How to Make the Right Lot Selection

New home buyers are faced with a multitude of decisions from the kitchen stove with four, five or six burners to the ‘Bad Ass’ fan for the living room. (And, yes, there actually is a brand called that and their fans are as unique as their name.) But always the most important decisions begin with the homesite selection because all homesites are not created equal, even within the same new home community.

A cul-de-sac lot at the end of a private road creates more privacy compared to a corner lot which has a road on two sides. Although, the initial value of homesites may vary by tens of thousands of dollars, I recently had an appraiser tell me that they do not differentiate location within a community when appraising a resale home. But perhaps they should as developers and buyers certainly do. However, even more important than the subtleties of its location within a community, is the condition of the land. Does it have any wetlands, stream setbacks, bedrock, maybe even a buried car? Recorded easements? Is gas and electric on site on adjacent? That’s a significant added cost if they are not ON site. Is the road public or private? And if private, who will maintain and repair it? Even the length of the driveway factors into the cost of the new home. And what about the topo? An uphill lot lends itself to a garage under design with living areas up one or even two flights of stairs. The larger the garage the greater the potential for more square footage of the living areas. Stacking the floors lowers the cost of the square footage living area because of the shared foundation and roof which is why ranches are the most expensive home style but still the most popular downsizing plan for the aging boomer. A flat lot lends itself best to a ranch or a two-story home with minimum excavation and haul off of excess dirt. A downhill lot is perfect for a lower level with either an interior or an exterior entrance for an ADU (accessory dwelling unit). A basement with no windows has minimum value while a daylight basement has adequate egress windows but not a full height door to the exterior. That basement is called a walk-out. Window wells can substitute for some lower-level safety requirements but are not particularly popular. A buyer’s quandary is choosing between their favorite new home community and a homesite that will meet their requested style of home.

There are three types of new home communities which define what can be built in the development. The first has no covenants, codes and restrictions and simply follows whatever the local zoning will allow to be built. The second type is a community which complies with local zoning but also has recorded covenants, codes and restrictions. These CCR’s as they are called are controlled by the developer of the subdivision and apply to the architectural approval of the last lot. After that, if a homeowner has a complaint regarding the lack of enforcement of the CCR’s, he must sue his neighbor in superior court. The third type of governance is when the development conforms to the local zoning ordinance, has a recorded set of CCR’s and is managed by a Homeowners Association to enforce the CCR’s. These are three important distinctions and buyers need to understand the governance, or lack thereof, of the new home community when choosing their new homesite.

My advice to potential home buyers is never buy a lot without first walking it with a general contractor, an engineer or surveyor. Select a builder who is familiar with the area and has a floor plan that can be adapted to suit your needs. Custom homes, where the design comes from an architect or a builder who uses Chief Architect software will ultimately add 15 to 18% in additional costs. Large custom homes are most frequently built on a cost-plus basis rather than a fixed fee. If a buyer buys a lot before hiring a builder who will secure financing for the vertical construction, buyers need to understand the builder’s commercial lender will require a lot subordination which will put the buyer’s lot equity in second position. Alternatively, the builder can purchase the buyer’s lot but that leaves the buyer with no control over his site selection if conflicts arise.

So back to the six-burner stove and ‘Bad Ass’ fan and the dozens of other selections a buyer needs to make for a build to suit home. Patience and good communication between all parties is the key to a successful new home build. And be prepared for a long wait, maybe even a year depending on Alaska’s weather conditions.