Owner builders embarking on a home building project will start out by selecting a building lot on which their new home will sit. As with all aspects of home building, we advocate planning and organiztion!
The following list is typical of the criteria you, the owner builder, may want to consider when searching for your lot. Some of the items may seem more important to the professional builder than to you who are planning on living in this home the rest of your lives.
Statistics show that the average American family moves every three to five years. So even if you don’t plan to move any more, it would be wise to give some consideration to the factors that affect resale value.
No attempt has been made to put the list of criteria in any particular order of importance. You must select those factors which you think are pertinent to your home building project. Add others you may think of, and place your own priorities on them.
Having some idea of what kind of home you want (ranch, two story, basement, etc.) will place some limits on which lots will work for you. Some people design the home, then find a lot that will work. Others find a lot, then design a home that will fit the lot.
Some of the factors, like Location and Price, will be compared for each lot you consider. Others, like availability of gas, taxes, and restrictive covenants, may be considered on a more narrowed down list. That is, you don’t have to look at every factor for every lot. If a lot costs twice what you’re willing to pay, you’ve eliminated it . . . so why ask the other questions.
You may designate some of the factors as “Buy, No-Buy” criteria,
and apply them first to the lots you have found, so as to narrow down the list of those you will give serious consideration.
For organizational purposes the list is divided under five headings:
1. Location
2. Neighborhood Characteristics
3. Neighborhood Amenities
4. Lot Characteristics
5. Restrictions
This represents pretty much the way you’ll go about finding your lot. You will think about the general location. Then you will look at neighborhoods to see how they look and what they have to offer. Then you will look at individual lots, and finally, you’ll examine the laws and regulations which will govern the construction of your home. So, without further comment, here is the list.
1. LOCATION
You have heard it said that there are three things you need to look at when buying a piece of property . . . location, location, and location! This little saying is not meant to really imply that the only thing you need consider is location, but rather it simply points out the importance most people attach to this factor in considering the desirability of a piece of real estate.
The “Proximity” criteria listed below defive this factor. Also consider the location’s position on the “social scale” - its snob appeal. This will certainly impact the property’s value.
In home building, there are other, more practical considerations related to location, particularly with respect to which city and county jurisdictions are involved.
Several of the criteria which will be discussed below, like zoning, building codes and restrictions, water and sewer tap fees, tree removal ordinances, runoff control requirements, and taxes to name a few, vary from jurisdiction to jurisdiction.
It’s hard to believe that some of these would really deter you from a very desirable lot, but it’s conceivable.
PROXIMITY TO (you fill in the blank).
How close do you want to be to . . .
Schools - In areas with school bus service available, this may not be as important as it used to be. However, many people still like the idea of having schools within walking distance - especially elementary schools. This factor could be a good selling feature if this is to be a spec home.
Relatives, Friends, Church - You know how close you want to be to these!
Shopping - Convenient access to shopping facilities may make your spec home more marketable. Here, as with business districts (offices) or industrial areas, you need to make sure there is an adequate “buffer zone” between your lot and these areas.
A buffer zone is a less intensive land use, like apartments, or a natural feature, like a park, or a combination of the two.
Work - This doesn’t just refer to how close the proposed lot is to your place of employment, but also how convenient it is to centers of employment. Many people object to long commutes to work.
So if you choose a lot near large employment centers (factories, offices, etc.), you’ll dramatically increase potential buyers.
Recreation - The presence of nearby golf courses, movie theaters, parks, etc. can certainly enhance your life style and perhaps make your property if not more valuable, at least more desirable (which is really the same thing)!
Also, many subdivisions and neighborhoods now have their own “clubs” which typically offer swimming,
tennis, and socials.
Public Transportation - This could be an important consideration for older people, people with children below the driving age, people with lower incomes, or any one who just wants to quit fighting the traffic.
Medical Facilities - Unimportant until you need them. Then you’ll be glad you asked the question!
2. NEIGHBORHOOD CHARACTERISTICS
GENERAL LAND USE IN THE VICINITY
When scouting a neighborhood it is always a good idea to broaden your search a little to see what kinds of land use surround it. In particular you should look for any nuisances or irritants. This could include anything which creates undue noise, commotion, noxious odors, unsightliness, etc.
A very nice neighborhood in Raleigh, North Carolina lies less than one-quarter mile from a rock quarry. When the subdivision was being built, Realtors typically brought prospects in from the other direction on a Sunday.
Many families were never aware of the presence of the quarry until they moved in and were rocked by the first dynamite blasts on Monday morning. It pays to do a little investigating!Owner builders may also want to check with the zoning board, planning commission, county and state traffic commissions, and building official (where permits are issued) to see what may be in the works.For example, the zoning office will tell you if there are any rezoning petitions pending in the area. The planning or building departments can tell you if there are any applications for new subdivision or multifamily projects nearby.A little snooping goes a long way! How would you like to find out half way through construction of your dream house that a public landfill (garbage dump) had been approved nearby?
GENERAL CONDITION OF THE NEIGHBORHOOD
Take special note of the appearance of the neighborhood. Are the yards well kept? What is the age of the other homes in the neighborhood? Are the homes in good repair and freshly painted? Or are things looking a little run down . . . trash accumulating, weedy lawns, and peeling, faded paint? More importantly, does the neighborhood seem to be improving or declining? This will definitely affect the value of the lot and the marketability of a spec house.
VALUE OF OTHER HOMES IN THE NEIGHBORHOOD
You probably have a pretty good idea of how much home you are going to build. An awareness of the value of the other homes in the neighborhood will help you decide how well your home will fit in.If it is to be your residence, try to have your home fall somewhere in the mid range of values. If it is to be a spec home, being towards the lower end may help it sell faster. Again, remember the rule we stated earlier.
SCHOOL DISTRICTS
Not only do you have to consider where the schools are, but also which schools are they! Schools are like neighborhoods, some are much more prestigious than others.Homes in the districts of schools with high academic or athletic reputations will move faster and could have higher resale value. You can bet that the lots cost more there.
NUMBER OF HOMES FOR SALE
In an older neighborhood, too many “For Sale” signs is a red flag. Something is causing a lot of people to decide they don’t want to live there any more. Find out what it is before you buy. It could adversely affect property values and the salability of a spec home.
TYPE OF FAMILIES IN THE NEIGHBORHOOD
Is this a neighborhood of “starter “homes . . . young families in their first homes, with young children? Or is this a “move-up” neighborhood, where the children are older and the homes larger? Or perhaps this neighborhood is primarily inhabited by empty nesters . . . smaller but nicer homes, children grown, older folks.
TRAFFIC
If you have small children, You probably don’t want to live on a busy thoroughfare. Simple observation will generally tell you what to expect. But don’t rely totally on this method.Traffic to the Fulton County Stadium in Atlanta used to be routed through a residential neighborhood. When there was no game, the neighborhood looked peaceful. But on game nights, it was bumper to bumper.County or state traffic officials can give you traffic counts in cars per hour, cars per day, etc. They can also tell you of any plans for “improvements” - like adding four lanes to your quiet residential street!Visit the area several times, at different times during the day, and on different days of the week. Ask the neighbors what it’s like.
PAVED STREETS
In an urban setting many would consider this a must. It certainly enhances
property values. Also, it may be required for certain types of federally guaranteed financing.If you plan to use one of these programs (FHA, VA, or Farm Home), make sure the lot is acceptable on all counts before you commit. One word of caution - paving increases rain runoff, because where there is pavement there is no absorption of the rain into the ground.Make sure that storm sewers are adequate to protect your property from flooding during heavy downpours. Of course, if you’re buying farm land, a paved road may be impractical.
CURB AND GUTTER
Similar comments could be made here, as were made concerning paved streets. The presence of curb and gutter certainly looks nice, helps control runoff, and may be required for certain types of financing.
UNDERGROUND UTILITIES
The use of underground electric, telephone, and cable TV lines make for a much more attractive, less cluttered situation.
FIRE DISTRICT
Who responds and how fast, when you have an emergency, may affect more than just your insurance rates. Where is the nearest fire department? Is it manned by volunteers or full time professionals? Is there a fire hydrant nearby?
TAXES
Check the rates for each jurisdiction you are considering. Getting outside the city limits or just over the county line may dramatically lower your tax liability. Here again, do your homework. How aggressive is the city in annexation?
What are the plans? How easy is it for annexation to be accomplished under existing law. It won’t do you any good to build just outside of town and be annexed next year. Tax rates are usually expressed in “mills.”
A one mill tax rate would be 1/10 of a cent for each dollar of assessed valuation. Remember, taxes are often assessed at some fraction of the actual market value - often 50%.
3. NEIGHBORHOOD AMENITIES
MUNICIPALLY SUPPLIED WATER
This is usually preferable to digging a well because quality control will be assured, and the fee for tapping on to the supply line is usually less than the cost of digging a well.
AVAILABILITY OF SEWER
This is critical if the lot is not suitable for a septic tank, or if they are not permitted. It is also preferable since tap fees are usually less than the cost of installing a septic tank and drain field, and because you will not be faced with maintaining such a system.
AVAILABILITY OF GAS
It’s not critical. You can always use electricity. But natural gas is cheaper to heat with (right now). And if you already have gas appliances, it could take on added significance.
AVAILABILITY OF CABLE TV, HIGH SPEED INTERNET, ETC.
Some people may place these items at the top of their list. Others could care less. ‘Nuff said.
4. LOT CHARACTERISTICS
PRICENormally, a residential lot represents around 25% of the value of the completed package (house and lot). This formula doesn’t hold if you’re interested in acreage (a farm, estate, etc.) or resort property.An ocean front lot may be several times more expensive than the home built on it. Only you can determine how much lot you can afford. Buy the best you can.
TERMS (HOW YOU WILL HAVE TO PAY FOR YOUR LOT)The Terms involved in purchasing your lot can be critical. Needless to say, some terms are more favorable than others, and, hence, become one of the factors you must consider in selecting between several lots. For example, if you are “cash poor”, you may lean more heavily towards a property which can be easily financed.
LOT SIZEThis is pretty much self explanatory. Within the same neighborhood or area, all other things even, the larger the lot, the more valuable. If you’re really not sure how large a lot you really need, look at the surrounding lots and how well their homes are accommodated.
SHAPEA lot that is 100 feet x 200 feet has exactly the same area as a lot that is 20 feet x 1,000 feet. Unfortunately, the latter is not buildable. You may already know the dimensions of the home you are going to build. Will it fit on the lot(s) you are considering?Be sure to take the front, side, and rear yard requirements into consideration. You can get this information from the zoning or building inspection department. The front yard requirement is often referred to as the set back.
Be aware that pie shaped lots like you’ll find on a
cul-de-sac (one of those streets that dead end into a round paved area, so you can turn around without stopping) may cost you extra in paving expenses for your drive - if you have to set the home back beyond the required setback to allow for side yards.
FRONTAGE
Frontage is the linear footage your lot “fronts” on some physical feature, for example a road, a golf course, a ski slope, the ocean, etc. Street frontage is not as important in residential lots as it is in commercial properties where exposure is desired.Corner lots or “double frontage” lots (lots that have a street along both the front and the rear property lines), may or may not be desirable. The traffic on these streets may well help you decide. Also, some people like to show off their place, while others prefer seclusion.
TOPOGRAPHY (SLOPE AND SURFACE DRAINAGE)
You should look for a “well drained” lot. That means a lot that has sufficient slope to allow rain that comes on to it from adjacent properties, as well as rain that falls directly on it, to flow naturally off, rather than sitting on the lot.“Low” lots - ones that collect rain water runoff - create many problems . . . problems with footings and foundations, walks and drives, wells and septic tanks, landscaping, and insects.In addition, the slope of the lot will generally determine if slab construction is practical. A basement home may work better on a sloped lot, especially if you want a “walkout” basement.
VIEW
This could be important in a scenic place - near the ocean, a lake, the mountains, a cityscape - or near a bad view like an industrial area.
SUITABILITY FOR A WELL
If no municipal water is available, this is a “buy - don’t buy” factor. Check with a local, reputable well drilling contractor. He will be able to tell you what to expect. If there are serious doubts as to whether an acceptable supply can be produced, back off this lot.The only other alternative is to make the purchase of the lot contingent on getting this problem resolved, and then digging the well before you close the lot! Who pays for this? That’s negotiable.It depends on how bad the owner wants to sell. Try to talk him into bearing this expense, with reimbursement at some later date - probably after you receive your first “draw” from the construction loan.You could split the cost. Or you could take the whole risk, if this is the lot you really have your heart set on, and you can’t get the seller to cooperate.
SUITABILITY FOR A SEPTIC TANK
This is another “buy - don’t buy” factor - if sewer service is not available. The requirements here are determined by a public official (usually the county health department), who will issue a permit if the lot is suitable.
Suitability is usually determined by doing a perc (percolation) test on the lot to see how well the soil will absorb the output of a septic tank.If you are buying a lot in a subdivision, chances are the lot has already been approved or turned down.
This decision is based on the type of soil, the presence of rock, slope and drainage, water table, proximity of water supplies, etc.Soils with a heavy concentration of certain types of clay do not absorb water (or drain) very well.
If a large area of the lot is underlain with rock that is near the surface, drainage is impossible.
A high water table will interfere with absorption of waste materials from the septic tank.Sometimes a septic tank can be installed on a marginal lot that has been passed over by the builders by spending a little extra for the removal of rock, or by installing a beefed-up drainage field. This extra expense may be offset by the lower price of the lot.
For an otherwise desirable lot you should talk with the county official and a septic tank contractor about the possibility of installing a specially designed system.
ACCESS
If the property does not front on a public street, be very careful to make certain that access to the lot is sufficient and permanently guaranteed. This will usually be accomplished by a recorded easement (see the next paragraph).
Check with your attorney before you buy!
EASEMENTS
Easements are the rights of another to use your land. Typically, they are granted for the maintenance of utility lines, drainage areas, etc. Access easements are often held by individuals over another persons land, such as a road or driveway to a lot that does not front on a street.Before you close on the lot, make sure you are aware of all recorded easements. Remember the example at the beginning of this section on choosing your lot!
TREES
Trees help sell spec homes. Check out how many and what type. Some are more desirable than others. This will vary from place to place around the country, but generally people prefer trees that don’t create a lot of maintenance and clean-up problems - dead limbs, prickly seed balls, etc.
Also take note of where the main trees are located. It won’t do you any good to have a beautifully wooded lot if you loose all the really nice trees when the building site is cleared! Incidentally, trees can be beneficial in helping you to be energy efficient.
Deciduous trees (those that shed their leaves in the fall) on the south side of the home will give summer shade while allowing winter’s warming rays to help heat the home. Evergreens on the north side will give some protection from winter’s chilling north winds.
Again, if the home is to be your residence, you know how many trees you want. We’ve known people to have a nicely wooded lot and cut down every tree. They hated to rake leaves!
Here are some financial consideration to trees that you may not think of until after you have purchased a lot.Trees standing where the home is to be built will have to be removed. This means that they will have to be cut down and the stumps dug up.
Then the trees will have to be cut up into manageable pieces and either buried on the lot or hauled off to a dump. This can be a very expensive process (several thousand dollars), if you are talking about a number of large trees.
Get an estimate from a person who is in the business of preparing lots for construction before you make a final decision.
Another financial consideration is the harvest value of the trees on a lot. A West Virginia man told us about buying some mountain acreage for $15,000 and immediately selling the hardwood on it for $75,000!
SOIL TYPE
The soils present on your lot can be critical if you live in certain areas of the country that have soils which are subject to expansion. The movement in these is due to their tendency to physically increase in volume (swell) when they absorb moisture.
The movement can seriously damage the structural integrity of your home. Construction techniques have been developed to lessen the likelihood of damage to homes built on these soils, but they are complicated, expensive, and are not foolproof.
It is best to avoid this type of condition if possible. If you have lived in the area where you intend to build for a while, you are probably aware of any problems of this sort. If you are not sure, check with your local building inspection department, independent soils engineer, or home warranty company.
Soils surveys are available through most counties and the U.S. Geological Survey. However, they may not identify problems at the lot level. Check with neighbors to see if any problems have been experienced in the neighborhood. Look carefully at the homes in the area.
Telltale signs are large cracks in masonry veneer, sepration at the seams of the house, especially at windows, doors, and chimneys, large cracks in the foundation, and a general “out-of-whack” look.
In areas where active soils are suspected, it is wise (in many cases required) to have a knowledgeable soils engineer do a test on the lot itself to determine if these types of soils are present where you intend to build the home, and to have a qualified structural engineer design your foundation system.
Be assured, it will be well worth your while.
FLOOD PLAIN
Most jurisdictions have flood plains mapped. These are areas that can be expected to be flooded at some time during a given interval (100 year is typical). They are called “Flood Plain Districts.”It’s real stupid to build in a flood plain. Many municipalities will not issue a building permit for a property in a flood plain. Insurance for homes built in a flood plain may be exorbitant or unavailable.Ask to look at flood plain maps before you buy a lot. Look for some higher ground.
NATURAL RESOURCES
Don’t overlook these. They may be present in many forms. Lots developed
in old orange groves in central Florida are often loaded with fruit trees that bring in hundreds of dollars a year. The sale of timber on farm acreage may well provide enough cash to build the home debt free!
MINERAL RIGHTS
In places where valuable minerals are found, it is a common practice to sell the rights to the minerals under the ground separately from the right to use the surface of the ground. Be careful. You may not own the oil on the back forty!
WATER RIGHTS
Do you have physical access to nearby bodies of water? Are they public or private? If they are private, will you be permitted to use them? How?
4. RESTRICTIONS
ZONING
Zoning is the method cities and counties use to prevent totally incompatible
land uses from springing up next door to each other. It’s what keeps someone from building a convenience store next door to your new $250,000 home. Almost all cities have these laws. Houston, Texas is the most notable exception.
Looking at the zoning map (where they issue building permits) will help you see not only what currently exists in the area, but what is possible under current zoning. Be sure to ask if there are any rezoning petitions which could affect your interests.
If you were near the edge of the subdivision and near any major traffic artery, there may be considerable pressure for the expansion of office or retail zoning. This could work to your advantage, if you’re willing to sell. But only if you can get your lot rezoned.
Normally, office and retail property is much more valuable than residential. Many people make a living doing just that. They buy property, get it rezoned to a “higher” use, and resell it for a profit. They are called land speculators.
This is because when they buy or option the land, there is no guarantee they can get it rezoned. They are speculating that they can get the new zoning so that they can sell for a big profit.
If commercial zoning invades your area, and you are unable to have your property rezoned, your property could lose value. This is because it would be less desirable (most people don’t want to live next to a store) and harder to sell.
RESTRICTIVE COVENANTS
Many subdivisions have these. They enumerate restrictions on how the lots may by used. They are drawn up and recorded along with the subdivision drawings, maps, and so forth.They are official and carry the weight of law. That is, the county can enforce compliance, just as they can with zoning ordinances or building codes. The restrictive covenants are in addition to zoning and codes. They may set minimum square footages for homes in the subdivision.Restrictive covenants may impose architectural guidelines and reviews, and a host of other things. You will certainly want to carefully read any covenants affecting the lot before you make a final decision.
LOCAL BUILDING CODES AND RESTRICTIONS
Most larger towns and many counties have adopted the “standard” building,
electrical, and plumbing codes like BOCA, UBC (Uniform Building Code), or the Standard Code published by Southern Building Code Congress International, the National Electrical Code, and the Uniform Plumbing Code.These codes spell out acceptable practices in the construction, wiring, and plumbing of a building. The municipality may or may not have trained people to enforce the codes (building inspectors). In addition, many localities have modified or added to the standard codes to address special local conditions. You need to know how this will affect your plans.For example, you may wish to get into some unusual techniques or types of construction, like all weather wood foundations or earth sheltered structure, only to find out that these are prohibited by local code modifications.Simply pay a visit to the local building officials office and ask about codes. We’ll talk about code enforcement (inspections) in a Lesson 13. But let us say here, that we believe in codes and a good inspection system. It’ll help you keep your subcontractors straight!
PET ORDINANCES
This one may seem a little farfetched, but who knows? Pets are certainly important members of the family. It won’t hurt to check it out.
This is quite a long list. Again, don’t be intimidated. It is presented just to help you ask the right questions. Some of the criteria listed here won’t mean a hill of beans to you.
Just find some lots to look at in neighborhoods you think you would like to live in, and start from there. Usually you will want to get some idea about price and restrictions, unless you have an unlimited budget.
Then you want to make sure the lot is buildable . . . can you get a building permit for it. Then you can investigate the other factors in any order they may seem important to you. You will certainly have to have some contact with the owner of the lot(s) before you decide - at least to get some feel as to the lot’s availability and asking price.
For the owner builder, embarking on a great home building adventure, common sense almost always prevails. Cover your bases, but learn to trust your gut! Remember, the perfect lot probably exist, but systematically examining your selection criteria, will help you come close.
Clicto see how you can compare the lots you are considering, and that have passed the tight scrtiny you have subjected them to under the criteria you selected (above).
