Many people are considering buying land and building their own home. This can be a great thing or it can be a nightmare and what makes the difference is your understanding of the process and your ability. Now ability can be you actually going out and clearing the land and building the home yourself or it can be you working with contractors to get the job done cheaply. There obviously will be things that a owner builder can’t do on their own and that would be getting utilities to the home site from the road. Working with utilities normally means that you need to use an approved contractor that is licensed and insured to hook up to the electric grid and gas lines or water and sewer. Depending on the property you pick you can be completely off grid or you can be partly on grid or totally on grid. The options and the cost can be the deciding factor but when you are moving out of a current home and building your own home the time constraints can be a bigger factor than cost.
Whats The Best Way To Buy Land For Building?
Honestly the best way to buy property with a good amount of land which you will build your home on is to buy a place that is already established but very neglected. If the property already has utilities and some type of building on it whether its a home or a mobile home or even just a barn for storing farm equipment then much of the hard work has already been done. Even just getting the Post Office to recognize your property can be a monumental task and if you are trying to find a lender they may be more likely to work with you over bare untouched land.
If you can’t find an established property then you will need plans in place to immediately address your utilities and a timeline for building that is industry standard. That means in most cases if you aren’t paying cash for the property you will need to pay off your loan within 5 years or more important convert your land purchase into a construction loan and then into a conventional home loan once you have an occupancy permit. Yes if loans are involved it can get very complex.
Your other option to a loan or paying cash is to find an owner financed loan. This is when the current owner sells you the land but puts a lien on the deed and you will pay an agreed amount of down payment and monthly payments. If you do consider this type of deal then its in your best interest to pay back everything you owe as early as you can. You don’t normally want to sit on one of these loans especially if the lender is older and there is a possibility that they pass on and then their estate could come after you for early repayment.
Buying Off Market Property Is The Best Deal
When you buy land or any type of property that goes through the MLS Listings and is dealt with by realtors then the cost will be considerably higher. First you have the costs of the realtors which don’t actually prepare the legal documents you still need a Lawyer to write up a deed. They also don’t do the Title Insurance / Deed Check to make sure the property can be legally sold without liens or other encumbrances. And they don’t do inspections on the property or help you get a loan or insurance or many many other things. There are reasons to use a Realtor but there are reasons that you shouldn’t and adding 10% to the deal for no work performed isn’t a good thing in my opinion and that is why off market deals should be done with both parties getting a real estate lawyer and having the same legal work done but without a realtor.
So if you are lucky enough to find someone that has property that they want to sell you then contact a real estate lawyer that primarily works in the field of real estate not a general practice lawyer that thinks they can handle any type of work. Legally they can write up a deed but they may have very little experience doing it. Have a conversation with a few of them prior to even looking for property and ask them their fee. The should be able to give you a flat fee but if they tell you they have no idea or they bill hourly then they are not the one to work with. Legally you can do all of this work yourself without a realtor or lawyer but it is more acceptable to the county register of deeds if the deed and paperwork are written up by an officer of the court who is sworn to act within the law. Use a Title Company to make sure the transfer of the land is legal and you should be fine.
Final Note
Now that you have found and purchased your land the first thing you need to do is establish its boundaries. Hire a licensed survey company to come out and mark the boundaries of your property with stakes. I would have a conversation with them with the deed map in hand and make sure that enough markers are installed to clearly mark the property. Any bend, stream, incline, path, driveway or road should be marked so then you can come back and establish a fence line. Don’t be shy about establishing your property boundaries because in many cases you will find neighbors that have over reached into your property and tried to make it their own. Its best to have this fight right away when the land is being surveyed by a licensed professional.
Also licensed survey companies may be very scares in your state. In some States there are only a handful of these companies so be prepared and don’t complain about the price because its going to protect you for as long as you live there.