While I personally can’t put together so much as an IKEA table without the help of a YouTube tutorial, others among us are bold enough to build a home from the ground up. No matter where you plan to live—although particularly if you’re seeking space in a suburban or rural area—purchasing land on which to build a house is a perfectly viable option and allows you to customize your home in ways you simply couldn’t if you were looking at an existing build. 

Still, there’s a lot to consider before you buy land, and you’ll want to pair with an experienced real estate professional to help guide you. Here are seven questions to ask when buying land to build a house.

1. Can you actually build on it?

Not all land is fair game to build on. In fact, far from it. Spare yourself the immense headache of buying a nonresidential lot by doing your homework up front. You may luck out with a zoning search tool online (provided by your city or county) that you can use, or you may have to call your local city or county zoning division. 

If the lot you’re interested in is cleared for residential use, don’t stop there! You’ll want to anticipate any long-term land-use plans from the city—think new roads or highways that could cut right through your new property. Last, understand what ordinances apply to the property. Roads are the most extreme example, but other types of ordinances could relate to parks, law enforcement, and even animal control. Understanding the bounds of a property’s potential upfront is crucial. 

2. Can you even access it?

This is an extreme example, but it’s happened before: Imagine if you bought a piece of land only to find out later it’s only accessible by private road? Such a situation is much more likely in rural areas; I personally know a family who purchased a property in off-the-grid Montana only to find out they couldn’t technically legally drive on the roads to get to it, and there was no other method of entry due to physical barriers like mountains and rivers. 

If a property can’t be accessed by public roads, you’ll have to get an easement, which usually carries an extra cost. An easement would allow you to use private property for a specific purpose to access your own property. The upside? Easements are more common than you think. Utility companies frequently use easements so that they can access sewer pipes, cables, and utility poles that would otherwise be off-limits because they’re on private property. Remember: Easements will usually dictate the use—for example, you can get to your house under the easement, but you can’t build any structures along the way.

3. Are there any HOAs or deed restrictions?

We’ve shared the rural example of private roads, but now let’s shift to a more suburban or urban example: HOAs. If you’re considering purchasing an empty lot in an existing neighborhood or subdivision, you may need to check to see if there’s a homeowner’s association and, if so, what the HOA rules would be. In addition to potential membership fees (which can add up!), HOAs have the ability to dictate the type and style of build, the ability to add external features like a pool, and even the exterior color of your home. 

Even if the neighborhood doesn’t have an official HOA, you’ll still want to check in on any deed restrictions. These are meant to provide a more neighborly experience and commonly include provisions like not building in a manner that obstructs a neighbor’s view. Rules surrounding fences, trees, and adjacent structures like a casita are also likely to come up in a subdivision. While these can be frustrating and limit what you may have had in mind for your home, remember they are also meant to help: You’ll never deal with a neighbor who cut down all the trees and painted their house neon orange. 

READ MORE: HOAS: WHAT YOU NEED TO KNOW

WHAT YOU NEED TO KNOW ABOUT DEED RESTRICTIONS 

4. Is it on a floodplain?

Flood risks are knowable and avoidable whether you’re buying an existing home or an empty lot. Before you purchase land, make sure to investigate whether it’s on a flood plain. Not only can flood insurance in a high-risk area cost thousands of dollars annually, but a home built on a flood plain is a harder sell when the time comes to put it on the market. You can determine if a home is in a flood zone at the local level, but the Federal Emergency Management Agency also has an online flood map tool. 

READ MORE: DO YOU NEED FLOOD INSURANCE?

5. Will the surrounding area remain the same?

If your favorite thing about a piece of property is that it’s isolated and private, you’ll probably want to look into future use. We mentioned this above in regards to long-term projects like roads, but you can think more short-term too. Is it in a subdivision with an empty lot next door in a booming community? Chances are, that lot won’t be empty for long. One caveat here is land that backs up to a park or nature preserve—check with your local government first, but you can reasonably expect things to remain the same.

READ MORE: WHAT IS EXTERNAL OBSOLESCENCE? 

6. Is it ready to build on?

Let’s say you’ve found a lot and it’s cleared all the hurdles above. You’re ready to go! But is the land itself? Turns out, lots come in three variations: build-ready, unimproved, and raw. 

Build-ready is exactly what it sounds like. The land itself has been prepared and is up and running in terms of things like utility access (you’ll still need to obtain all permits, of course). Unimproved lots don’t have utilities set up, while raw lots are meant for speculative purposes and could take a while to be ready for any sort of building. We’ll talk about loans in a moment, but it’s worth noting here that build-ready lots are the easiest to get a loan for—they’re less of a risk for banks. 

7. Can you obtain a loan?

Put simply, land loans are different than home loans, they’re usually trickier to get compared with a traditional mortgage. That’s because land loans usually require a much higher down payment, ranging from 15 to 25 percent—and that’s for a build-ready lot (see above). For a raw lot? You could be looking at a down payment that’s as much as 50 percent! Moreover, many land loans must be paid off in full within three to five years, a much different timetable than your average 30-year mortgage.

The Land Buyer’s Checklist

The questions above are just a sampling of the types of things to consider before you purchase land. Fortunately, the Realtors Land Institute has a comprehensive checklist for land buyers that we have included below. In addition, RLI also has a search tool where you can look for land for sale. 

Here are several extra items the RLI suggests you consider—many of them being more applicable to rural properties—in addition to everything we’ve discussed above:

• Special tax assessments

• Property boundaries

• Crop and timber yields

• Well water quality and flow

• Fire and ambulance services

• High-speed internet options

• Adjacent properties’ land use

• Past logging practices

• Water rights and soil productivity

• Topography and geological hazards

• Hardship and farm help dwellings

I was just blessed with yet another birthday.  Birthdays, in general, are not exciting to me but the icing on the top is that I get to spend it with my amazing family!  My husband never fails to make me cry happy tears and he made my day 110% special. Thank you, PJ! I spent a little time thinking about all the time that has passed us by, and so quickly too! Despite all that has gone on in our crazy world I still have my relationships, family, friends, and love and passion for what I do.  My world is just full of blessings! You all know that I've been a REALTOR for nearly 9 years now and I never imagined that I would still be here. It is truly because of my friends and family that I have been such a success with it.  I just felt a huge sense of gratitude to all of my clients who, for the most part, I now call my friends. The majority of my business comes from repeat clients or are gracious enough to refer their friends and family to me. I just want to thank you and I want the whole world to know!

PS:  I would love to have coffee again.  Send me a message!

XOXO

Nico, your friendly neighbourhood REALTOR

One of the questions that I get asked about is how to buy a house when I haven’t sold my house yet.  This is a very valid concern.  We all know that one of the most exciting times in a homebuyer’s life may be at closing when you sign on the dotted line and get the keys to your new dream home. 

Selling and buying a home at the same time may be a bit tricky, it isn’t impossible. Here are a few tips to consider.

1. Have a Contingency Offer

Buying on contingency is a great way of making sure you don't have two mortgages.

If you want to avoid carrying two mortgages, one of the best things to do is to buy on contingency, meaning you're making an offer on a house contingent on selling yours. The overarching definition of a contingency is "a provision in a contract requiring certain acts to be completed before the contract is binding," but when it comes to home buying, this means you can't close on your new home until your old home sells.

If the seller is flexible on timing or it's a buyer's market, then making an offer that’s contingent may be the right move. This will also allow you to withdraw your offer if your current home doesn’t sell by a certain date. Although this is a good option for some buyers, it may not be too appealing to sellers in hot housing markets who want to sell their home quickly and receive multiple bids from other homebuyers.

2. Have a Rent-Back Option

Having a rent-back agreement can give you some extra money while you close your old home.

A rent-back agreement allows home sellers to stay in their home past closing. After settlement, the previous owners of the home you just bought can pay rent to you in order to stay there a bit longer. This may be the perfect arrangement: It gives sellers some extra time to find a new house while paying you rent since they're still occupying your future residence, which gives you some extra money to briefly cover two mortgages.

This rent-back option can alleviate some financial concerns and help you avoid moving into a temporary home. On the flip side, it's also convenient when you sell your home and then rent it back from the new buyers while you're waiting to close on your new home. A rent-back agreement is typically for only a month or two.

3. Find Temporary Housing

Temporarily moving in with family is a great way to save money while you try to sell your home.

Although moving and packing more than once is a nuisance, it may be a more appealing option than carrying two mortgages at the same time. Finding a short-term rental property or moving in with relatives or friends could be a great option to help you save money.

If you can find a short-term rental home or an apartment for a few months, it'll allow you to have your own space before the stressful moving and packing adventure begins again. If you can temporarily move in with a friend or relative, you may also be able to keep that rent money in your pocket.

4. Obtain a Bridge Loan

A bridge loan is a great option for homeowners looking to move quicker.

If you want to sell your current home without taking out a mortgage on your new home, you can get a bridge loan. A bridge loan is a short-term loan that provides immediate cash flow. Bridge loans have a term of up to one year, they have relatively high interest rates, and they're usually backed by some form of collateral (in this case, the home you currently own). However, a bridge loan can be an option for homebuyers who need money for a down payment on a new home before their current home is sold and finalized.

According to SmartAsset, besides giving homeowners the funds they need for making a down payment on a new home purchase, a bridge loan also removes the need to make a contingent offer on a home. While this is a plus, the bridge loan does carry risks like the lender could foreclose on the home if you default on your loan. Another disadvantage of getting a bridge loan is higher fees and costs associated with the loan as well as not being able to get a loan from a different lender, which will limit your chances of comparing mortgage rates to find the best deal.

So, can you buy another house before selling your own? The short answer is yes, absolutely. However, selling and buying a home at the same time can be difficult, so be sure to consider all your options, take stock of your financial needs, and discuss your goals with your real estate agent before making a decision.

I found this blog interesting which is why I took the time to share it here on my website.  You will find this article here:

https://www.neighborhoods.com/blog/how-to-move-when-you-havent-sold-your-old-home-yet

Feel free to share your thoughts in the comments below. 

First-time homebuyers face an alphabet soup of terms that they need to know and understand. Here are some of the most common acronyms you’ll see during your journey to a new home.

APR: Annual percentage rate 

The fixed interest rate you’ll pay every year on the remaining balance of the loan. For example,  if you owe $100,000 this year on your mortgage with a 5% APR, you’ll pay $5,000 in interest. 

ARM: Adjustable-rate mortgage 

A mortgage in which the interest rate varies over the life of the loan. Most ARMs start with a  low fixed rate for a period of time and then adjust upward based on market rates. 

CD: Closing disclosure 

A five-page disclosure, given to the buyer at least three days before closing, details the terms of the loan, payments, fees, escrow, and more. 

DTI: Debt to income 

The ratio of monthly debt—including mortgages, car loans, student loans, and credit card debt  (but not expenses such as utility bills and health insurance)—compared with monthly gross income.  Lenders prefer a DTI of 36% or less, with no more than 28% devoted to the mortgage payment. 

FHA: Federal Housing Administration 

FHA loans may be available for homebuyers who can’t put 20% down or don’t have an optimal credit score. This type of mortgage always requires PMI.

FSBO: For sale by owner 

A property for sale without a broker assisting the seller. FSBO sales generally come with more risk to the buyer and take longer to complete.

HOA: Homeowners association 

LE: Loan estimate 

LTV: Loan to value 

MLS: Multiple listing service 

PITI: Principal, interest, taxes, insurance

PMI: Private mortgage insurance 

Amortization 

REALTOR® 

VA: Veterans Affairs