Buying a lot to build a house - what to watch out for?

Buying a lot to build a house - what to watch out for?
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The wife and I have decided we want to buy a piece of property and build our next house. I wanted to start a discussion to see what I could be missing here and to see if there’s any other points I should address or look out for.

We found a 2 acre parcel and will be doing our due diligence over the next week.

  1. Always utilize the Property Appraiser tools - our county provides direct access to GIS maps to show elevation/terrain but more importantly, FEMA flood maps.
  2. If there’s any HOA, review of the bylaws and/or building requirements (some planned developments require you to submit housing plans prior to building for approval. The lot we found is not in a HOA).
  3. This is more of a question - but do we get an appraisal prior to making a firm offer? Is this even allowed? The assessed county value compared to their asking price has a large spread.
  4. We plan on paying cash for the lot. Is there anything I should be aware of to maximize this purchase? If we plan on building a house soon, does it make sense to roll this into a home construction loan rather than use cash/equity for the dirt?

Thanks all!

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I like that you’re contemplating purchase of two acres instead of a postage stamp lot. Congrats!

I would be certain to do a search of past ownership of the property, its provenance if you will. This would be done at the county courthouse of the county in which your land is located. Do the search personally if at all possible and go back as far as you are able. Look for anything suspicious or worrisome . . . something which might suggest past industrial use, for example, or any past use which might have involved dumping or burial of hazardous material. Search for possible past lease or sale of mineral rights. There are many “gotchas” such a title search can help to reveal.

Be sure anything you buy is, and will remain, high and dry. These days “500 year floods” are happening every ten years in some places. You want to be miles away from that possibility . . . or else decide in advance to build your new home with elevated underpinnings.

Don’t cheap out on title insurance . . . buy the kind with an escalator for inflation. But your courthouse chain of title search might also provide you hints, in advance, regarding potential title issues.

Be cognizant of the geology of the property. Learn whether there is a history of sinkholes in the area. Be certain the soil type will be suitable for your plans going forward. You want to build your new home on solid, reliable, ground.

Finally it goes without saying you need to walk the land carefully, fully, and completely, searching for anything whatsoever which might appear amiss. Take as many helpers with you as you have available. The more eyes on the property the better!

Good luck with your purchase! :grinning:

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Awesome points, @shinobi! Thank you. The lot is heavily wooded, but we do plan on walking it as best as possible to see what we can find.

You are certainly welcome.

But you did not mention the heavily wooded aspect in your OP. Hence:

Be 100% certain local law will allow cutting of the trees as your needs going forward might make necessary. In most instances this will NOT be a concern. But some venues are persnickety about trees. It’s not just the clearing you will need to do in order to build your home. It’s also about a yard, if one is in your plans, and any other land use you have in mind which might force you to cut some of the trees.

Also there is something I forgot, and it does involve trees . . . in a way:

You need to learn of any proposed, pending, or actual pipeline building which might be in the offing for your land. Many people prefer not to have a pipeline across their land, whether it be for oil, NG, NGLs, or whatever. If you like the trees as a feature of the land you are considering, be aware any pipeline will clear cut a swath through those trees fifty or more feet wide for the requisite right of way. Additionally, a pipeline right of way through your land grants to the owner the right to enter upon that right of way at the owner’s discretion. This is for purpose of maintenance, testing, and so forth. If privacy is something you value, this is a consideration.

I’m only mentioning pipelines because they can be another one of those gotchas where land purchase is concerned. If a pipeline right of way has already been granted, your courthouse search done thoroughly should pick it up. But if a pipeline is only in the planning stages there might not, as yet, be anything showing in the courthouse records. That is why you need to learn if anything is impending.

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Doesn’t cutting down trees also require making sure that not only the trees aren’t under some kind of protection, but also some protected bird hasn’t made a nest on it?

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This is an especially smart observation that never even occurred to me. To take it one step further, through generalization:

There is need to investigate limitations which might have been placed on usage of the land owing to restrictive zoning, land use regulations both local, state, and federal . . . . and so forth. It can happen today that landowners’ rights, once routine and taken for granted, have been interfered with by government. Nobody should be buying land without first thoroughly investigating such possible landowner rights infringements. This goes double if the land happens to be located in a place where there is activist government.

My wife was in development review in a local municipality as a civil engineer reviewing plans for stuff like this.

Read and re-read codes, and I can’t stress this enough - hire an engineer to act as a consultant BEFORE you buy. Examine the property carefully for not-so-obvious stuff like hazard areas (flood, steep slopes, stormwater runoff, etc). These are not often obvious - you might be in a hazard area because of an activist local government. While most local governments can’t prevent you from building, they can make it prohibitively expensive for you to do so. For instance, if the parcel is in an area that currently absorbs a lot of stormwater, and represents a buffer between one parcel and another, they may require you to add mitigation (such as a tightline) since your house now represents impervious surface that was previously pervious. That kind of thing is not cheap.

Impact fees are another big thing that’s often overlooked. Local governments and school districts often impose charges on new housing to pay for the “impact” it has on infrastructure like schools, roads, and the like. These will often total tens of thousands of dollars.

Look for covenants/restrictions on the land. A common thing around here is that a large parcel is subdivided by the owner into short plats. The previous owner, in cashing out his or her land, wants to remain on one of the plats and sell the rest. That owner will record restrictions on how the land can be used before subdividing. Our house was built on a short plat in the late 70s and has a bunch of restrictions from the previous owner about inane stuff like no chicken farming, no more than one outbuilding on a parcel, etc.

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Pursuant to the above discussion in its entirety, I want to offer the OP some killer language I ran across in a deed just this afternoon. This is a doozy if ever I’ve seen one. Here it is:

This conveyance is subject to all exceptions and reservations as are contained in the chain of title

You find something like that in the seller’s deed, well, flashing red lights! The obvious failure there is astonishing lack of specificity, likely as not owing to unbridled sloth on the part of some lawyer . . . easier and cheaper to insert such a catch-all than actually to search the chain of title or pay someone else to do so.

But it happens.

The decision I am in process of reading, where I found that, was handed down by the Supreme Court of my state, so many were the appeals. Lazy lawyering can lead to plenty of litigation and trouble. Be sure the seller’s deed, and any back through his chain of title, specifies exactly what you are purchasing and precisely what might not be included.

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Wow! A lot of great advice. Also, congrats on the future new digs.

Make sure you can read a topo map and understand contour lines, or know someone who does. I’ve found the flood maps to be woefully inadequate and, at best, only provide a starting point. When you’re looking at the topo maps, try to take into account future development and what that will do to drainage / flooding. A lot of the flooding that occurs today is because development has removed so much ground surface that little water can be absorbed, and has to be drained thru pipes, which often prove to be inadequate.

This is fairly common, and with good reason. No one demands the county reappraise their property because it is valued too cheaply. A lot of cities reappraise every few years so that they can grab more taxes. Counties that aren’t being actively developed probably don’t. My parents property wasn’t reappraised for 20+ years … until they built a new house.

Finally, make sure that you want a 2 acre lot. I don’t know your needs/wants/plans, but I’ve heard a few people with that size property say that they wish they had purchased 5+ acres, or only a half-acre. :smile:

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Watch out for activities undisclosed by previous owners, possibly inadvertently and possibly intentionally.

Once I tried to buy a parcel of land that looked rather flat and zoned for three houses. The seller was a church so we assumed that everything would be above board.

Not so. The flatness of the land was an illusion. It was actually a ravine covered up with unknown depths of landfill after a landslide (triggered by church construction) FIFTY years ago. It cost some thirty grand in fees to builder, architect, soils engineer and geologist - we had a geologist dig up the information as part of a survey to locate the fault line to determine the setbacks needed to build in earthquake country (California). A lawyer was needed to get the earnest deposit back. Needless to say the land purchase did not close, and our efforts to press the seller to cover the expenses of this investigation led nowhere. I wrote it off as a wild goose chase.

Expensive lesson learnt.