Wednesday, March 23, 2016
Getting Started In Buying Land - Part 02
Developed And Undeveloped Lands
The land you are considering may be completely undeveloped with no representations from the seller about its characteristics or usability –typically called “vacant land.” Or you may be looking at a fully developed lot in a subdivision with sewer, water, power, and gas already brought to the building site, along with a commitment to buy a design/build package from the developer. Or anything in between – for example, a lot in a rural development with a partially built unpaved road, designated lots, and no other improvements.
There are pros and cons to each. In general, vacant land will be less expensive but requires much greater knowledge and diligence on the part of the buyer. A developed building lot in a subdivision requires less investigation by the buyer, but is usually purchased at a premium. The more “developed” a lot is, the less development cost and risk the buyer assumes. Not surprisingly, you will pay a premium for that – for both the infrastructure at the site (e.g., earthwork, well, and septic) as well as the peace of mind that the work has been done. However, a piece of “vacant” land can end up costing a lot more than a lot in a subdivision by the time you pay for the necessary permitting, infrastructure development, and utility hookups.
The lure of a large lot in the country is compelling for many people planning a custom home. The attractions are many: open space, beautiful views, peace and quiet, privacy, garden space, and perhaps room for a shop, studio, or even a horse barn. Also, you can generally get more land than you would in a subdivision for the same or less money, although after you add up all the development costs, some or all of those savings will disappear. Figuring your real out-of-pocket cost for a piece of vacant land takes a lot of homework.
A piece of undeveloped land can hold many secrets and requires a thorough investigation by the buyer. Caveat emptor (Let the buyer beware!) is the rule here. If you are not experienced in this area, and don’t wish to take time to educate yourself, and are not prepared to spend a lot of time and possibly some money investigating potential building sites, then you are probably better off buying land in a subdivision. The list of potential surprises that may come with a piece of land is long. Many will restrict what you can do with the land, most have cost implications, and others will affect your quality of life on the land. The most important issues are covered below, but there may be others unique to your particular town or region. So look carefully before you leap in this direction.