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14 Questions to Ask when Buying Land for New Construction

Posted by Sarah Steen on April 22, 2019
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Picture of meadow and tree with buying land caption

Is it your dream to build your home on a beautiful piece of land? Then buying land for it is, of course, the first step. This step can be challenging. It involves looking for the perfect location but, particularly in Colorado, it also requires looking below the surface.

There are usually a lot of questions when it comes to buying land.  You can see the surface, the rocks, the mountains and the prairie, but what about the things that you can’t see? Would you know to look for water rights? Get soils tests and any other research? What will end up costing you more money in the construction process? (For example, if there are too many rocks that need to be removed from your land it could add to your bottom line).

In order to help you find your perfect piece of land, we’ve provided some resources and questions to ask before you make your offer. This list is a basic guideline to help you research potential land. We’ve also provided suggestions for what might need to be in your contract (depending on the builder) if you intend to build a house on your land. Doing your homework is imperative in a land purchase, especially if the land has not been developed yet (meaning a developer has not made the initial investment of basic infrastructure in the area where your parcel is located). Keep in mind that this is post is just a starting point. Because each property is different, do as much research as possible prior to offering and contracting in accordance to your requirements or wishes.

Some research tools have a considerable cost associated with them, so you’ll want to wait until you have the property under contract.  Give yourself plenty of time in your contract to move through all the due diligence items.

Related Reading: New Construction Checklist

Begin with these Questions and Considerations:

  1. Accessibility

Is the property accessible? Easy access or is a 4×4 needed? How is your land zoned and are there Home Owner’s Association (HOA) restrictions? You’d be surprised to know just how many back-country pieces of land in the mountains are part of a HOA with strict rules.

  1. Development

Is the property developed? Partially or completely? ​ Do you have streets? Lights? Curbs? What will you be responsible for? Like most questions in this list, the answer for each of these questions will probably differ for each property.

  1. Power

Is there existing power line to the build site? Property’s edge?

picture of mountains with small pond and trees

  1. Water

Is there existing water to the build site? Is a water tap, well or cistern needed? What are your water rights? (One of the most important recommendations for clients who are buying land: always refer to a water attorney). What are your permits? How old are your [adjudicated] water rights? The older they are, the more valuable. If there is a pond, then look at the pond’s (or any other water source) permit. Again, a water attorney will help you with that.

  1. Boundaries

Can the seller verify the property boundaries and legal access with a survey? If there is no survey available, you should consider paying for one. But most likely your lender (or your title company if you are a cash buyer) will require a survey. Surveys aren’t cheap, but they are absolutely worth the money. Take a closer look at any easement rights marked on the survey. Is anyone encroaching on your lot or are you encroaching on someone else’s lot? Certain easements allow you to use the area but prohibit building anything on them.

  1. Zoning

What does zoning allow? Are you actually allowed to build on the lot (SURPRISE!!)? Is there a specific maximum height your home needs to be? A specific size? Does zoning allow for manufactured or modular homes? Was it subdivided properly?  (If the seller purchased with cash originally, they may not have done title work. If that’s the case, they must guarantee both legal access and correction of any legal discrepancies surrounding the property).

  1. Flood Zones

Are there any flood zones in proximity to the property?

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  1. Mineral Rights

Is it possible that there are any mineral rights? Any leases to extract to others? Any use rights for the land? You’ll have to consult with a land man to obtain detailed information about that because your REALTOR will most likely not have access to this information.

  1. Land Features

Are there specific features of the land worth noting? Some examples of things to look for:

  • Is there solid rock instead of dirt at the build site?
  • Are there a ton of trees in the way?
  • Is there too much sand?
  • Are there environmental issues like illegal dumping that has previously occurred on site?

Picture of small plants sprouting through soil

  1. Soil Tests

Have any soil tests been performed? This is needed for construction as well as septic installation. An engineered septic system might be needed depending on the soil, and this will skyrocket costs.

  1. Taxes

What will your property taxes be after construction? Taxes will change once you have a home on the land. Ask the assessor what you should expect so you can plan accordingly.

  1. Structure Limitations

Are you hoping to build specific structures on your land? Maybe you only want to have a mobile home on it? Once you start looking into this, you’ll find that the Regional Building Department requires you to have a home with a minimum size in square footage. This is definitely something to research if you are planning on a tiny home, RV, or a compost toilet. There may be a limit on the number of months per year that you can park an RV or tiny home on the lot.

  1. Usage

Are there usage restrictions? These could come from zoning (ask for a variance), from the HOA (again ask), or from the Regional Building Department.

  1. Full Visibility

Walk or drive the land. If it’s too much acreage, have it flown by a drone and look for special issues like additional springs, water, unknown usage of the property by neighbors, or features that would not lend itself to construction.

 

 

Conditions and Contingency Suggestions

1.  Closing to be made contingent on acceptable outcome of Site Analysis. (This is similar to a home inspection, but for a property)

2.  Closing to be made contingent on acceptable Plans and Spec Appraised Value.

3.  Possible condition to make contract assignable to builder.

Please contact any brokers with Colorado Real Estate Group if you have any questions or if you need guidance! susanna@co-regroup.com or 719-219-9739

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