So, you’ve decided to owner-build your dream home and looking for that perfect spot? A year and a half ago we decided, that building a brand new house from the ground up was the right choice for us. This was a promise for a fresh start in a house that was exactly the size we wanted, within the same school district we live in now and with just the features we needed for our growing family.
Purchasing a lot is the first huge investment you will make when it comes to building your perfect home. You’ll want to make sure you do your due diligence before forking over a chunk of change and committing to where you build.
Here are some of the steps we took and some we should have taken, while deciding on our new address.
1. Know Your Market
Some of you will read this and be shocked that we paid $175k for just over an acre of uncleared land. However, in the current market in the Greater Boston area and neighborhood we live in, this was actually a very good price.
The price of homes and land are skyrocketing here and we have seen a huge increase even in the equity of our own home. We knew this because we had been following the price of land and we also knew that there were very few lots still zoned to build new construction within our town.
We studied the town’s database of interactive maps, spoke to our real estate agent and browsed through tons of online listings before deciding this is what we were willing to spend.
2. Visit The Location
Have you ever heard the term “sight unseen”? Nothing makes me feel more uneasy than talking to someone who has purchased real estate without physically seeing it beforehand. Yes, this really does happen.
We were far too picky to not see any of the lots we looked at in person, and we live just two minutes down the road from our building site, so we had no problem with this. For some, this might mean you have to fly out of state and stay in a hotel for a couple nights while visiting your new location. This will be a huge benefit in the long run.
My dad recently moved from California to Montana to build what he calls a “barn-da-minium”, a barn large enough to park an RV in with a loft style home over the garage. He basically drove Interstate 15 back and forth multiple times to look at lots that suited his needs. I urge you not to make such a huge investment without seeing the piece of real estate first.
3. Hire An Inspector or Engineer
Hiring either an inspector or engineer will help on multiple levels. In our town we must have a certified Engineer draw a plot plan, septic plan and as-built plan in order to get permits. The seller for our lot hired their own to do this originally when he subdivided the 2.5 acres with an already existing home. This was practically done for us, bonus!
What I would say we should definitely have done was to hire a professional to do our own perc tests. The seller had these done, but come to find out in the excavating process and through talking to some of the contractors and people at the town hall, they had to do several dozen perc tests to get 4 good ones in very specific spots on the lot! To me, that’s cheating and we still had to go back and do at least one more perc test to find the right leach field spot and get the building permit….so lesson learned after having to fill in some very soggy areas and spend extra money to help with the drainage.
4. Verify The Zoning Laws
Oddly enough, the lot we purchased actually sits half on Zone RA and half on Zone RB, which was not a problem because both are zoned for residential building. Had we not checked this and verified that both zones have the same zoning laws we could have run into some pretty major issues. It’s safer to make sure your lot was zoned for what you desire to use it for. Sometimes the zoning laws can prevent you from running a business or using it as a residence.
5. Title Research
This is super important, do not skip this. Researching the Title will also come up when you sign a Purchase & Sale (a.k.a. P&S) through your agent or lawyer, but that can be too late to get your “good faith” deposit back if the research turns up something egregious.
You can easily do an online search, this tends to be the most cost effective. Most towns and cities will have records of this online in their database. Our town has a great online database that you can look at several different layers of the legal property lines and zoning.
The one thing we needed more diligence with was the easement on our lot that ran through from the street to our neighbors in the back. Our lawyers could not find anything in the deeds that went back 100 years as to our right to access the lot through that easement, even if it showed on the town map. We decided we still loved the location and moved forward with the purchase, knowing we would need to put in a driveway through the right of way at the front of the lot instead of the easement at the back of the lot. This did however, change our house plans since the house now faces in a different direction than we originally thought it would.
The funny thing about living in Massachusetts is that the area was developed over 300 years ago, when people used landmarks to lay out property lines. Things like this are actually written into the deeds. For example, our current home’s property line runs right through our neighbors driveway….because it was written in the original deed, dating back to the late 1800’s, that the line began 2 feet right of the large oak tree.
Guess what? That oak tree is gone! Also that easement we thought we had access to? It was written in a deed 80 years ago that as long as the owner was living she had access to use it. Guess what? She passed away 3 years ago! So it was no surprise to find out that our neighbor to the front did not want us accessing our lot through the easement.
6. Look At A Recent Land Survey
Again, the online database for many towns and cities is an extremely helpful tool in gaining insight to impediments your future home site may have. You can use online databases to research structures, mortgages, easements, encumbrances and legal boundaries.
It’s important to know what you are getting yourself into before such a huge investment. This will help you and your lawyer when it comes to your title insurance. It also won’t be such a shock when you suddenly find out that the driveway you thought you had belongs to someone else!
7. Appraisal
If you are not confident that the parcel your are looking at is worth what is being asked you can get it appraised. This is usually something you do if there is a structure already there. I still think this is a valuable step in making sure you are not overspending on the piece of land itself. Typically if you are financing the land you will be required to do this anyways to obtain a mortgage, but if you’re paying in cash it’s still smart. Don’t overspend!
8. Have An Environmental Assessment
If your lot is like ours, you can run into issues with Conservation land, wetlands, wells, ledge and the list goes on. Sometimes there are hidden issues like an old septic, buried oil tanks and gas leaks. I wish we had done more of this before signing a Purchase & Sale, then we would have known we were looking at drilling and blasting to get a foundation in.
Would this have swayed us from buying the lot, maybe, but most likely we would have just budgeted differently in the beginning or even modified our house design.
9. Title Insurance
Title Insurance is usually done with all the closing papers. Our lawyer and real estate agent did the work for us on this one. Having Title Insurance gives you peace of mind so that the following issues don’t come back to haunt you: any pending legal actions against the property, back taxes, old mortgages, claims from heirs or even forgeries.
Sounds a little over the top? Not to me! I want to stay in our forever home and sleep peacefully knowing the hypothetical grandson from a previous owner doesn’t come back to claim his “rights” to our land!
Lists can be very helpful during your build in keeping you organized and on track. So we created a free “9 things you must do before buying land” checklist for you to download and print off.
These things can add up if you choose to use professionals, which in our case we did for some of them. We of course skipped some and now are paying the price in other ways. We did some of our own research which helped to keep costs down.
I would say to only do this kind of work if you are very serious about the real estate you are about to sign a Purchase & Sale on. We only chose to do all this extra work on the lot we ended up buying and not the first ones we looked at because they did not fit our wants and needs.
By doing many of the things on this list you can avoid some very costly fixes in the future. You can build your dream house practically anywhere and modify that to fit the surroundings, but you likely cannot correct major issues with the land itself. If you do they are probably gonna cost you!
Have questions about due diligence on your property we didn’t cover here? Let us know!
~Queen Bee & Worker Bee
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