Six Steps to Buying Vacant Land

With advance planning, a properly written offer containing a feasibility contingency, and a commitment to due diligence, you can eliminate a lot of the uncertainty of buying vacant land.

Feasibility Study

An offer on vacant land should contain a feasibility study. A feasibility study is a negotiated length of time for the buyer to conduct any and all tests and studies of the property to verify that it will meet the buyer’s needs. The feasibility study is conditioned upon the buyer’s “subjective satisfaction” with the property, which means that the buyer may cancel the agreement for any reason within the specified time period and have the earnest money deposit refunded. The feasibility study gives the buyer a way to reduce the risk in buying vacant land.

The most common study performed is a soils analysis. The soils analysis is useful for determining the type of septic system that is required, the cost of which can vary from a few thousand to tens of thousands of dollars. The buyer is also encouraged to inspect any existing structures and wells, and verify the availability of utilities. The buyer should also verify buildability and zoning issues with the appropriate governmental authority. It is also an opportunity for the buyer to obtain bids for site prep and construction to verify that the property will fit within budget.

Critical Areas

Much of our area is impacted by environmental factors that may affect the buyer’s use of the property. Flood zones are a common example. There are many low-lying areas adjacent to rivers and streams that are prone to periodic flooding. As your agent, I can assist you in procuring a FEMA flood zone map in order to determine if a property is in a flood plain.

Another common example is the presence of wetlands or other soils issues. Wetlands are protected areas and you can’t build within a certain distance of them (a “buffer”). This distance varies depending upon the type of wetland. The presence of wetlands will potentially limit what someone can do with his or her property.

Some counties, like Thurston County and Lewis County, have web-based parcel mapping systems that allow a user to view critical areas information for any piece of property. Please consult me for information on how to use these excellent tools.

If critical areas are discovered on a property, the buyer is strongly encouraged to consult with experts in the field and the appropriate government authorities regarding the implications for the use of the property.

Covenants, Conditions & Restrictions (CC&Rs)

Covenants and restrictions are legal obligations that run with the land. Some lots are located in developments where there may be covenants and restrictions that are general rules that cover that development. Examples would include prohibitions against manufactured homes or livestock, minimum specifications for construction of the residence, provisions for road maintenance, establishment of a Home Owner’s Association (HOA), etc. Copies of the covenants are generally provided by the seller, the agents involved, or the title company. All covenants differ from one property to the next. Buyers are strongly encouraged to verify whether or not any covenants on a particular property will limit their intended use.

Planning and Zoning

Zoning and planning ordinances affect your use of the property. You are strongly advised to consult with the appropriate authorities to determine if your intended use of the property is consistent with local zoning laws. For example, some jurisdictions may have ordinances that prohibit certain types of business or commercial activity in a particular area. If you’re planning to subdivide the property, operate a home-based business, or want to install a secondary “mother-in-law” dwelling, verify that these are permitted under the zoning for a particular property.

Investigating the zoning in your area also gives you a chance to find out what types of properties are near you. Is your residential land located in the middle of a residential area, or are you going to be in close proximity to an industrial site? Will your use of the property be consistent with the uses of the surrounding properties? Such issues may affect your quality of life as well as the value of the property for future resale.

You also want to speak to the local building and planning department (city or county, depending on jurisdiction) to determine what permits you will need, and how much they will cost. If you are building within city limits, check to see whether they will make you install sidewalks or streetlights along the street. Be sure to ask about critical areas and environmental restrictions, and whether there are any impact fees or pending special assessments. Most technicians in your local building and planning are very helpful, but I strongly recommend you talk to more than one person to make sure you are getting accurate information.

Title Report

During the escrow process, the buyer and seller will order a preliminary title commitment from the local title company. It contains a report that lists all of the recorded liens that affect the property. It is important to read this report to see if the title is impacted by such things as liens, judgments, easements, covenants, reservations, etc. These are all items that can limit the buyer’s use of the property as well as the marketability of the title when the buyer decides to sell it down the road. The seller is responsible for providing marketable title to the buyer.

Neighborhood Review

Before you buy a lot it is always a good idea to drive around the neighborhood. Does the neighborhood appear safe and is it a place you want to live? Is it close enough to work, school, medical care, shopping, etc? Does it offer the amenities that you’re looking for, like a library, or high speed internet? Parents of school age children should investigate the quality of the local school district. You should also investigate crime rates and other important information. I can direct you to various sources to research this information.

The Bottom Line

By the end of the feasibility contingency time period you want to know whether you can do what you want with the property. You should have a firm idea of how much it will cost to develop and build the property, and how long it will take. You should have a high degree of confidence that you can achieve your goals in a reasonable amount of time at an acceptable cost. If not, then we can cancel the agreement before the feasibility time period expires so you can get your earnest money deposit back.

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I specialize in vacant land in the South Sound, particularly Thurston, Lewis, Mason, and Grays Harbor Counties.

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