Building a Home on Your Lot - Tips From a Custom Home Builder
Buying a Lot – What Should I Look For?
Q: How much should a lot or homesite cost?
A: It depends on your total budget. How much do you want your total mortgage to be when the construction is complete? The cost of land generally represents 17-25% of the total value of your home.
Suppose your total budget is $300,000. Let's look at a typical breakdown:
Land - $60,000
Real Estate Commissions - $18,000
Carrying Costs on Construction Loan - $10,000
Total Construction Costs - $212,000
Total Cost of Home: $300,000
In this example, land cost is 20% of the full cost of the home. Remember, construction costs must include permits and fees, clearing and preparing the land, and all steps of construction from laying the foundation to laying carpet and paint. Most experts recommend that land costs represent 17-20% of the total value of the home, but that can be stretched to 25% occasionally, if land costs in the general area are high.
Where to Buy
Q: Is it better to buy a lot in the city or the country?
A: It depends on your needs and preferences. In terms of cost, land further out generally costs less - which goes hand-in-hand with more spacious acreage for each home. Within the Research Triangle Park area, it can be very difficult to find a lot listed under $100K in places like Cary or Morrisville. These are popular, well-developed cities with restrictions on growth that drive up land cost.
Land bordering the Triangle area, such as Clayton or Pittsboro in Chatham County, or further out in Johnston, Alamance or Harnett County, can be found for under $60K, and there is greater privacy with houses spread further apart on larger acreage for about the same cost as a smaller lot in the more congested areas.
Not everything about a home in the country is less expensive, though. There may be extra delivery, material or labor fees during the construction process, depending on exactly how far away your lot is. These charges can be minimal, but check with your builder or a knowledgeable agent who has a good understanding of custom home building on a lot of your choice.
Q: What's a "setback?"
A: A setback is the amount of space you are required to leave between the edge of your home and the edge of your property. This is often a factor in subdivisions or fully developed neighborhoods, where space is at a premium. This is important to keep in mind, as it can impact the kind of house you want to build.
Here's how it works: If your lot is 60 feet wide, and the required setback is 10 feet, that means you must count 10 feet in from the left, and 10 feet in from the right, before you can start to build.
The "building envelope", or the land needed to place your home on, will now be a maximum of 40 feet across. Thus, the home plan you choose cannot be any wider than 40 feet from left to right. Setbacks can also apply to the front and rear of your lot - you may be required to build no closer than 30 feet from the front of your lot.
Size and Shape
Q: What if the lot has an odd shape? Will that affect the building process?
A: If your lot is a half acre or more, the general shape of the lot may not matter quite as much. But a small lot, a triangular or other irregular shape can limit your building envelope as well. Consider carefully, and make sure your desired home will fit on the lot, without being tucked in somewhere different than you had in mind, or being forced to change the design of the home to accommodate lot limitations.
Q: Is a lot on a gently rolling hill a good investment?
A: There are a lot of variables to this. A house on a hill can provide fabulous views. The neighborhood can have more character and appeal if the roads have some slope.
However, a home built on a sloped lot requires more foundation work and more site preparation. Depending on the size of the foundation and the slope of the lot, this can add to construction costs. Drainage considerations can also be a factor.
Q: I found a lot with a lot of trees. How many are going to be cleared when the home is built? What will that cost?
A: It's hard to find a really nice, wooded lot. Once you do, it's important to think about how much of that foilage will disappear in the process of building. Even environmentally aware builders who carefully develop lots to retain every possible tree can't keep them all. If there is a grove of trees you particularily want to keep, you'll need to talk to the builder about that before the site is cleared, to ensure that your home will be able to be placed where you want it. The builder will be able to tell you about other conditions that may prevent your home from being placed exactly where you want it, as well.
Site preparation does cost more for a wooded lot. Tree removal, stump removal, disposal of trees, and grading after tree removal takes a lot more effort than preparing a grassy, treeless lot. A lot with rocks and boulders can also require extra preparation.
Wow - What a Bargain!!
Q: How can I tell if a bargain price is a good deal?
A: Be wary of a lot listed at a price that's considerably less than other land in that area. One important thing to look for in this situation is the "perk" detailed in the listing. If it states, "No perk," be aware that this is a huge concern. "No perk" does not mean that there are no "extras." When used in conjunction with land, the term "perk" means the ability for the ground to support a septic system. If your lot is not connected to a city sewer system, a septic system is required. If the ground does not perk, you'll be required to use some VERY costly alternatives. Make sure to get an expert opinion before buying a lot with this label!
Q: What makes a lot valuable?
A: There can be many reasons why the price tag on one lot is higher than another. Trees. View. Shape. Slope. Streams that run through the property. Lake front. Location. More importantly, what's the value for your lifestyle, interests and affordability? The most important criteria in value is whether it's where you want to live, and your builder can erect the kind of house you want on that spot.
Information courtesy of: Kelly McNabb