John DuPriest

Buying Bare Land – A Whole Other Ball Game

Buying bare land involves serious considerations, particularly land or lots that are not part of a formal, recorded subdivision. A completed subdivision represents months and sometimes years of planning, engineering, construction and inspections before the finished lots are ready for building or sales. The water lines, sewers, drainage, curbs, gutters, sidewalks and streets are usually completed.

In contrast, unimproved bare lots or land, usually referred to as “acreage” is just that - unimproved bare acreage. To build a home on such unimproved land requires a source of potable water, a sewage system acceptable to city /county health authorities, electrical power, satisfactory topography for a home and proper and legal access to the property.

Here is how I make as sure as humanly possible that my buyers are getting a valid building site:

1. I structure the purchase contract to insure that the purchase is subject to a proper due diligence period. In other words, the seller must allow you and me time to confirm that the parcel is or can be a valid building site and what the costs will be to make it so. Our purchase agreement allows a due diligence period of 17 days or more. By the end of that time it is likely that you & I will know more about that property than the owner does!

2. Once we have an accepted offer, you and I schedule a day for you and I to go to the various city/county agencies to determine whether or not you can build a home on the property. I go with you to make sure that the right questions are asked and answers are obtained. This is serious business. When that day is over we will have most of the information we will need to satisfy ourselves that we have a buildable parcel and we will know, within reason, the development requirements and approximate costs for that particular parcel. Here are the areas & subjects we will investigate together and in depth:

a.) Water - We will either have piped water or a domestic well. Either will involve costs and some testing. In the case of a well we will need to know CAN we even get water, how much water (there are minimum requirements) and what will it cost. We will also confirm the availability of irrigation water. VERY IMPORTANT.

b.) Sewer - Where is the sewer line, what will it cost to hook up. If a sewer is not available or is too expensive we will have to consider a septic system. This requires testing and ultimately design and construction costs. Such costs can vary widely.

c.) Utilities -Electricity is usually close by in areas we service but if it isn’t it can be expensive to bring it to the site and hook up. This can usually be handled with a phone call. If not, we will pay them a visit and get information and cost estimates.

d.) Drainage/Grading - We will determine whether or not we are in a flood zone and if so what are the mitigating measures and costs. Grading for a single family home is usually not a problem but we want to confirm that.

e.) Property Boundaries - Fences rarely define the actual boundaries of a parcel. We will confirm those boundaries either with a survey or by accepting the Seller’s definition. The choice will be yours after I explain the pluses & minuses.

f.) Fire & Police Protection - These are easily confirmed

g.) Schools & Community Amenities - These too are easily confirmed

h.) Estimated Costs - All of these jurisdictions and departments impose fees and costs. By the end of the day we will have a reasonable estimate of those costs.

3. After our due diligence work is complete we will begin to deal with financing of the purchase. Sometimes the Seller will finance a bare land purchase for a short period, usually 3 to 5 years. But very few Sellers will subordinate their loan to a first loan such as that which you will need to pay for actual construction. This will require financing that is very different from the usual “home” loan. I can explain this in detail later.

4. Once you are comfortable with all the requirements and costs we are ready to proceed with closing.

Bear in mind, if at any time in the due diligence process you do not like the results of our investigation and you make your concerns known before expiration of the due diligence period, you will be able to get your deposit back less any funds expended on your behalf.

In all these 44+ years full-time in the business, I can count on the fingers of one hand the times a due diligence investigation did not pan out. So rest assured if you find the parcel that suits you it is almost always buildable at a reasonable (quote, unquote) figure. If it isn't we go find another one.

Call me and let's go Land-Lookin'. It's fun and the fresh air is good for you!