Buying land is very different from buying a new home. If you're a home buyer who is thinking about buying land and then building your home separately, here's what you need to know.
Before purchasing a plot of land, the buyer must first ensure that the land is zoned appropriately for the buyer's purposes. Commercial zoning would prevent a buyer from building a home on their plot. Sometimes zoning can be changed, but this can be a time-consuming process.
Financing Can Be a Challenge
Banks are reluctant to loan buyers money for a plot of land that has no home built on it. Whereas a house can be used as leverage to help ensure the buyer will continue making the monthly mortgage payments, a vacant lot gives the bank little leverage in the event of default. Buyers who are able to get a mortgage for an empty lot usually have to put more money down just to secure the property and qualify for the mortgage. Some lenders will not make loans at all if the property does not have a home on it. Buyers who are not able to secure a loan to buy undeveloped land are often forced to pay in cash.
Have a Plan for Water and Sewer
Often vacant lots are located in rural areas where there is no plumbing and no sewer line in place. To ensure that the property gets water and waste water treatment, the home buyer must dig a well and have a septic tank installed.
Digging a well and installing a septic tank represents added expense for the buyer. These extra expenses must be taken into consideration before purchasing the land. Home buyers who want to ensure that digging a well is within their budget in addition to building the home itself should do so by getting a price estimate from several qualified contractors.
Have a List of Must-Haves
Although buying a plot of land is different from purchasing a pre-built home, there is one way in which the experience is the same. Buyers who think through their home buying goals before making their purchase will be happier with the experience.
A list of must-haves might include a specific commuting distance, beautiful views, accessibility, and proximity to neighbours and businesses. Without the list of must-haves, it's hard to take an organized approach to the search for land. Home buyers who know what they want can rule out many properties without ever driving to the site, simply by checking the information on the listing.
In addition, a buyer who has a list of must-haves can share that list with their real estate agent. Once the real estate agent has a list of must-haves, the agent can make suggestions as properties become available. This can make the search for land go much faster and easier.
Work With Your Real Estate Professional
If you're a Oak Bay home buyer who would like to start by purchasing a vacant piece of land, contact a real estate professional in your area. Your real estate professional can suggest properties that are available in the area where you would like to buy. A good real estate professional can also help you with the complex details involved in a land purchase.
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The Neal Estate Team is your #1 source for all of your Victoria BC real estate needs. Get in touch with us online or by phone at (250) 386-8181 to speak with a Victoria real estate buying or selling expert today. With decades of experience as a top selling Victoria REALTOR® and ranked in top 1% globally with over 4,000 transactions and $1 Billion SOLD, Ron Neal & The Neal Estate Team have the industry experience and market knowledge to help you make smart and informed buying or selling decisions.