If you’ve been looking at residential lots for sale to find a site for your new home and you’ve found your community, evaluated builders, done computer research and checked out the property with a site visit, then it’s time to transition into the Technical Due Diligence stage.
This post describes tips for evaluating infrastructure and utilities at the property, and is the first of several posts in this series to focus on Technical Due Diligence.
If you’ve decided to put the property under contract (which can allow you to negotiate price, determine key terms and keep it from being sold while you’re completing your due diligence), then make sure the purchase contract gives you an adequate inspection period and includes typical conditions that can help you get out of the purchase if your due diligence uncovers any “deal breaker” issues. A Buyer’s agent can help with the process and protect your interests in these areas.
Don’t Worry, It’s Not Too Technical
Technical Due Diligence sounds complicated, but it’s really just about doing homework on some of the practical details. The subject matter is more specialized, but you can easily handle the task with some support from the experts like real estate agents, builders and surveyors.
To help you enjoy life at your new homesite, you’ll need to evaluate the availability of and options for key utilities and infrastructure at the building lot like power, water, sewer and communications.
Developed Neighborhoods vs. Life in the Country
Utility and infrastructure matters often are easier to confirm if you are buying a finished lot for sale in a recently developed or established community. Your construction agreement with your builder can cover many of these services; however you should be knowledgeable about how these items may impact your plans and costs – especially if you are buying a vacant lot for your home without a specific builder in mind.
In contrast, if you are buying a vacant lot or an undeveloped parcel of land for sale outside of an established neighborhood or the city limits you may need to do a little more work to confirm that you can get the services that meet your needs and budget. Or you may find that getting utilities and infrastructure to your new home will be no problem, even out in the country.
Utilities, Infrastructure & Other “Percs”
- In many situations, electrical power is a given. However, you may need – or want – to be creative about powering your home.
- You may want to consider solar, natural gas, propane, heating oil or even geothermal to meet some or all of your home’s energy needs. Fortunately, today there are more options for alternative and green power for homes than ever before.
- It may seem obvious, but if you want a gas stove for gourmet cooking or the efficiency of a gas water heater then confirm that natural gas is available at the lot.
Water and Sewer:
- Even though public water or sewer may be available for remote parcels of land, there may be significant costs to pipe and extend these services to where your house will be built on the site – especially on larger lots.
- Some municipalities may extend the public sewer or water main lines closer to your property for little or no cost. Contact your local utility department to inquire.
- When connecting to municipal water or sewer systems there may be fees for water or sewer tap/connection, meters, capacity or other assessments that you should consider in your budget.
- Sometimes you can meet your water requirements using alternative systems like wells, rainwater and filtration systems.
- Public sewer service is not always available for homesites, even in some developed communities. Fortunately there are alternatives to gravity sewers – other than outhouses! – and a septic system is one of the most popular.
- With a septic system you will need to work with a specialist and the local government to make sure the soil passes a percolation test. A “perc test” measures the absorption rate of the soil where a proposed septic system would be installed.
- Hopefully the lot easily passes its perc test, because failing to get the outcome you want can limit the number of bedrooms in your new house or prevent you from being able to build on the site at all. Don’t overlook this important test!
- Plan for the types of communications services you want – like high speed Internet, telephone or cable TV – so appropriate wiring can be included in your house plans.
- There are more options for communications these days that don’t require a direct connection to a utility or wiring. If cable is not available in your area, satellite TV may be the best option for you; and you may prefer to use your mobile phone instead of installing a traditional land line phone in your home.
Whether you are buying a lot in an established neighborhood or buying land away from it all, you should take care to ensure your utility needs will be met and the options you are considering will work at your site, in your plans and in your budget.
Technical Due Diligence has its obvious benefits – but don’t let the “technical” nature of the process scare you. Your real estate agent and builder likely will be able to quickly and easily give you comfort about whether the services you need are available when buying a lot.
More Technical Due Diligence advice is coming in Tip #6 about roads and access to your land, our next post in the series on 8 Tips for Buying Residential Lots and Land for a New Home, and in Tip #7 about title review and restrictions.
Also see our page about Tips & Resources for Buying Lots & Land, where we have gathered many helpful resources in one place for lot and land buyers and provide tips about using LotNetwork.com to help you in your search.
- 8 Tips for Buying Residential Lots and Land for a New Home (lotnetwork.com)
- Decide Your Community Style: Tip #1 for Buying Lots and Land (lotnetwork.com)
- Choosing Your Builder: Tip #2 for Buying Lots and Land (lotnetwork.com)
- Check from Satellite to Street: Tip #3 for Buying Lots and Land (lotnetwork.com)
- The Site Visit: Tip #4 for Buying Lots and Land (lotnetwork.com)
- Utilities & Infrastructure: Tip #5 for Buying Lots and Land (lotnetwork.com)
- Roads & Access: Tip #6 for Buying Lots and Land (lotnetwork.com)
- Research Title & Restrictions: Tip #7 for Buying Lots and Land (lotnetwork.com)
- Use Real Estate Professionals: Tip #8 for Buying Lots and Land (lotnetwork.com)