Do You Want to Buy Land?
Date: September 8, 2022
If your ideal home doesn’t include nearby neighbors, you may be thinking of buying land where you can build a new house or set up a prefabricated (mobile, modular, or manufactured) home. Buying raw land is different from buying an existing home. Some factors to consider include:
Financing – Getting a land loan is trickier than a traditional home mortgage. Land loans often come with higher interest rates and require a larger down payment. To qualify, a borrower may need to have a better credit rating and a lower debt-to-income ratio. Land loans also tend to have shorter terms accompanied by a balloon payment. The most straightforward way to buy land is with cash. Cash buyers have the advantage of time. They can act quickly without waiting for approval from a lender. Swift action is often key to securing a good deal. Buyers planning to make a cash offer on a parcel of land should be prepared to show proof of funds.
Restrictions – Before making an offer to purchase land, be sure to check for zoning and land-use restrictions. You want to be sure the property can be used for the purpose you have in mind. Common restrictions include the type of building allowed, minimum and maximum size of buildings, required setbacks from property boundaries, and allowable uses.
Access – Beware of “landlocked” properties. If the property does not adjoin a public, government-owned, roadway, you will need to obtain an easement to enter and exit the property and pay to build a road.
Utilities – Connecting to municipal utilities, where available, can be costly. If the property is in a rural location, you might need to drill a well, install a septic system, and pay to connect to electricity. High-speed Internet and cellular telephone service may not be available in remote locations.
When buying land, be sure to budget for all related development costs in addition to what you plan to spend on the property itself.
A Realtor® with experience selling land in the area where you plan to buy can help you avoid common land purchasing pitfalls. Thinking about buying land? Let’s get together to discuss your plans.