How to Buy Land: A 7-Step Guide to Zoning, Financing, and Avoiding Costly Mistakes

Buying vacant land can be a more affordable path to homeownership than purchasing an existing house, but it requires meticulous due diligence to avoid costly errors. The core challenge lies in verifying that you can legally and practically use the land for your intended purpose, whether building a home, parking a tiny house, or holding it as an investment. The most critical step is conducting thorough research on zoning, access, and buildability before you make an offer. This guide provides a seven-step process and essential questions to ask, helping you navigate the complexities of a land purchase with confidence.

What Are the Most Important Zoning Rules to Check?

Zoning information is the legal framework that dictates how a property can be used. Local governments classify every parcel of land—for residential, agricultural, or commercial purposes—and establish specific rules for each zone. These regulations determine if you can build a single-family home, a barn, or even run a business from the property.

Beyond the specific rules for your parcel, review the municipality's "general use plan," which outlines development intentions for the area over the next 5 to 15 years. For instance, a quiet rural parcel might have future plans for a new highway or commercial development nearby that could affect your privacy and the property's value. Government planning staff are excellent resources for deciphering these documents; don't hesitate to contact them with questions.

How Do Deed Restrictions and HOA Rules Affect Your Plans?

A deed is the legal document that transfers property ownership. It may contain deed restrictions, which are private rules that govern land use, often found in communities with a Homeowners’ Association (HOA). These restrictions can be more limiting than zoning laws and might regulate everything from fence styles and parked vehicles to the types of pets allowed.

If an HOA exists, request its Covenants, Conditions, and Restrictions (CC&Rs). Read them carefully. If anything is unclear or if there is no HOA to provide documents, consult a real estate attorney. They can perform a title search to uncover any existing liens or easements and clarify all restrictions tied to the property.

Is the Land Actually Suitable for Building?

This fundamental question involves several factors beyond simply owning a plot of dirt. Key considerations include:

• Environmental Hazards: Determine if the land is in a flood zone, which would require expensive flood insurance, or if it's prone to landslides. This information is available through local planning departments or FEMA maps.
• Topography and Setbacks: Topography refers to the land's slope and physical features. Flat parcels are generally cheapest to build on. You must also account for setbacks, which are local government rules mandating minimum distances between a structure and property lines. Setbacks determine the actual "buildable" area of the lot.
• Soil Quality: A geotechnical investigation (soil test) determines if the ground can support a foundation. For rural properties without sewer access, a percolation test ("perc test") assesses the soil's suitability for a septic system.

Based on our experience assessment, it is highly recommended to make your purchase offer contingent on the satisfactory results of these tests. Adding contingencies for zoning, septic viability, and a professional survey allows you to back out of the deal and retain your earnest money if significant problems are discovered.

What About Access and Utilities?

Legal access is non-negotiable. If the only path to the property crosses another person's land, you must have a legally recorded easement (a right-of-way). Without it, your property is landlocked and nearly worthless. A plat map, available from the county recorder's office, shows boundaries and may indicate easements, but an attorney's review is often necessary.

Utilities are another major cost factor. In rural areas, you may need to drill a well and install a septic system, which can cost tens of thousands of dollars. Also, verify internet access options if you work from home. Obtain written bids for all necessary utility work before finalizing your purchase.

How Do You Finance a Land Purchase?

Financing land is different from financing a home. Many traditional lenders do not offer loans for raw, unimproved land. Your options often include:

• Local Banks or Credit Unions: These institutions are more familiar with local land values.
• Seller Financing: The current owner may act as the bank and finance the sale.
• Construction-to-Permanent Loan: If you plan to build immediately, this loan combines the land purchase and construction costs into a single mortgage.

If paying cash, you may later use the land as equity for a construction loan. Always get cost estimates for development before seeking financing to know exactly how much money you need.

A 7-Step Guide to Buying Land

1. Get Pre-Qualified: Contact a lender specializing in land or construction loans to understand your budget.
2. Hire a Specialized Agent: Work with a real estate agent experienced in land sales, such as an Accredited Land Consultant.
3. Search for Parcels: Use your agent, online land-specific websites, and drive through target areas to find available properties.
4. Conduct Due Diligence: This is the most critical phase. Research zoning, HOA rules, environmental hazards, and access. Hire inspectors, surveyors, and attorneys as needed.
5. Submit a Contingent Offer: Work with your agent to craft an offer that includes contingencies for financing, surveys, and soil tests.
6. Secure Financing: formally apply for your loan once your offer is accepted.
7. Close the Purchase: Finalize the sale at closing. Secure title insurance to protect against ownership disputes and obtain liability insurance for the vacant land.

Success in buying land hinges on verifying its use potential before you are legally bound to purchase. By methodically investigating these key areas and enlisting the right professionals, you can turn a parcel of land into a valuable asset.