Building Your Custom Home For Dummies. Peter Economy
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time with a buyer only to sell a piece of property at a fraction of the price (and a fraction of the commission) of a completed home; however, a few agents have made dealing with lots their specialty. Check to see if the real-estate agent you’re working with understands the issues associated with building, planning, and zoning that we reference in Chapter 6, as well as in this chapter. If your agent doesn’t readily answer your questions and seems unsure, if you feel like you know more about these topics from reading this book than they do, or if they brush off or blow over your questions entirely, you may want to look for someone more experienced in lot sales. If your agent seems knowledgeable in lot-only sales, they can help you assess whether any potential problems associated with building on a particular lot may surface.
Doing the legwork on your own
If you want to find the perfect lot, you may have to do some detective work. Grab your sleuthing equipment and get started.
Finding a lot when there isn’t one
If you’ve searched online, worked with an agent, and driven the neighborhoods, and you still haven’t found your dream lot for sale, you may need to take a more aggressive approach. If you find any piece of land you like, contact the owner and make an offer! It doesn’t matter that it isn’t listed for sale right now. Remember: Everything is for sale; it’s only a matter of price. Information on who owns any piece of land is part of the county public record. Through a real-estate agent, mortgage broker, or title company, you can request the address and phone number of the owner of any piece of land. If your real-estate agent is managing your part of the transaction for a commission, they should be thrilled to help you with the negotiations and the closing process.
TOO BAD IT’S NOT 1889!
In 1889, Oklahoma was emerging as an appealing opportunity for settlers looking for land. Oklahoma Station and Guthrie Station were two promising railroad outposts destined for urban development. In one of the strangest and most chaotic stories of land acquisition, the government created an exciting and unprecedented process for claiming land: a race! Rules were posted allowing people to gather at the nearby Arkansas and Texas borders ready to run, ride, and walk to their desired parcel of land on April 22, 1889. Upon arriving at their parcel, they would claim it by staking a flag and filing a claim form. People already in the territory (“Legal Sooners” as they were called) would cheat by staking their flags early even though prohibited by law. Thousands of people, including single white women and African-American men and women, raced that day and made Oklahoma their home. It was exhilarating and brutal. “It is an astonishing thing,” the New York Herald observed on the eve of the opening, “that men will fight harder for $500 worth of land than they will for $10,000 in money.”
Evaluating a Particular Lot: The True Value of Dirt
Although it may be true that the value of something is based upon what someone is willing to pay for it, land value has other factors to consider when determining its ultimate usefulness for building a custom home. You need to take into consideration the cost of getting the land ready for the build. You also must factor in limitations on the size of the home.
When determining the value of a particular piece of property, a lender’s appraiser looks at other comparable land sales in the area to create a number for the lender’s purposes. Keep in mind, however, that this appraisal doesn’t guarantee your ability to resell the land for the same price. Nor does it mean that your custom-home budget will be able to absorb the price of the land. Consider all the factors associated with your build — especially financing — before purchasing a lot. Chapters 9 and 10 can help with understanding how lenders evaluate your land in relationship to the entire custom-home project.
Examining amenities and utilities
The relationship between utilities and your lot can have a significant impact on the lot’s value. A lot requiring a septic system can add costs (which may decrease its value). The need to drill a well or to add off-site additions, such as sidewalks and parkways, can also negatively impact a lot’s value. Be sure to explore the cost of installing utilities and amenities before you buy any lot.
This section contains some “due diligence” items for you to consider when figuring the ultimate “cost” of your lot. Ask these questions of the seller and your agent, or research them with the appropriate county or city agency. Then create a list of all possible costs to prepare for your budget and estimate how long it will take to work through the permitting or approval process. Here’s a short list of questions to ask:
Does the lot require gravel, asphalt, or concrete for its driveway?
Will you need to install sidewalks?
Will you need to install street lighting?
Will the lot require extensive earthmoving or a special foundation?
How far is the electricity from the build site, and how much will it cost to extend it to your property?
What is the cost of connecting to the sewer or installing a septic system?
Will the property support a required septic system?
What is the cost of connecting to water or installing a well?
Zoning in on zoning’s limitations
Nearly every city and county attaches building restrictions to land when the land is first put into development. This is called zoning. Zoning determines many factors you must consider, including:
The type of building you can put on the land
The