For many people, part of building a custom home is finding the right place to build. Perhaps you've been searching for a while and you're getting a little frustrated with the process. But then you find a great deal on the last available lot in a particular area. Lucky you! Or maybe not.
There's a reason that lot you're thinking about buying is still vacant. Your job is to figure out if that reason is a deal-killer or not.
When a land developer starts selling lots, he usually doesn't vary the prices enough to account for the real differences in desirability. As a result, the lots get cherry-picked, either by builders, the people buying the custom home, or both. Here's what that usually means:
- -The best, most desirable, and/or easiest-to-build lots get sold first.
- -The toughest lots to build on are the ones that sell last.
- -There always seems to be that "dog" lot that nobody wants.
- -Years later, that lot is still sitting there and nobody is around who remembers why (or they aren't willing to volunteer the information).
The unsuspecting buyer who's looking to build a house on her own land comes along and thinks she's found a hidden gem. But it's highly likely there's an issue of some kind.
- -Drainage. Maybe that lot is the gutter for the entire neighborhood or maybe it's in a 100-year flood plain.
- -Soil condition. Maybe there's some subsurface rock that's going to be tough to excavate. Or perhaps the owner of the land 75 years ago used to burn the trees he cut down and now there's ten feet of organic soil that will have to be removed.
- -Weird shape, easements, or building lines that mean any house built there would have to be a 1,000 square foot two-story house with a one-car garage in order to fit.
We once had a client with a lot he had just bought in a neighborhood that had been developed some 20 years prior. He got a really good deal. But then we discovered a problem. The FEMA floodplain maps had been redrawn in the interim, and the house would need to be raised seven feet above the existing level of the land. With costs for concrete, labor, fill dirt, etc., it was going to take $70,000 to make that lot suitable for building. That $20,000 lot became a $90,000 lot.
If you're looking at the last lot in a development, be sure to do your homework first.
