The Ultimate Guide on How to Buy Land and Build a House


Clever Real Estate


December 2nd, 2020


If you dream of buying a vacant lot and building a custom home you may wonder what your first step should be. We've compiled this ultimate guide on how to buy land and build a house to help you make an informed decision.

Buying land and building a home gives you much more flexibility and freedom than purchasing an existing property does. Whether you dream of owning many acres and building a farmland retreat or purchasing a smaller residential lot and creating an urban oasis, there are many options available to homeowners.

If you've searched high and low for your dream home and it still evades you, it might be time for you to consider buying a piece of land and building your dream home.

Although buying land and building a home can be a very different process compared to purchasing an existing house, it can be a gratifying experience, both financially and emotionally.

Here's what you need to know about how to buy land and build a house.

Find Available Land

When finding your perfect slice of vacant land, a local realtor can be worth their weight in gold. Most real estate professionals have “pocket listings” in their area and know of land available that is not currently on the market.

You could also try searching online on websites such as LoopNet and LandWatch for opportunities. It never hurts to ask your neighbors and friends if they have any land available or knows of anyone that does.

Want to buy vacant land to build a home?

A Clever Partner Agent will help you find the perfect plot of land.

Understand the Zoning

When buying an existing home, you can be reasonably confident that it was already zoned for a residential building. This isn't necessarily true when purchasing a piece of land, so it's essential to find out what you can actually do with the land before you commit to buying it.

Purchasing a plot of land that has zoning restrictions can quickly kill any custom home building plans you have. Research the land and conduct your due diligence, such as going to the county planning office and asking them directly if there are any building restrictions.

If you aren't sure of what questions to ask, reach out to an experienced real estate agent who is knowledgeable about vacant land. They will be able to guide you through the process and help you to find out any information that may negatively impact the land's possible usage and value.

Is the Land Suitable to Build on?

One of the most crucial steps in purchasing a plot of land is to have the area surveyed by a professional. The surveyor will tell you the dimensions of the land and whether anyone else has a right to use the property and, if you decide to build on it, how accessible the land is.

Other factors to consider are whether the land's soil prevents the safe building of a home or digging of a well. Sometimes environmental problems crop up that make building an impossibility.

You should also consider whether the land is classed as wetlands because the regulations on this type of property can be severe. Laws differ between the city, county, state, and federal level. It is crucial that you try to find local wetland inventory maps, as these can help you locate all problem areas.

Does the Land Have Utilities?

Utilities such as water, electricity, and natural gas are a necessity for residential properties and usually managed by the county. If you would prefer a more rural setting for your land build, you will have to find out whether there are existing utilities in place.

When there are no utilities, you will have to consider the additional expense of installing a well and septic system, as well as running electrical lines.

If you're not sure the extent of the work that may need doing, consult an experienced real estate professional who can help you to find local contractors and source quotes. Depending on the quotes you receive, you may find it necessary to alter your purchasing budget.

Financing Land is Different

When you decide to purchase a vacant plot of land, the financing process is different than buying a traditional home — especially if the land is completely undeveloped and lacking any utilities.

Raw land loans can be extremely challenging to obtain, as raw land is considered to be a riskier loan than a traditional home purchase for lenders.

Some lenders do not offer vacant land financing options at all, and the ones that do typically require a 20% to 50% down payment when the land is raw. Financing options for vacant land also usually have higher interest rates.

Vacant land is often offered with the option of owner-financing. Owner financing is an arrangement between the seller and the buyer directly. This can be useful for buyers who find it challenging to finance their land purchase with a traditional lender.

The More Quotes the Better

Designing your custom build home is probably the most enjoyable part of the process. To ensure that you find a builder who really understands your wants and needs, you must be clear about your expectations and timeline.

Aim to speak to several different contractors and ask them for in-depth quotes pertaining to the scope of work that you require. It takes an average of over six months for a custom home build to be completed, so you will have to make sure that you and your contractor both have realistic expectations of completion.

The joy of a custom home is that you can design it specifically to meet your needs, and while this is wonderful for you, it may not be ideal if you ever have to sell your home. Speaking to a local real estate agent can help you to decide what features of homes are most desirable in your area for resale value, as well as what to expect if you do come to sell your home.

Consulting a local property expert can make sure that you avoid pitfalls such as an “overbuilt” house that you will have trouble recouping your investment from at a later date.

Timeline for Building a Home

To give you a clearer picture on what to expect when building your dream home, here is a proximate timeline of how your home will come together.

Before You Build

Before a shovel even touches the ground, thoroughly prepare a building plan. This is also the point where your vision comes to terms with your budget. In this stage, you'll work with architects, designers, contractors, tradesmen, a real estate agent, lenders, engineers, and inspectors to create the home you've always envisioned but that you can also afford.

Once you move ahead with the build, know that it will be more difficult, costly, and time-consuming to change your mind about designs, materials, and floorplans. Also, be certain about your wants and needs ahead of time so there's clear communication with everyone on the same page.

Week 1: Site Excavation and Leveling

Once you've received financing through a lender, scouted and purchased a plot of land with your real estate agent, planned the home, and received permits, you're ready to begin building your dream home.

During the first week of construction, a crew will come in to prepare the lot for your foundation. This includes leveling the ground, removing any large boulders, creating erosion barriers, and excavating a space if your home design has a basement or crawl space.

This phase also includes placing the footers, or the concrete bases that will support the foundation of your home.

Weeks 2 to 3: Foundation Work

Once your footers are in place and have passed inspection, the foundation work can begin. The workers will pour the concrete slab for your foundation that will provide the sturdy base to build your home on.

Weeks 4 to 6: Framing

As workers move into the framing stage, you'll start to see your home take shape. Framing is like building the skeleton of your home — you'll see the floor plan, different levels, and cut outs for doors and windows develop.

Exterior walls and your roof will also be completed at this point along with sheathing that will protect your home from the elements as construction continues. Plus, you should expect another visit from the inspector to make sure the framing and roof passes code.

Weeks 7 to 8: The Mechanicals

While this week may not be as dramatic as putting up the walls and roof of your home, the mechanicals will allow you to go the bathroom inside rather than an outhouse in your yard. The mechanicals include plumbing, electrical systems, your heating and cooling units, as well as wiring your home for a security system if you choose to have one.

Once the mechanicals are installed you'll have running water, working outlets, and enough wiring for light fixtures and appliances.

Weeks 9 to 10: Insulation and Drywall

Next comes the insulation and drywall. First, workers will install the insulation to help maintain a comfortable temperature and provide a bit of soundproofing. And because insulation typically covers up wiring, an inspector will generally give the go ahead on your electrical systems before adding insulation.

Then the drywall will go up in the interior, be sanded and primed, and possibly even have a first coat of paint. You're house is beginning to look like a home.

Weeks 11 to 12: Flooring and Painting

At this point in the construction process, your design and vision will begin to manifest. The floors and cabinets you carefully and specially picked will be installed along with any built-in shelves and interior doors. Plus, all your walls will be given a coat of paint.

During this time the crew will also get to work on finishing up the exterior walls such as adding brick, stucco, or siding. You'll also see work being done on your driveway, walkways, and landscaping.

Week 13: Adding Appliances and Fixtures

The countdown to your home's completion has begun. You'll see a lot of activity throughout the week as plumbers, electricians, and subcontractors will install your sinks, faucets, countertops, appliances (such as your refrigerator, washer and dryer, and stove), light fixtures, outlet covers, and more.

Your HVAC system along with your electricity will be turned on making sure everything is working properly. You'll also see drastic differences to the outside of your home as workers put the finishing touches on your landscaping.

Weeks 14 to 15: The Final Touches

You're almost ready to move in. The only thing left is final inspections where not only does the inspector ensure everything is up to code and meets proper safety requirements, but you'll also do a final walk-through inspection taking note of any issues or minor changes you'd like to have done.

Once everything looks good and is up to both the inspector's and your standards, you can close on your home, move in your belongings, and revel in the fact you're now living in your ultimate dream home.

If you have dreams of purchasing vacant land and creating a one-of-a-kind custom build but aren't sure what your next step in the process should be, connect with one of our Clever Partner Agents. Clever Partner Agents can offer you expert and personalized advice throughout the real estate process, to ensure that you find the land and home builder that will best fit your budget.