How to Buy a Lot

Despite this spring snowstorm, welcome to spring and the time of year when buyers shop for lots to build a new home on. However, not all lots are created equally so here is some advice based upon my years of experience as a residential land developer. First and foremost, I do not recommend any buyer purchase a lot without first walking its perimeter with a land surveyor or home builder. Even after that walk about, there should be a minimum of a 45 day diligence period written into every land purchase agreement while you research some of the items discussed below.

The site might have everything you are looking for– tall trees, southern exposure, even a view of the mountains and a peek-a-boo view of the inlet but does the current zoning allow for what you want to build on the property? Can you keep your motorhome year round? Can you have four dogs instead of the maximum three the MOA allows? How tall can your new home be? These questions and others need to be investigated by examining the zoning requirements and a careful reading of the covenants, codes and restrictions. You can find most of this information from the property manager of the homeowner’s association, assuming there is one. 

Land developers do not do soil tests on individual lots so that is part of the due diligence of the prospective buyer. However, soil tests for the road in front of the lot should be available from the developer or the MOA. These tests can give you a good idea of future excavation costs, including the haul off of bad soils and the haul in of gravel for your foundation. These extra costs do not add value to the vertical structure you are building. If the asking price of the lot appears to be below market value, there is usually a good reason for its reduced price so tread carefully and keep asking questions either of the seller or at the MOA.

Anchorage has a number of infill lots, particularly in older parts of Anchorage, including South Addition, Fair View, downtown and certain areas of east Anchorage. However, don’t assume that because the home next door is hooked up to water and sewer that there is adequate water/sewer to the lot you are contemplating purchasing. In older communities, water and sewer pigtails are not thru the right of way and so a buyer will need to tear up the street to connect to the water/sewer main. Even if by chance, the pigtails are extended through the right-of-way, they may not be the right size or material and will need to be replaced. Plus, there is always the cost of traffic control which on a busy street like Boniface can cost several thousand dollars. And none of these costs add value to the building you are wanting to construct.               

Other potential costs may be ‘off-site’ such as a requirement to pave the alley the property is adjacent to. This is a frequent occurrence in mid-town, South Addition and Mountain view where the land was development in a grid. On the hillside, is access to the property a long private or dedicated road? If private you may end up being part of a limited road service district with annual costs.

These are just a few of the due diligence items that need to be explored before proceeding with the sale. Take your time, explore all your options before committing to that lot purchase to build your dream home. A few weeks of due diligence can save you thousands of unexpected costs.