Real Estate Questions Answered

By
Real Estate Broker/Owner with Benchmark Realty LLC

Almost on a daily basis, I am asked questions by folks who have read a book or watched a show on HGTV and want to flesh out their understanding of issues related to real estate.  Most of what we see on TV and read in magazines or (in some cases) books is put there for pure entertainment value.  Or as is the case of TV and newspapers, to sensationalize a topic in order to gain the attention of the pubic. 

My dad, or someone I once knew, said that if you want to know the truth about something, ask someone who knows.  So in that theme I have begun collecting the various questions I have received over the past months and will publish them here, along with the answers.  Hopefully this will help the readers out there, or at the very least give you something to do when you can't sleep at night.  So here goes . . .

Q.        We Want to Buy Land and Build Our Dream Home.  What Advice Can You Provide On Buying Land?

A.        Buying land can seem daunting to most homebuyers, but if you've decided to build your own home, there are a few basic guidelines that can make the process go more smoothly.

First, know your budget...and do your homework!  Interest rates and down payments can be higher for land than for home buying.  And the financing term is usually shorter.  Before you begin your land search, sit down with a loan officer to discuss interest rates, down payments, and construction loans.

Second, determine your building costs.  Talk with several local contractors to find out what the average price per square foot is for a home that you are planning to build.  Make sure to include all costs, including land, architectural design, direct construction, landscaping, taxes, permits and other fees.  

Third, decide on an approximate location, size of lot, and features you want.  Make a list of features you want the property to have.  Find out if the land is suitable for the type of home you want to build.  Examine lot views, home sighting, topography, drainage, and the impact neighboring lots may have.

As a rule of thumb, in Williamson County most builders try to work on a 5 times lot cost.  So if the lost cost $100k then the total cost of a house on that lot (including lot cost) would be around $500k.  No one has ever demonstrated the validity of this pricing model to me, but that's another blog.  Recently, due to the current state of the new construction market, I have been seeing some builders moving product for 4.5 or even 4 times the lot cost.  I don't know how long that will last but it creates a real opportunity for prospective buyers.

Another thought to keep in mind is to talk to various builders before you buy a developed lot.  Most of them will cut a deal with you by purchasing the lot, building the home and then selling you a turnkey package.  Really this is better for you and the builder, mainly because what happens if things go sour between the two of you?  His house is sitting on your land...that's a problem.

Buying land can be tricky and requires someone knowing what they are doing to look over your shoulder.  There are many things to consider, such as: Is the land build-able?  Are there any neighborhood covenants or restrictions that could limit your building plans?  Is there suitable drainage?  Are there any environmental hazards like buried toxic waste, or gas lines?   Make sure you study all aspects carefully before purchasing land. 

If you are thinking of selling or buying soon, and require competent, professional representation, please call me at 615-957-9921.

Comments (4)

Greg Steffens
Mountain Country Realty - Lake Arrowhead, CA

Hey Phillip - Welcome to Active Rain and congrats on your first post.  Be sure to spend some time looking around at what and how others are blogging here.  It is a great education and lots of fun.  Looks like you're off to a great start...keep it up!

May 22, 2008 07:01 AM
The Trumm Team Omaha Homes for Sale, Real Estate
Keller Williams Greater Omaha - Omaha, NE

Welcome to ActiveRain!

If you would like a few tips on getting the most out of ActiveRain, please visit my blog Welcome to Active Rain.  It has a few simple steps of what to do now that you have joined.

If you ever have any questions, just let me know.

Troy Trumm

May 22, 2008 07:21 AM
Phillip Cantrell
Benchmark Realty LLC - Brentwood, TN

Thanks to everyone for the warm welcome!

May 22, 2008 07:35 AM
Kelly Winch
Cascades Sotheby's International Realty - Sunriver, OR
Broker, CDPE

Welcome to Active rain- I see you are mastering the blogs already

May 22, 2008 12:50 PM