The Complete Guide for Buying Land to Build a Home in 2022

Real estate requires an investment of time and money – and the more time you spend preparing, the more money you will spend wisely.

Buying empty building land is, in many ways, more complex than buying a finished home.

What you can see with your own eyes is essential, but what you may not see (soil features and groundwater levels, legal restrictions and conditions for connecting to utilities) can have a much more significant impact on your successful land use.

In this article, we will take a detailed look at how to determine the accurate price of a land plot, estimate the costs of its development, and avoid common buying mistakes.

We will also cover the maximum range of issues you need to understand before buying a plot to build a house or a luxury apartment in Islamabad.

STEP 1 List of priorities in site selection

Before you start looking for a site to build your home, take the time to make a list of priorities. You may not afford to buy land for your ideal dream home, so you will need to decide where to compromise and where to stick to your terms.

Some key questions to help make such a list:

• Distances. How far are you willing to travel to the city, place of work, shops, public transport stops?
• Region and settlements. Define a list of specific settlements, districts, or directions to perform the search. You can also go the other way – by defining a list of places where you would not want to build a house.
• Institutions. Are local schools, kindergartens, clinics suitable for you?
• Physical characteristics. Are you looking for a wooded area, open space, high on a hillside overlooking the countryside, with access to water? Is there anything else important?
• Neighbours Do you want a secluded life in the countryside? Or will you be happier in a dense, established community where you see the neighbours regularly and where the kids can find lots of buddies around? Will it be a cottage village or a house in the countryside?
• Utilities. What utilities should be available: water, sewerage, electricity, natural gas, cable TV, high-speed Internet access?
• Driveways. Will a dirt road be enough, or do you need an asphalt driveway? At what distance from the main highway can a building site be located?
• Costs. What costs are acceptable to you for summing up communications or connecting to existing ones? This can be incredibly costly in the case of gas and electricity.
• Plot size. How much space is needed? Will, there be a house with a large area of ​​land or a small allotment be enough, which will be cheaper and it will be possible to find a better place for the same budget?

By compiling such a list, you can issue a specific task to a realtor or for yourself to simplify the analysis of existing proposals on the market for plots for building a house.

Also Read: Planning to refinance a new home? Here’s how you can do it

STEP 2 List of potential sites for building a house

To select sites according to the selected criteria, we use:

• information from specialized online services
• local print media
• realtor services

STEP 3. What and to whom to ask questions before buying a land plot

Once you’ve decided on a list of areas that you like, start looking at them and work out a checklist for each of them. This will help you determine the pros and cons and not miss essential details.

At this stage, you may need to communicate with:

• the owner (or his representative)
• lawyer
• surveyor
• local council land surveyor
• companies, utility providers
• well drillers
• septic installers
• neighbours
• district inspector
• builders

Eliminate as many uncertainties as possible before formulating your price proposal and making an offer to buy it.

Remember! Buying the wrong land to build a house can be a costly experience.[/message] 

Naturally, the main question is: Can I use the site as I planned and is the asking price adequate? And if the answer is “Yes”, then we begin a much more detailed study …

Questions for the seller or his realtor

Although one cannot trust information from the seller or his realtor, it is acceptable to obtain primary data. In most cases, you will receive accurate information.

Most of these questions are duplicated in other sections when you get more objective information from others who are not interested in the transaction.

• Is the purpose of the site suitable for building a house?
• How many years the seller has been the owner (will there be a 5% personal income tax)
• Have the boundaries of the land been laid out?
• Has a registration number been assigned?
• Are there any restrictions on the plot (rights of way, for example, or other easements)?
• How many owners does the property have? Does it have the joint property of the spouses?
• Is there a service organization and monthly fees (gardening partnership, management company, etc.)?
• Are there common facilities (water, sewerage, roads, fences, etc.)? Who manages them?
• Does the site have access to electricity, natural gas, water, or public sewerage?
• What is the groundwater level?
• What is the soil on the site (clay, loam, sand)?
• Is there potable water on-site? What is the quality of the water?
• What are neighbours?
• Is it convenient to use this area throughout all seasons? Are roads cleaned in winter? Does it wash out the primer?
• Are there any objects in the area that worsen your comfort of living (noise from an industrial site, an airport, a pig farm or fields fertilized with manure, a reservoir with noisy companies, etc.)

Legal issues (to your lawyer)

• How did the seller acquire the land?
• What is the purpose of the land (for building a house, gardening, OSG), and what are the restrictions on construction in connection with this?
• get acquainted with the title documents: state act on land, technical passport for houses, a declaration on putting the house into operation, certificate of ownership of the house
• check the site on the cadastral map online
• If the site is sold with buildings, are they put into operation, or is there an official permit for their construction (are they self-lined)?

Questions on the ground (independently and to the surveyor)

• What is the soil on the site (deep to the level of 1.5 m)? Make a hole (you can use a garden drill) and look.
  • Poor soils for the foundation are fine dusty sand (quicksand), clay soils, peat, silty soils.
  • Average soils – loams and sandy loams (mixtures of sand and clay particles)
  • Good soils – coarse sand, gritty soils (gravel, stone fragments)
• Drive a crowbar or rebar into the ground. If it was possible to do this to a depth of a meter or more, this is terrible soil for construction (peat or fluid loam, sandy loam).
• See how the foundations of neighbouring houses behave? Do they crack? Are they moving? Warp? Is there backwater for groundwater? Are the floors wet?
• Is the property on a slope? Are there water sources (springs, river, body of water) near your site or in your area? Are you planning a house with a particularly complex design? Will the walls be heavy? Will there be two floors or more? If “yes”, then this is a direct reason for doing engineering and geological surveys (site geology)
• At this stage of the pre-purchase study of the site, you can apply for preliminary consultations with a surveyor.

Questions for utility providers                                      

You will need to find out which organizations supply electricity, natural gas, and other utilities to or near the property (ask the seller, realtor, or neighbour). Next, you should contact them for preliminary consultations.

The information obtained will estimate the necessary costs for connecting all communications. This, in turn, will help determine if the seller’s asking price for the property is adequate or if there are reasons for significant bargaining. Or maybe it’s better to refuse such a purchase altogether.

Electricity

• Is the surrounding area electrified? If not, which company is engaged in the electrification of this area? If there is none, it is better not to consider the site.
• Determine whose nearest transformer (private, rural or on the balance sheet of RES).
• Clarify with the balance holder of the transformer the technical possibility (is there enough power limit for your connection, what is the total power of the transformer and how much is left free?) and the conditions for connecting to its transformer (including the price).
• If the technical conditions for connecting to the power grid exist, check their validity period. If it has expired, it may not be renewed.
• There is no transformer nearby (or there is no power), check with the local RES the cost and the possibility of installing your transformer substation (transformer point)
• How many meters to pull the electric cable to the site, and what is the total cost of work (services and materials)?

Natural gas

• Can natural gas be connected to the house? And how long will it take?
• What is the total cost of running the gas, including the connection fee, connection project, work carried out by a certified company, cost of materials?

Telecommunications

• What are the options for cable TV and high-speed internet?
• What are the setup fees and monthly fees?

Sewerage

• If the sewerage is centralized, what are the connection conditions?
• If the sewerage is individual, what options can be used? For example, suppose the water table is high. In that case, it may be necessary to use a sewer system based only on closed septic tanks, which is a more expensive solution.
• Where can individual sewerage be placed? Are sanitary standards observed in terms of distances from the planned house and neighbours’ plots? Will the entrance of the vacuum truck be convenient?

Water supply 

• If the water supply is centralized, clarify the conditions for connecting to the system.
• How deep are the neighbours’ wells?
• Is there enough debit of wells for standard water supply?
• Are there any severe sources of groundwater pollution (for example, a random dump) at a distance of the nearest kilometres?
• Find out from drillers the costs of installing turnkey wells to the estimated depth. Check the cost considering two options: a pumping station (about 50 mm in diameter) and a submersible pump (about 100 mm in diameter).
• What are water problems common in this area? Such as hardness, acidity, sulfur dioxide (rotten egg smell), iron, manganese, sodium (salt), magnesium and copper? Presence of nitrates or other potentially hazardous substances? It may be better to do a water analysis from a nearby well immediately. Can analyze in order from the SES.
• What types of water purification systems are widely used in the area, and how much do they cost to install and maintain (check with suppliers of such equipment)?

Operating costs

• Are there any costs associated with other services provided by the service organization (protection of the territory, maintenance of public roads, garbage collection, etc.) and what is their amount?

Questions for neighbours

When buying a plot, they rarely find out who the new neighbours will be in advance. But it’s not hard to put in some reasonable effort to make it clear.

Do not be shy if you are seriously considering buying this land to build a house. Knock on the doors of neighbouring houses, introduce yourself, and talk to the neighbours. This is an excellent time to ask about water well performance, groundwater levels, and any questions that are of particular importance to you. So, for example, new constructions are planned in the area, which can change (for better or worse) the comfort of living.

In addition, you can make a first impression of the neighbours and visually assess their lifestyle.

At a minimum, ask them questions like:

• Are there any disputes over the delimitation of plots?
• How high is the groundwater? Water at the level of soil freezing (about 1 m from the surface) will seriously increase the cost of the foundation and septic tank.
• Ask your neighbours if there were problems with the foundations (cracked, moved). How are things going with the flooding of the territory, with swelling of the soil? Are basements damp?
• What is the soil at the level of the foundation on their site?
• Who cleans the roads from snow in winter?
• As for the neighbours, it will not be superfluous to talk with the district inspector.

Questions for contractors

• What are the features of building foundations on such soil?
• Will there be any retaining walls?
• Will there be a large volume of earthworks?
• Are there steep slopes or unstable ground that will require unique engineering solutions?
• Is there adequate access to construction equipment? Lengths, mixers?

STEP 4 Assessment of investments in a land plot for building a house

Site development costs can vary greatly depending on the ground, slope, building plans, and local utility connection costs.

Since many site development costs are not obvious, they can significantly exceed the expected construction budget or derail the project as a whole. Therefore, it is essential to make a realistic assessment of the cost of improving the site when you buy land without utilities. And even when buying a plot with communications, make sure you know what is included in the price whether you will have to pay additional fees (for example, gas can be 1m from the plot, but you will have to pay a substantial amount to connect it).

So, in addition to the purchase price of the land, make sure you work out in detail all the possible costs for the site.

This is not an estimate of the work; it is most likely a cost estimate of the advantages and disadvantages of a particular land plot. In this way, you can compare several sites in monetary terms and understand which one is cheaper in the end.

There are, of course, relatively minor costs. We present them here for the sake of completeness and so that you can verify the presence of these operations. But some can fluctuate within tens of thousands.

The costs of purchasing and arranging a land plot may look like this:

Note: Prices have been converted to the US to keep the information updated. However, all the same, tariffs change, and prices, of course, can differ significantly in different regions. So feel free to check everything yourself. It is important.

The cost of arranging a land plot for building a house

Description $Min $ Max

Realtor services 2-5% (if any) 0.00 1000.00

Costs of preparing a land plot for sale

Statement of existing restrictions (encumbrances) on the land plot 3.50 3.50

Certificate of normative monetary valuation of the land plot 4.80 4.80

Extract from the State Land Cadastre for the plot 2.40 2.40

Production of a normative monetary value (outside the settlement) and if there was none 45.00 100.00

Expert monetary assessment report 45.00 100.00

Costs after the contract of sale

Verification of the land plot according to the registers (seller) 20.00 20.00

State registration of the seller’s ownership 5.60 5.60

Extract from the state register of rights to real estate 5.70 5.70

Drawing up a contract of apartments for sale in Islamabad 50.00 100.00

Notarization of the contract + services for registration, issuance of extracts 150.00 250.00

Verification of the land plot according to the registers (buyer) 20.00 20.00

State registration of ownership of the buyer 5.60 5.60

Extract from the state register of rights to real estate for the buyer 5.70 5.70

State duty 1% of the contract amount 100.00 200.00

Income tax  5% of the contract amount (if the seller owns the land for less than 3 years) 0.00 1000.00

The cost of preparing a land plot for construction

Engineering and geological  surveys (site geology) 50.00 200.00

Water supply

Centralized water supply (connection fee, materials, services) 100.00 300.00

Well (drilling, materials, pump, automation, expansion tank) 200.00 1 500.00

Water treatment (if necessary in case of lousy water) 1000.00 5,000.00

Sewerage

Centralized sewerage (connection fee, materials, services) 100.00 300.00

septic tank 500.00 7000.00

Electricity

project, connection fee, materials, work 1000.00 5,000.00

Transformer point (if there is not enough power limit) 0.00 10,000.00

Natural gas (project, connection fee, materials, work) 2000.00 5,000.00

Excavation

Site planning (ground leveling) 500.00 2000.00

Drainage (if needed) 0.00 3,000.00

Sloped site: levelling, shearing, retaining walls 0.00 7000.00

Driveways 0.00 2000.00

Foundation

Rise in the cost of the foundation due to poor soils 0.00 10,000.00

TOTAL $5,913.30 $ 61,123.30

Costs may vary depending on site conditions and the cost of services, materials, permits, etc. Adjust cost estimates for your project based on on-site survey data

As you can see, the difference can be simply stunning. This once again confirms that it is essential to pre-calculate all costs.

In our example, the most expensive plot is purchased through a broker away from communications (although not in their absence) on a slope of heaving soil and with poor access roads. Do you think it is impossible to agree to buy such a building plot? Now imagine that it is located on the shore of a beautiful reservoir … The price seems a little cheaper than those closer to the village… They say nothing to communications – some 100-150 meters … This is how you can be happy, the “wild” area owner.

STEP 5. Make your offer to the seller

So, you have done some serious preparatory work. You asked a lot of questions to the seller, representatives of public utilities, neighbours, consulted with specialists and worked out a preliminary budget for preparing a site for building a house.

Now you have the most powerful tool for any negotiation – knowledge. Because the more information you have about real estate, the better and more informed, you will be able to bargain.

If you have looked at enough land in the area, you will understand how much the sellers here value their properties. Remember also that the price in the ads is not the actual price of the transaction; these are just the “Wishlist” of the sellers.

Now, to negotiate, you need to focus on the site’s shortcomings and indicate the cost you have determined to eliminate such shortcomings. These amounts can become the subject of bargaining.

We hope that the information provided by us will allow you to purchase the best plot while avoiding unreasonable costs.

If you still have questions about what to look for when choosing and buying a land plot for building a house, write in the comments, and we will look for answers.