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Building on Your Lot vs. In a Community

November 22, 2020

If you have thought about building a home, chances are you’ve considered building on your lot (BOYL) vs. in a new home community. The thought of building on your own land may seem appealing however there are things you need to know when making a decision. It can be like a dream come true but it’s not as easy as it seems. We recommend you speak with a REALTOR® as well as a builder before securing a piece of property. Many factors play into whether the location is buildable and if it will fall within your desired price point.

When searching for a piece of land, be careful of buying an inexpensive lot and then putting an expensive home on it or a costly lot and building a smaller and cheaper house, which damages land value. A good rule of thumb – build a home similar to sizes and price ranges in the surrounding area.

Essential Things to Consider BEFORE Buying Land

There’s so much more to finding the perfect homesite than locating a piece of property in your desired area. It’s best to do lots of research beforehand, such as:

How is it Zoned?

Before buying land to build a house on, check the zoning that the local planning authority has determined. Before you make a binding offer, make sure you’re not stuck with a piece of property that you can’t build residential homes. Don’t buy something in hopes that you will get the zoning changed afterward. Zoning decisions require input from the local planning commission to neighborhood members, making it difficult to change.

How Much Lot Prep is Needed?

Statistics indicate the national average cost for land clearing is between $1,200 and $6,000. Removing other land features such as concrete or tree stumps, the land size, and land grading all affect the total cost. There may be existing structures that need removal, increasing the cost to clear as well. One of the most significant expenses many forget to add is building the home on a chainwall or the amount of dirt needed to provide a safe foundation for the home.

When buying land, also search for hidden conditions such as debris that has been covered over, old waterways, wetland remediation – if required, or any defects in the land. In the end, depending on the property, you may have to build less square footage or give up some of the extras you were planning on adding to the home.

Are There Utility Hookups?

You may think today utilities are everywhere, but that’s not always the case, especially in some of our more rural areas. Before writing an offer, check to see which utilities are available: water, sewer, natural gas, electricity, etc. For example, you may need to add a well or septic tank, which can run upwards of $10,000 or more. If utility services aren’t available, you will need to find out the cost to do so. Don’t forget to check the cellular and Internet services.

Financing Your Home and Land

Building on your own lot isn’t the same as building with a high volume production builder. They usually have programs that enable you to place a small deposit down, and you move in once the home is done. Building custom on your own lot is different. The builder typically doesn’t buy the property and build. Instead, a Construction Loan is recommended, which is available once you purchase the lot. The custom home builder can then collect “draws” on the funds until the home is complete, all based on the financial institution’s inspections.

While building in a rural area has its benefits, building in a community has many as well:

  • The feeling of living in a community of your peers
  • Homeowners Associations that require guidelines and cleanliness to help maintain home values and appreciation
  • Flood zones, utilities and streets are usually considered when creating the development
  • Comparable properties will be easier to find
  • Typically, subdivisions are near amenities and popular school districts
  • Easier to resell than homes in a rural area
  • You can sometimes get more square footage and amenities in the home as the homesite is already prepared
  • Comparable properties will be easier to find

Bottom line, when building a custom home, is buying land right for you?

As a home builder on the MS Gulf Coast, we have met with many homeowners who started on their new home journey believing building on your lot would be more beneficial. In the end, it is not a decision to take lightly, so don’t rule out a new home community. Contact Susan, our New Home Specialist, at 228-239-2621 for more information on building your dream home.

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This post was written by Acadian Homes