Selecting The Land
What Every Home Builder Should Know: some critical issues every home builder needs to be aware of.
There are many critical issues to consider when purchasing land for building a home. Even if you already own your home site, you should keep in mind these important elements.
It's important to note the act of purchasing land and the act of settling on the purchase are two different things. When you purchase you're committing yourself to the potential ownership of the land. Nevertheless, once you sign the contract, you have a certain amount of time to button down your decisions. This can be a decidedly helpful grace period, especially if you are waiting for you financing to be approved. But this can also be tremendously stressful for some people.
Immediately after purchasing your land and prior to settlement, you will very likely experience a "rejection process" that wreak both emotional and physical havoc. Your body, mind, and soul will try to reject your purchase. This very upsetting and real phenomenon will occur anywhere form one to six hours after you purchase the land, and may continue until such time as you actually settle on the property. It can be compared to the process of rejection that your body goes through after an organ transplant. After the purchase, you are unconsciously trying to convince yourself that you have done the wrong thing. Even your friends and family may work at convincing you that your decision to buy property was incorrect and should be reversed. But you should not be dissuaded based on either emotional factors or well-intended advice. It's natural to feel a sense of uncertainty after you have purchased anything, especially something expensive. But if there are no factual or technical reason for not buying property, trust you initial instincts and accept that the decision was the right one.
One way to be sure of your purchase is to know what to look for when buying property. If you've already purchased your land read this carefully; you'll rest easier if these factors have been considered.
We've found that people who are involved in the building of their own home end up adding more value in the final product than those people who hire general contractors to do it. The home is worth more because it is better made. It is better made because the builder is the ultimate owner; if it's your home, you'll put more tender loving care into it. Owners who are involved in their homes have a tendency to pick and choose better materials, turn away marginal lumber, and redo a wall, a cabinet, or a window if it is not just right.
The value of a piece of property varies according to who is looking at it. You will put a value on it, the market puts a value on it, the appraiser (who also considers the market value) puts a value on it, and your lender will have his ideas about the value. Rarely will all these values be the same. It is imperative that you understand this, and be prepared for these disparities of views. But the most important measure is the value to you.
Assume you paid $50,000 for a piece of property and an appraiser puts a value of $55,000 on it. Does it bother you? Certainly not. You knew it had to be worth more than $50,000. But assume he tells the lender that it is worth $45,000. The value of variance is still only $5,000, but suddenly you decide that either the appraiser was an idiot, or you were a fool for having purchased the property. Do not despair. The appraiser has only been paid somewhere between $100 to $200 for his appraisal. You've spent weeks, months, perhaps years making a decision about the property. So in the final analysis your determination of value is not only the correct one, it's the most important one to you. Keep in mind that the whole appraisal process, despite the fact that it is referred to as an objective process, is really quite subjective. Don't be too excited if the appraisal comes in too high or upset if it comes in too low. The important thing in building a custom home, which is a very creative operation, is the value of the land and project to you.
Your land must be properly zoned and there are many different kinds of zoning. So it is crucial that you know the zoning regulations before you buy it. The five zoning classifications we most often hear about are agricultural, residential, commercial, industrial, and environmental.
Restrictions On Land Use
When you take title to a piece of property, you do so by an instrument called a deed. A deed is evidence of fee-simple ownership in a piece of property, but that instrument does not give you unrestricted and unfettered use of your property. There are three restriction to the use of your property: constitutional, zoning, and private covenants. The first two will be discussed here.
1. Constitutional - Both federal and state constitutions will dictate some of the land use of your property and control some of the activities that take place on your property. An obvious control is that which deals with discrimination.
A frequently misunderstood one is the government's ultimate power to take or use all or part of your property through its power of eminent domain.
Keep in mind that the constitution also affords you many more rights than it denies. An example would be the striking of a covenant or zoning law because it was unconstitutional.
2. Local(Zoning) - The zoning restrictions are imposed by a local government authority that has jurisdiction over your particular piece of property. And is most cases, when we refer to the government we mean the country or the city, not the state. The state will have very little say on the use of your property. But the country or city will, and these restrictions are known as zoning ordinances. It is important to remember that the county can change the zoning on a piece of property after you have bought it. Fortunately, if there is a change, it is usually from a lower zoning classification to a higher, more valuable one, as for example, from residential to commercial - in which case, your property will be more valuable, although you will not be able to build your home on it.
Recently, the Supreme Court ruled that when a jurisdiction downzones a piece of property it amounts to taking somebody's property rights. It was always understood that if the government took physical possession of your property - such as your land, your house, or your leasehold - they had to give you a hearing, and pay you fair market value. Until recently, however, a rezoning of your property, although it restricted the use of your property and ultimately the value, was not deemed to be a taking of your property, and as such you were just out of luck. However, two recent Supreme Court rulings say that downzoning and building restrictions may constitute the taking of property. Hence, you have the same constitutional rights as if the state had taken your land directly - that is, you must be given a hearing and a fair market value price must be paid if the restrictions of downzoning have resulted in an economic loss.
The government (state or federal) that obtains the property through condemnation must pay you the fair market value (FMV) as determined by the court. When the government wants your property it will first try to buy it. If you elect not to sell at any price, then the property can be taken by condemnation.
When it is taken by condemnation, the court takes testimony as to value and then conveys the property to the government and requires the government to pay you the fair market value as determined by the court. The FMV, as determined by the court, may be more or less than that which was originally offered to you by the government.
The county can also impose restrictions on your land for reasons other than building and use classification. For example, it can prevent you from keeping animals on it or, as is often the case, require that you have at least two acres if you want to keep horses, more if you want to keep chickens, etc.
You should obtain a copy of the county's zoning ordinances either prior to the purchasing of your property or prior to settlement. Be familiar with them before you commit yourself to that particular piece of property. Copies of county zoning ordinances are readily available and can be purchased from the county administrator for a nominal charge.
Physical Aspects Of Your Land
1. Topography - When you're looking at a piece of property, consider the usable area. A two-acre piece of property is frequently as valuable as a five-acre piece of property, especially if the five acres has only two acres which are usable. Also, look at the drainage. Drainage can be a serious problem. Most states now require that the surveyor delineate a hundred-year floodplain. There are special exceptions, but in most cases you cannot build on a floodplain.
A topographic study of your property is invaluable, not only in terms of ingress and egress, but in terms of location of the well, location of the septic system, drainage, and the proper positioning of your home. If you have a large piece of property, a topographic survey may show you that if you just go a little bit further in one direction, you may have a better site plan for your house.
2. Soil Conditions - There are a number of aspects of the physical condition of your land which must be considered in addition to the availability of the water and whether the land will percolate. If there are any questions about the physical conditions of your property, you should have a soil scientist. For a few hundred dollars he will tell you everything you need to know about your soil.
3. Trees - Most people seem to like trees, and they do add a nice setting to your property. But they are very expensive to remove. A piece of property that has trees on it is lovely, but you'll have to clear trees from the building site. When you clear the area, do not cut a tree off at ground level because it is more difficult to remove a stump once the trunk of the tree has been cut off. When you clear the site, include an area approximately ten feet away from your house to permit room for heavy equipment around the house. Trees that are within ten feet of the house are going to be a problem anyway - either the roots are going to affect the house or the house is going to be a problem for the trees. A frequently underestimated building cost is site preparation and tree removal.