Securing Land: Finding and Purchasing Your Building Lot

Overview

• Typical Duration: 2-6 months
• DIY Difficulty: ★★★☆☆ (3/5 - Research intensive)
• Typical Cost: Varies greatly by location ($20,000-$200,000+)
• When to DIY: Property research, site visits
• When to Hire: Title company, surveyor, soil testing

Finding the right piece of land is the foundation of your owner-builder journey. Rush this step and you'll regret it for years. Take your time, do your research, and make sure the land works for your plans.

When This Step Happens

• Must be complete first: Budget defined, basic house plans concept
• Can happen in parallel: Finalizing house plans, securing financing
• What comes after: Finalizing construction financing, permit application

What Makes Good Building Land?

Critical Factors

1. Zoning and Building Restrictions

• Is residential construction allowed?
• Minimum lot size requirements met?
• Setback requirements (distance from property lines)
• Height restrictions
• Architectural review board requirements

2. Utilities Access

• Public water or well required?
• Public sewer or septic allowed?
• Electric service available?
• Distance to utility connections (cost increases with distance)
• Internet/phone service availability

3. Soil and Drainage

• Soil suitable for foundation type you want?
• Adequate drainage (no standing water issues)?
• Percolation test passed (if septic needed)?
• No contamination or environmental issues?

4. Access and Road

• Legal access to property (easement or public road)?
• Road condition (paved, gravel, dirt)?
• Year-round access possible?
• Will road support construction trucks?

5. Topography and Site Conditions

• Relatively level building site available?
• Slope within acceptable range (less than 15% ideal)?
• Tree clearing required (cost factor)?
• Rock or ledge issues?
• Flood zone concerns?

Step-by-Step Land Acquisition Process

Step 1: Define Your Requirements (Week 1-2)

Create your must-have list:

• [ ] Maximum budget for land
• [ ] Minimum lot size
• [ ] Distance from work/amenities
• [ ] School district requirements
• [ ] Preferred features (views, trees, privacy)

Research zoning requirements:

• Call local zoning office
• Ask about residential building requirements
• Get minimum lot size and setback requirements
• Ask about septic vs sewer requirements
• Inquire about any building moratoriums

Step 2: Search for Available Land (Week 2-8)

Where to look:

• Online listings (Zillow, Realtor.com, LandWatch)
• Local real estate agents specializing in land
• County tax assessor records (for owner contact info)
• Drive the areas you're interested in
• Ask locals (feed store, hardware store)

Red flags to watch for:

• Priced significantly below comparable lots (why?)
• No utilities available or "utilities nearby" (expensive!)
• Landlocked (no legal access)
• Listed as "recreational" or "agricultural" only
• In flood zone or wetlands

Step 3: Initial Property Evaluation (Week 4-12)

For each promising lot:

Check zoning and restrictions:

• [ ] Call zoning department with parcel number
• [ ] Confirm residential building allowed
• [ ] Get setback and coverage requirements
• [ ] Ask about well/septic requirements
• [ ] Check for HOA restrictions

Visit the property:

• [ ] Walk the entire lot
• [ ] Check for standing water (go after rain)
• [ ] Look for rock outcroppings
• [ ] Note trees that would need removal
• [ ] Verify access road condition
• [ ] Check cell phone signal

Research utilities:

• [ ] Call electric company (cost to bring service)
• [ ] Call water department (public water available?)
• [ ] Check septic requirements with health department
• [ ] Ask about internet service availability

Step 4: Due Diligence (Before Making Offer)

Critical investigations:

Soil and Percolation Test ($500-$1,500)

• Required for septic system approval
• Tests soil absorption rate
• Identifies unsuitable soil conditions
• May affect foundation type needed

Survey ($500-$2,000)

• Confirms exact lot boundaries
• Identifies easements or encroachments
• Shows topography
• Often required by lender

Title Search (Included with title insurance)

• Confirms seller owns property
• Reveals liens or encumbrances
• Shows easements and restrictions
• Identifies title defects

Utility Connection Costs

• Get quotes from utility companies
• Electric service extension cost
• Water tap fees
• Sewer connection fees

Step 5: Make an Offer (Week 12-16)

Offer should be contingent on:

• [ ] Satisfactory soil/perc test
• [ ] Satisfactory survey
• [ ] Clear title
• [ ] Financing approval
• [ ] Acceptable utility connection costs
• [ ] Building permit obtainable for your plans

Typical negotiation timeline:

• Submit offer with contingencies
• Seller responds (accept, counter, reject)
• Negotiate terms and price
• Reach agreement (under contract)

Step 6: Contract Period (30-60 days)

Complete all contingencies:

Week 1-2: Order tests and surveys

• Schedule perc test (if needed)
• Order survey
• Order title search
• Request utility quotes

Week 2-4: Review results

• Review perc test results
• Review survey for issues
• Review title report
• Get utility connection cost estimates

Week 3-5: Secure financing

• Submit land loan application
• Provide appraisal (if required)
• Complete loan underwriting
• Get loan approval

Week 4-6: Final steps

• Remove contingencies (if satisfied)
• Schedule closing
• Get title insurance
• Prepare closing funds

Step 7: Closing (Week 16-20)

Closing process:

• [ ] Final walkthrough of property
• [ ] Wire closing funds (never cashier's check)
• [ ] Review and sign closing documents
• [ ] Receive deed and title insurance
• [ ] Record deed at county recorder

Closing costs to expect:

• Title insurance: $500-$1,500
• Survey: $500-$2,000
• Perc test: $500-$1,500
• Legal fees: $500-$1,500
• Recording fees: $100-$300
• Total: Typically 2-5% of purchase price

Financing Land Purchase

Options for Buying Land

1. Cash Purchase (Best if possible)

• No interest payments
• Stronger negotiating position
• Faster closing
• No loan approval contingency

2. Land Loan (Most common)

• Typical terms: 10-20 year amortization
• Interest rate: 1-2% higher than home mortgage
• Down payment: 20-50% required
• Must be improved land (buildable with utilities)

3. Owner Financing

• Seller acts as lender
• More flexible terms possible
• May require less down payment
• Verify seller owns free and clear

4. Construction-to-Permanent Loan

• Finances both land and construction
• Converts to mortgage after completion
• One closing (saves costs)
• Requires detailed plans and budget

Tips for Land Financing

• Improve your approval odds:

  • 20%+ down payment
  • Good credit score (680+)
  • Low debt-to-income ratio
  • Demonstrate building plans and budget

• Reduce interest costs:

  • Buy land with cash, refi later
  • Larger down payment
  • Shorter loan term
  • Pay off quickly (use as construction proceeds)

Common Mistakes

1. Not Checking Zoning

Problem: Buy land only to find you can't build what you want Solution: Call zoning office BEFORE making offer, get requirements in writing

2. Assuming Utilities Are Cheap

Problem: $30,000 to run electric 1/2 mile to your lot Solution: Get written quotes from utilities before closing

3. Skipping Soil Testing

Problem: Discover ledge or unsuitable soil after purchase Solution: Make offer contingent on satisfactory perc test and soil boring

4. Not Walking the Entire Lot

Problem: Discover wetlands, steep slopes, or encroachments Solution: Walk every foot of property, preferably after heavy rain

5. Buying Landlocked Property

Problem: No legal access to build or live on property Solution: Verify legal access via public road or recorded easement

6. Ignoring Building Setbacks

Problem: Setbacks leave no room for house you want to build Solution: Get setback requirements, measure available building envelope

7. Overpaying for "Potential"

Problem: Paid premium for lot that costs $50k to prepare Solution: Calculate total cost (purchase + prep) vs comparable finished lots

Quality Checkpoints

Before removing contingencies:

Zoning and Legal:

• [ ] Confirmed residential building allowed
• [ ] Setback requirements acceptable for your plans
• [ ] No pending zoning changes
• [ ] HOA restrictions acceptable (if applicable)
• [ ] No liens or title issues

Physical Conditions:

• [ ] Soil/perc test passed
• [ ] No wetlands or flood zone issues
• [ ] Topography suitable for your house plans
• [ ] Trees/clearing costs acceptable
• [ ] No rock or ledge issues discovered

Utilities and Access:

• [ ] Legal access verified
• [ ] Road adequate for construction
• [ ] Electric connection cost acceptable
• [ ] Water source confirmed (well or public)
• [ ] Septic or sewer confirmed

Financial:

• [ ] Total cost (land + prep) fits budget
• [ ] Financing approved
• [ ] Closing costs calculated
• [ ] Utility connection costs known

Budget Breakdown

Example land costs (varies greatly by location):

Ongoing costs while planning/building:

• Property taxes: Varies by location
• Land loan payment: Based on financing
• Insurance: Vacant land policy ($200-$500/year)

What Comes Next

After securing land:

• Finalize house plans for your specific lot
• Complete construction loan application
• Begin permit application process
• Plan site preparation work

Typical gap between land purchase and construction start: 2-6 months

Link to: House Plans

Related Resources

Ready to finance your project? See our construction financing guide.

Need help evaluating a lot? Our site preparation guide covers grading, drainage, and utilities.