Buying land can be an exciting opportunity to bring your vision to life, whether you’re planning to build a custom home in Austin, TX, or invest in land in Atlanta, GA. Unlike purchasing a home, buying land comes with unique considerations, from zoning laws to environmental assessments. It’s not as straightforward as touring properties and securing a mortgage—buying land requires a deeper dive into local regulations, financing options, and development possibilities. This Redfin guide will walk you through how to buy land, offering a comprehensive list of questions to ensure you’re prepared for every step, no matter where your search takes you.
How to buy land in 9 steps
Step 1: Define your goals for the land
Before you start searching for land for sale, it’s essential to clarify your goals. What you plan to do with the land will shape every decision you make, from location to financing. Are you looking for a plot to build your dream home, somewhere to live in your RV, start a farm, or secure a long-term investment? Each use comes with specific considerations, for example:
- Residential use: If you’re planning to build a home, look for land in areas with suitable zoning, access to utilities, and proximity to schools, work, or amenities. Consider factors like soil quality for building foundations and any neighborhood restrictions. For example, a peaceful rural property might offer space and privacy but could lack city utilities.
- Agricultural use: For farming or livestock, research soil fertility, water rights, and local climate conditions. You’ll also need to understand zoning laws and agricultural tax incentives/implications.
- Long-term investment: Investors often prioritize location and future growth potential. Look for areas with planned infrastructure improvements or growing industries that could increase land value over time.
Defining your goals upfront ensures you’re asking the right questions and choosing a property that aligns with your vision, saving time and resources down the road.
Step 2: Review your budget and explore financing options
One of the first decisions to make when buying land is determining how you’ll finance it. While some buyers opt to pay in cash, this isn’t always feasible, especially for higher-priced plots. If cash isn’t an option, you’ll need to consider a land loan.
Land loans can be more challenging to secure than traditional home mortgages because lenders view them as riskier investments. Unlike homes, land can take longer to sell, making it harder for banks to recoup their money in case of default. To mitigate this risk, lenders often require larger down payments, sometimes up to 50% of the purchase price, and may charge higher interest rates.
The type of loan you’ll need depends on the land you’re buying and its development status:
- Raw land loans: For undeveloped land with no utilities or infrastructure, expect higher interest rates and stricter terms. Lenders may also require detailed plans for how you intend to use the property.
- Unimproved land loans: For land that may have minor features like utilities nearby but not yet on-site, terms can vary. These loans fall between raw and improved land loans in terms of cost and difficulty to secure.
- Improved land loans: If the land has already seen some development—like utility hookups or road access—financing is generally easier and comes with better terms.
Key financing considerations:
- Budget for a larger down payment: Be prepared to invest more upfront, especially for raw land.
- Be transparent with your intentions: Lenders often want to see clear plans for the land’s use before offering financing.
- Explore local lenders: Smaller banks and credit unions familiar with the area may be more willing to work with land buyers.
- Evaluate alternative financing: Owner financing can be a flexible option if a traditional loan isn’t available, though it may come with shorter terms and higher interest rates.
Financing land can feel daunting, but understanding your options and preparing for higher upfront costs will ensure you’re financially ready to move forward with your land purchase.
Step 3: Find a real estate agent experienced with buying land
Working with a real estate agent who specializes in land sales can make a significant difference in the buying process. Your agent will help you navigate the unique aspects of purchasing land, such as zoning laws, land valuation, and local market conditions. They can help you find properties that align with your goals, navigate legal complexities, and negotiate better terms. A skilled agent will also connect you with trusted professionals, such as surveyors and inspectors, ensuring you make a well-informed purchase.
Step 4: Research zoning and land use restrictions
One of the most important steps in learning how to buy land is understanding the zoning laws and land use restrictions that apply to the property. These regulations can vary significantly depending on the location, and they directly impact how you can use and develop the land.
Start by determining how the land is zoned. If the land is zoned for residential use, you’re in luck, as this will typically allow for the construction of a home. However, if it’s zoned for commercial or agricultural use, changing the zoning can be a complicated and expensive process. If the land is located in a developing area with planned commercial properties, it might be more difficult to get approval for residential construction. In this case, it’s essential to check with the county zoning office to confirm any restrictions and the feasibility of building your desired structure.
Beyond zoning, it’s also important to consider any other land use restrictions that might be in place. These could include easements, environmental protections, or homeowner association (HOA) rules that limit how the property can be used. For example, the land could be subject to a conservation easement that restricts certain types of development, or there may be deed restrictions that prevent commercial activities.
Key questions to ask when researching zoning and restrictions:
- How is the property zoned? Is it zoned for residential, commercial, agricultural, or another use? If you’re buying land to build a home, ensure it’s zoned for residential use or investigate the process for rezoning.
- Are there any deed restrictions on the property? Deed restrictions limit how you can use the land. These may include rules on building types or land usage, such as restrictions on mobile homes or specific architectural requirements. Always check the deed and consult an attorney to ensure there are no restrictions that could impact your plans.
- Does the property have road access? Especially in rural areas, you’ll need to confirm that the land has access to a road. If not, you may need an easement to cross neighboring properties to reach your land. Check with the county’s Assessor or Clerk’s office to confirm any easements or access issues.
- Are there utility hookups in the street? If the land is near a city, utilities like water, electricity, and sewer may already be available. If not, you’ll need to determine the cost and process of bringing these utilities to the property.
- What are your water rights? If you need to drill a well, confirm the property’s water rights, which should be listed in the deed. You’ll also want to contact the state’s Department of Resources to ensure that you can legally drill for water.
5. Choose the right property and consider factors like location, buildability, climate concerns
Where is the land located? Look at what’s around the property. If it’s near a noisy highway, a power plant, or a landfill, these factors could affect the land’s value and your future quality of life. Conversely, if it’s close to desirable amenities or future development, it could increase the property’s potential value.
Can you build on the land? This question goes beyond zoning laws and includes a deeper look at the land’s topography and environmental conditions. If you plan to buy land to build a house, you’ll want to consider the soil type—rocky soil may make excavation difficult and expensive, while marshy areas may require additional permits or remediation before building. Also, evaluate the terrain: Is it flat or steep? Steep slopes will add to construction costs, as you may need to grade the land to create a stable building site. If the land is wooded, check if there are any restrictions on tree removal. A marshy area might require additional permits or remediation efforts before you can build.
What are the infrastructure and utility needs? Does the property have access to essential utilities like water, electricity, and sewage systems? If not, you’ll need to determine whether you can easily bring these services to the land. The cost of installing utilities can be significant, especially if the land is located far from existing infrastructure.
Are there any environmental protections/concerns? Is the property located near protected wetlands, endangered wildlife habitats, or other environmental hazards? If so, you may face restrictions on what you can build or do with the land. Research local environmental regulations to make sure your project isn’t hindered by environmental protections.
Are there climate risks to be aware of? Consider climate risks like flooding, wildfires, or hurricanes, which can affect the land’s viability. Research flood zones, fire-prone areas, and storm risks to understand any building requirements or additional insurance costs. If you decide to proceed with buying land in a high-risk area, you’ll need to consider taking extra precautions when building your home, such as using fire-resistant materials or creating defensible space if you’re in a wildfire-prone area.
What are the required building setbacks? When researching how to buy land, you’ll want to learn about setback ordinances, which are property laws governing property lines and boundaries. A setback is the required distance from the property line for any structures. If the lot is small, you may find you won’t be able to build as large a house as you hoped because the setbacks dictate you don’t have enough space.
Step 6: Apply for a land loan
Now that you’ve determined the type of land you want to purchase, you’ll have a clearer idea of what kind of land loan you’ll need. Whether it’s raw, unimproved, or improved land, you’ll be able to select the right loan type based on your property’s characteristics. This is the time to formally apply for your loan. Be prepared for higher interest rates and larger down payments, particularly with raw or undeveloped land. Work with lenders experienced in land financing to guide you through the process and secure the best terms for your purchase.
Step 7: Submit your offer
Once you’ve selected the land and arranged financing, it’s time to submit your offer. Include contingencies in your offer to protect yourself, such as financing approval, zoning verification, and a satisfactory title search. Having contingencies ensures you’re not fully committed until certain conditions are met, reducing your risk during the purchase process.
Step 8: Do your due diligence with surveys, inspections, etc.
This step of how to buy land is crucial in ensuring that the land is exactly what you expect. Conduct a variety of surveys and inspections to avoid unexpected issues down the line. A property survey is essential to confirm the exact property lines. A soil test or percolation test may be necessary if you plan to build a home or install a septic system, especially for undeveloped land. You may also want an environmental survey to check for hazards like contamination or endangered species on the property. Additionally, make sure there are no easements or liens on the property by reviewing public records. This is your chance to verify that the land is buildable, free from legal complications, and suited to your long-term plans.
Step 9: Close on the sale of the property
Once all terms are agreed upon, it’s time to close the sale. At closing, you’ll review and sign the necessary paperwork, including the purchase agreement and any loan documents. You’ll also pay closing costs, which can include title fees, taxes, and other related charges. The title company will handle the transfer of ownership and ensure that all legal requirements are met. Once everything is in order, you’ll receive the deed to the land, officially making it yours. At this point, you’re ready to move forward with your plans for the property.
Additional costs to consider when buying land
As you research how to buy land, you’ve likely realized there are more costs to plan for than just the purchase price. These costs can vary depending on the location, land type, and your future plans for the property. Here are some key expenses to budget for:
- Closing costs: Like any real estate transaction, buying land involves closing costs. These can include title insurance, recording fees, and attorney or escrow fees. Closing costs typically range from 2% to 5% of the land’s purchase price.
- Land survey: If the property boundaries are unclear, a land survey is essential. This ensures you know exactly what you’re purchasing and can help avoid future disputes. The cost of a survey can vary but typically ranges from $300 to $1,000.
- Land clearing and preparation: If you plan to build a house on the land, you may need to clear trees, shrubs, or other obstacles. This can be a significant expense, especially if the property is heavily wooded or has uneven terrain. Costs will depend on the land’s condition, but clearing could cost several thousand dollars.
- Utilities and infrastructure: Many undeveloped properties lack essential utilities like water, electricity, or sewage systems. Connecting to these services can be expensive, especially in rural or remote areas. You may also need to install a septic system or well, which can add thousands of dollars to your budget.
- Property taxes: Landowners are responsible for paying property taxes, even if they are not developing the land right away, which vary by location. While land taxes tend to be lower than those for homes, they’re still an ongoing cost you should plan for. Make sure to check the current property tax rates before buying.
- Insurance: Depending on your land’s location and use, you may need property insurance. For instance, if you plan to build, you might want coverage for potential damages or liability. This could be an added cost, especially if the land is in a high-risk area for natural disasters.
- Permits and fees: If you plan to build, subdivide, or make significant changes to the land, you’ll likely need permits from local authorities. These permits often come with application fees and may require inspections, adding to your total expenses.
How to find land for sale
Finding land for sale involves some research and knowing where to look. Start by browsing online platforms like Redfin – just select “land” from the “home type” dropdown. Specialized websites like LandWatch or LandSearch also list available parcels, offering a great starting point. A real estate agent who specializes in land sales can be an invaluable resource, helping you identify properties that match your criteria and guiding you through the buying process.
Additionally, explore property auctions or local classifieds for hidden opportunities. Networking with local builders, contractors, or even neighbors in your desired area might reveal land that’s not widely advertised. Be sure to conduct thorough research to ensure the land meets your needs and comes with a clear title.
Is buying land a good investment?
Buying land can be a smart investment, especially if your goal is to build your dream home. In some markets, this could be more affordable than buying a newly built home, depending on location and the availability of land. Building your own home on land you’ve chosen allows you to have full control over design, layout, and materials, which can ultimately make your investment more rewarding.
However, buying land with no immediate plans for development and hoping for appreciation is riskier. Factors like zoning, accessibility, and environmental concerns can impact its future value. If you’re buying raw land, assess its development potential to ensure it aligns with your long-term goals. Thorough research is key when deciding whether or not you should buy land.
