What is Lot Premium that New Home Builders Charge in Northern Virginia?

Real Estate Agent with Samson Properties VA0225077251

The word "Lot Premium is becoming a synonym for many of the home buyers in the Northern Virginia area when they visit new construction/homes for sale at the builders' office.

What is a Lot Premium?
Additional premium($) purchaser pays on top of the base price to purchase a home on a particular home site.

Why a Lot Premium is Charged?
Premium lots/hom
e sites have something that sets them apart from the other basic home sites within a community. They may be larger than the other lots, but size is not the only consideration for a premium. Premium home sites might cost more because they have a treed view. Corner lots often come at a premium price, as do those in a cul-de-sac or in an area which offers additional street parking, privacy and other unique exterior features.

How is the Lot Premium calculated?
Premiums are calculated based on various statistics builders has. For example builder may have higher lot premium for a home site that backs to woods but is a smaller yard compared to another home that has large yard but backs to street. Market demand for the home site is also considered when charged to the buyers. Another factor that I have heard from builder is their purchase price of that particular home site/subdivision that may add premium to the home site especially in case of custom builders

Does Premium Lot hold resale value?
This is very
much dependent on the lot, location, lot premiums and the current local real estate market.  For example: When you go to resale your home in Virginia you will more than likely be competing with the similar homes with same floor plan in your subdivision/neighboring area. So at the same/similar price, the buyer may probably pick the more desirable lot and upgrades the home has. If you had purchased a home on a desired lot it may help you in slow moving market that may attract a buyer even though the other home may be listed lower.

Bottom Line on Lot Premium:

  • Drive up to the home site that have premiums and not have premiums.
  • Ask builder why they are charging a lot premium compared to other home sites. Example- If a new street is going to be behind the home without lot premium.
  • Compare the home site you are planning to purchase with the other resale homes in the market to understand how they stand in today's resale market place.
  • Just like any other upgrades some will lose more value than the others.  Depending on what is important and the total purchasing power you will need to pick and choose your new home.

Posted by

Associate Broker

NVAR, Life Time Top Producer
NVAR,Multiple Million Dollar Sales Club Member
Samson Properties
Cell - 703-625-4949
Email - info@eNOVAHomes.com
Web: www.eNOVAHOMES.com
Residential real estate agent serving Northern Virginia in Fairfax & Loudoun county over a decade and almost $100+M in sales volume experience. 


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Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Ritu, this can be a large charge depending on where the lot is!    I recently had a buyer in Parker, walk-out lot, mountain views, and was a larger lot, almost $100K for just the lot premium!

Dec 17, 2012 03:20 AM #1
Ritu Desai
Samson Properties - Ashburn, VA
Virginia Realtor-Fairfax/Loudoun/PW-703-625-4949

Joan, we are also seeing hefty lot premium charge for view and grading of the land. Buyers who understand the value will purchase and pay the premium.

Dec 17, 2012 09:59 PM #2

Hi Ritu,
I have a lot premium question.
Does Architectural Review Committee need to consider the effect on lot premium before giving construction/structural addition approvals to a home in the neighborhood?
Do you know of any HOA ARC/Lot Premium consideration guidelines? If there is any good source an ARC can consider when dealing with Lot Premium in its decision making process?

Feb 22, 2016 01:24 AM #3
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Ritu Desai

Virginia Realtor-Fairfax/Loudoun/PW-703-625-4949
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