Helpful Hints on How to Buy and Build on a Lot

Spring time brings out buyers looking for lots to build their dream home on. Currently, there are 220 lots in all zoning districts for sale from $30,000 to $6,086,865. However, many buyers are looking for a larger R6 lot of which there are only 60 lots including Anchorage and Eagle River. In 2017 the average R6 lot sold for $183,000.

The R6 zone almost always requires an individual well and septic system. Many buyers, having lived in a home on a lot with public water and sewer and on a publicly dedicated street are unaware of the due diligence necessary before committing to a purchase. Not every lot is going to percolate sufficiently for a septic system. Check the surrounding lots to see if they have holding tanks or the more expensive Avantec system. There is also a significant difference in cost and installation between a four bedroom septic or a three bedroom. Water is still the source of all life. The depth and flow volume of the well will add to the cost of your lot. Check the neighbors well depth at the MOA or the State DNR which is a good, but not guaranteed, indication of what you will have to spend to develop your water source. The minimum standard for a four bedroom house is .42 gallons per minute or 600 gallons per day. However, underground water sources shift and wells do run dry so there is no guarantee you will have a continual water source. Then you have to verify the quality of your well water to make sure it’s ok to drink.

The lot, if it is not accessible by a public road, may be part of a LRSA, a limited road service district. Find out how much it costs to maintain the road and who is in charge of the LRDSA. This is not always a static cost, depending on the winter snow fall and annual maintenance. The topography of the lot is going to determine its initial development cost. Extra excavation and haul off adds cost but do not add value. Haul off costs are calculated by the round trip in miles to and from the dump site so needless to say the location of the lot and dumpsite may significantly impact your cost. Poor, especially wet soils conditions will require often large excavation out and gravel haul in for a stable building pad. Most sellers will allow one or two test holes as part of due diligence as long as there is not unnecessary damage to the topography. You can also look at test holes required to build the access road if it has been recently constructed and approved by the MOA.

There may be easements or restrictions to the lot that are not visible to the human eye so please order a property profile which is a nominal cost from any title company. Although a full title report is not required to purchase a lot most real estate professionals will not participate in a sale without a title report. Some restrictions or easements that commonly pop up are gas and electric or perhaps even a public access easement. There may also be setback requirements more restrictive than required by the MOA. MOA driveway standards may not exceed 10% which may mean, on steep lots, one or two switchbacks which add to the cost of the driveway. Some lots may have buried fuel tanks, basement foundations or have been used for storage and repair of old vehicles. In that case, a Phase I environmental assessment should be done.

Finally, after you have gathered all of the information, I strongly suggest you hire a builder or an engineer to review your findings and walk the lot with you. This spring, wearing a pair of snow shoes or muck boots is also probably a good idea.