Purchasing Raw Land: How to Avoid Your Homesite Becoming Just a Campsite

You may know a real estate agent, but do you know a true land agent who can protect you when looking for a new building lot?

Gregory Phillips, President of On Your Lot Homes in Columbia, Maryland, describes the process of purchasing raw land to build a custom home. The veteran land agent has worked in real estate for 35 years and has focused on land transactions for 25 years.

“I have seen almost everything that can go wrong in a real estate transaction,” says Phillips. "Remarkably, the chance of something to go wrong in an improved transaction vs. a raw land sale is, in my opinion, 100 times greater in land deals.”

Here is what you need to know about purchasing raw land to avoid your potential home site from becoming a camp site.

Why Having a Land Agent Matters

A land agent understands the challenge of establishing the “highest and best use” of land. Raw land opportunities typically have “curable and non-curable” defects that need to be examined. This is a completely different discipline than participating in improved transactions. A Realtor who does not focus on land sales may not be able to help with this, but an experienced land agent can.

“I am often brought into a land transaction by other real estate agents and real estate attorneys to fix a broken lot or cure a defect that someone missed,” says Phillips.

Professional land agents specialize in more than just the buying and selling homes. They have the local market and land type expertise to guide buyers through the entire process. Access to the property, environmental concerns, condition and quality of the soil, and topography are just a few of the specifics that a good land agent will examine.

Filter Out Bad Raw Land Opportunities

When you purchase land to build a new home, you must first ensure that the land will allow you to build the type of home you want cost-effectively. Think of it as a “home inspection” for land.

At On Your Lot Homes, every land opportunity undergoes a study period so that clients have time and space to decide if any found defects are curable. If a defect is curable, we then determine a price to fix the issue that makes financial sense. Then, we renegotiate the lot price to “cure the defect” on the seller’s dime without added expense to our clients.

When studying a land transaction, the first step is to get the lot under contract with a 15-45 study period. During this period, the team fulfills the highest and best-use analysis mentioned above. Phillips calls that the “get out of jail free card” because if OYL Homes finds any issue that is not in your best interest, you can simply terminate the contract and move on to find the next home site.

“I do my best to protect my own clients from themselves,” says Phillips. “I encourage my clients to terminate transactions or not enter into land transactions if the due diligence study does not meet my clients’ needs.”

Find Your Lot Checklist

Once under contract, On Your Lot Homes confirms all that we learned and was provided to us in the pre-contract phase.

Consider the following items:

• Is the lot part of a record plat or a deeded parcel?

• Are there utilities on site, or will we need to bring utilities to the site?

• Is the site serviced by public or private water or public water and sewer service?

• Is natural gas available & how will electricity be provided?

• Do we set an electric meter, or is this a transformer set?

• Is there fee simple access to a public right of way, or do we have an easement?

• Are the easements recorded or is there a handshake deal?

• Are there covenants, conditions, and restrictions that guide the size or the finishes?

• Does the controlling government agency provide a Buildable Lot Letter?

• Does the zoning match our intended use or future use, such as for a home business or parking for business vehicles?

• What plans/studies are needed to obtain a grading permit?

• What are the Storm Water Management guidelines for the site?

• Are there any environmental features on the lot? Who controls approval for such?

• If the lot is serviced by well water, what are the Gallons Per Minute Yield, Well Depth, and Water Quality results?

• If the lot is wooded, how much can it be cleared and are there any Specimen or Champion trees on site?

When thinking about your new home process, working with a land agent first is your best bet. If you are not familiar with the risks of land transactions, then you need someone on your team who can guide you.

OYL Homes Is Your Land Agent for Maryland Custom Homes

At On Your Lot Homes, our team of experts, both internal and external, are here to meet the needs and challenges of any site condition or municipality. Whether you have a particular lot in mind or are just starting the land process for your new build, we will do our very best to guide you.

For answers to all of your questions, contact On Your Lot Homes today at (833) 289-6954 or reach us via email at build@oylhomes.com.