential lots with streets and utilities provided, it is said to have been subdivided - hence the term "subdivision.
"So these terms, "lot" and “subdivision," will be used extensively in this and other sections. If you are planning on a more secluded setting, say on a mountain top or in the middle of 150 acres, don't worry - the process is basically the same.
You'll probably be dealing with a septic tank and well instead of city sewer and water, and you may have to new subdivisionpay a little more to have the materials hauled out to your property, but as we said - the process is the same.So please don't be put off by our use of "lot." If this doesn't fit your situation, just substitute "farm" or "estate" or whatever is appropriate.
Where To Look For Residential Lots
If you don't already own one, your first task (after completing your Budger) will be selecting and purchasing a residential lot. Most owner builders go about this in a very haphazard manner.
Whatever method they use to find a property, they certainly don't use any systematic way of comparing lots, or making sure that the lot they buy will really be satisfactory. If it looks good, and they can afford it, they buy. Even some small builders buy lots this way.
You can use this method if you wish. But you may be in for some rude surprises when it comes time to build. We recently talked with a man who plunked down $30,000 of his precious savings to buy a beautiful lot in a new subdivision.
When he went to get his permits, he discovered that the residential lot had extensive drainage easements due to off-site conditions, which all but made his lot unbuildable. He's trying to sell the lot now, and will probably take a healthy loss.
We're going to show you how to ask the questions and structure your purchase so that you can avoid some of these surprises. Be aware, before you begin your search, that you probably will not find a perfect residential lot. That is, one that meets all your requirements and expectations.
So be prepared to make at least some compromises. Your goal is to find the one which comes closest within a reasonable amount of time and with a reasonable amount of effort. Only you can decide what is "reasonable."
If you have a connection to the Internet, it's a good place to start searching for anything - residential lots included. We use www.google.com as a starting point, but you can use any good search engine or portal. Many real estate agents maintain a web site, and many include information on their listings.
An obvious place to start your search is in the newspapers. Look in the classified section. Following the “homes-for-sale” you'll usually find a section listing acreage, farms, lots, etc.
On larger pieces of land (acreage or farms), the owner may (but rarely) be willing to cut out a home site and sell it separately. Usually they want to sell the whole thing. Selling off a prime home site may significantly reduce the value of what's left.
A call to the number listed in an ad will reveal whether you are dealing with a developer, a real estate agent, or simply a land owner.
Later in this lesson we will discuss negotiating with various types of sellers.
At this point, all you want to do is find out where the property is located so you can see it. If it looks good you can begin to accumulate more information on it as described below.
REAL ESTATE AGENTS
Another method is to contact three or four real estate agents. They are usually aware of projects where lots are available.One thing to always keep in mind with a real estate agent is that unless you are going to pay him a fee to represent you, he will actually be representing the seller.There will be a sales commission involved, and the seller will usually try to up the price of the lot to cover the agent's commission.
FRIENDS AND RELATIVES
When you begin to let it be known that you are looking for a residential lot, friends and relatives will often bring those of which they are aware to your attention.Frequently you will find that people are very familiar with residential lots in their own neighborhoods, often knowing not only who owns the lot, but also something of it's history (so-and-so tried to put a house on it but couldn't get a septic tank permit, etc.).
RIDING THE NEIGHBORHOODS
Another way of finding residential lots is to simply ride through neighborhoods in which you would like to build or live. In older subdivisions you will often find lots that for some reason have been passed over by the builders who initially built there.Perhaps the lot was slightly rougher, or had some rock that made installation of a septic tank a problem, or various other reasons. In many cases these residential lots are buildable, and, with some design care, can be the most architecturally dramatic lots in the neighborhood.
Residential Lot Ownership
WHO OWNS THE LOT?
How do you tell who owns the residential lots you have located? Call the county tax office and ask them how to find the owners of lots. If you're lucky, they will have it posted on the web, and you can get the information you need on the Internet.
If not, you will probably need to go to the tax assessor's office to search the records there.Every county does it slightly differently, but they all keep records on who owns what.This is public information. Usually, they will show you how to find what you need all by yourself.Normally this will involve locating the lot on a tax map. There will be a reference number for each lot. That reference number is used to locate a listing on the residential lot, which is in a book, on microfilm, or on a computer.
You will not only find the owners listed, but a great deal of other useful information - things like the size and shape of the property and its assessed value.Be careful with this last one. The assessed value of a lot may be different from its appraised value.
The assessed value is the value assigned to the property for tax purposes. Property is often assessed at some percentage of its actual market value. Just ask the clerk in the tax office what percentage is used.
For example, if the property is assessed at $10,000, and you discover that in this county property is assessed at 50% of its actual value, you'll know that the property is probably worth somewhere around $20,000. In any case, tax appraisals can only give you the roughest idea of the property's actual value.
In many areas, the tax office also has aerial photographs of the area. You can use these photographs to save some leg work, by spotting vacant property on the maps and getting ownership information before you go out looking.
WHAT DIFFERENCE DOES IT MAKE WHO OWNS THE LOT?
If the developer of the subdivision owns the residential lots you are looking at, then you're in luck.
Chances are he has been sitting on these residential lots since the subdivision was developed, unable to move them, and doing nothing but paying taxes on them every year. He would love to get rid of them and will probably give you a great price.
In many cases the person who lives next door will own a lot. They may have bought a second lot just to have more space, or for an investment. The money that you are offering for the lot may outweigh the original supposed benefits of ownership.
An estate may own the residential lot. This could be good or bad. It could be that the heirs to the estate have no interest in the land and would like to sell it and get their money out of it. In such a case, you may be able to get a good deal on the lot.On the other hand, estates can be messy. They can be so tied up by the complexities of the number of people and circumstances involved, that they become practically impossible to buy.
Comparing Residential Lots
Of course, finding lots is only one part of the equation. Once found, the residential lots must be compared until one is finally chosen. Click here to find more on comparing the lots you have found.
Then you'll have to purchase your residential lot.
If you haven't already done so, it's almost time to prepare your Plans and Specifications!