For many people, buying an existing home just won’t work. Maybe they don’t want to deal with a competitive seller’s market, or they just want a brand-new custom home. Whatever the reason, many people would rather buy land and build on it. What they often aren’t prepared for are the special challenges that come with buying land to build on. With that in mind, we offer these tips on how to buy land in New Jersey for your new home.
Check Zoning and Soil Quality
All too often people buy land in New Jersey simply because it looks nice and/or commands good views. They buy on visual appeal alone and neglect to check into zoning laws/regulations, soil quality, and potential hazards like flooding.
Here’s a typical scenario, according to one top agent: “Someone buys [lane] because it’s really cute. They can’t build on it and put it back on the market. Some other sucker buys it, and it happens again and again and again.”
So industry pros recommend that you “[c]heck the zoning, grade, and soil quality, as well as other details specific to the area that may keep a house from being constructed on the land. Even if there’s an existing home on the property, it’s still important to check, as zoning or soil quality could have changed since that structure was built.”
If you’re unsure where to begin or how to check on these important matters, you can consult a New Jersey agent. Just call 855-966-DEALS to discover more.
Investigate Utilities and Sewer/Septic
Similarly, you should look into whether utilities are hooked up and the availability of sewer service or suitability for a septic system when you plan to buy land in New Jersey for your new home.
“Undeveloped, vacant land . . . may need additional work to enable it to reach utilities, including electric, gas, and plumbing. If utilities are not available . . . factor the additional work into your budget.” It can be very pricey.
“A sewer hookup, for example, may even require construction on the street in front of the property, which requires additional permits and more money. . . . [I]f a septic system s required, you’ll need to factor in additional soil testing before you can get started, which can add hundreds or even thousands of dollars to your total. And that’s not even (including) the cost of the septic tank.”
Consider Saving to Pay Cash
You should also save and be prepared to pay cash when you buy land in New Jersey. The reason for this is that mortgage lenders are far less likely to lend for “raw, undeveloped land than for an existing house because there are too many unknowns with raw land.”
“The upside is that if you can pay for the land in cash, the lender is more likely to finance the construction of a new house. Suppose you own the land or lot outright (without a loan). In that case, the lender may consider your ownership as a down payment for construction financing, which can later be transferred into a traditional mortgage at the end of the building process.”
Look Into Value of Nearby Homes
Before you buy land in New Jersey for your new home, you should also research the values of the nearest homes.
Building a home is a huge investment, and you definitely want that investment to appreciate (or at least hold its value) over time. The value of your home will suffer if surrounding homes are of less value. But it “will be worth more if it’s of similar or slightly less value than the nearby houses.”
Here’s an illustrative example . . .
“If your new home costs $500,000 to build, but the neighbor’s homes are valued closer to $250,000, you may have a tough time selling your home for what it’s worth. On the flip side, if you spend $300,000 to build your house, and nearby homes are valued at over $1,000,000, your house will be more attractive to buyers and bring a better price.”
Hire a New Jersey Agent Before Making an Offer
Sure, you can begin looking for land on your own. A lot of the fun and excitement involved surround the search for just the right piece of land in the right location. So go ahead and scour listings and drive around looking at potential properties. But before you buy land in New Jersey – before you even consider making an offer – hire an experienced New Jersey agent.
If you work with an agent, you’ll have certain protections, such as the ability to get out of the contract if the property isn’t suited for construction. . . . A knowledgeable agent can often tell you whether the land is in a flood plain, whether rural water and electricity are available in that area, and what type of building restrictions are in place.”
Your agent can also craft an offer that will protect you and get you the best deal possible. “An agent can . . . write up an offer that lets you back out if the local building authority does not approve a permit to build a house or if you’re unable to secure financing to build. You’ll end up paying the agent’s commission when the transaction is complete, but it’s worth it not to get stuck with land you can’t build on.”
Don’t miss out on the benefits of working with a good agent. When you’re ready to buy land in New Jersey for your new home, contact us today at 855-966-DEALS.