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Kelly Beckley, Other/Just Looking in Seattle, WA

What type of due diligence should be done when purchasing a lot on which to build a home?

Asked by Kelly Beckley, Seattle, WA Tue Jul 3, 2007

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Bruce McKinnon’s answer
Bruce Lynn’s comments are VERY accurate. But, I will try to give your question a different look as most real estate agents know absolutely nothing about land. Or, more specifically, it’s about “land development.”

In much of Seattle and King County suburbs (certainly in Mukilteo in South Snohomish County), there is very little “buildable” land left. Most of what is left is currently classified as “unbuildable”. Neither of these words can be found in the dictionary, but they are words that are clearly understood by every city engineer and planner. Generally speaking, what land is left has issues. That is why nothing has been built there (sure there are exceptions, but few). The majority of issues relate to what is defined as “Critical Areas” under the Washington State Growth Management Act ( http://www.gmhb.wa.gov/gma/ ). “Critical areas” include bluffs, streams and wetlands. The issues involve required set-back requirements and the engineering effort necessary to convert land from “non buildable” to “buildable” status. At a minimum, if a property has these constraints, various requirements will have to be met by the owner before ANY work can begin on developing (preparing) the property to build. Paperwork Why? Because the city issues all building permits and ultimately the FINAL “Occupancy Permit”. Without that, you can’t live in the house you just built. Not funny. I just went though this with several clients.

Land Development will require a minimum of 3 things (if not already completed and current): A survey, a geotechnical study and a SEPA study (if more than 100 cubic yards of dirt will ultimately be moved). If there are bluffs, a topographic study will be required and probably a geological study. In a “worst case scenario, a Reasonable Use Permit will be necessary along with some engineering studies (e.g., to address bluff stabilization, soldier pile walls, rockeries and other types of retainer walls). And where there are critical area regulation issues, development (getting studies completed, completing permit applications, meetings with city planning department staff 8 or 10 times to review staging progress, completing engineering studies) or building the paper file is not fun. The “buildable determination process” is frustrating, arduous, time consuming and very expensive. The process takes 2 ½ to 3 years and can easily cost $40,000 to $80,000—and even more, dependent up the complexity of development. And, no construction has even started. Land development is NOT for the faint of heart.

What to do? When/if you find property that you might consider purchasing, go to the city planning department first and ask to speak to a seasoned city planner about THAT SPECIFIC PROPERTY. At least you then might get some inkling about the challenge you might face once the land is purchased. The Planners will NOT tell you what the process MIGHT cost to develop the land. They don’t know and certainly would not want to create a liability situation for the city, if they could conjure up a good guess. If you do find a property you just have to place an offer on without knowing what it might take to develop it, then the offer should incorporate a “feasibility study” contingency addendum to the contract (often 30 to 45 days) so you can take that time to get your answers. If you don’t like what you find out, you can walk away with your earnest money in hand.

There may also be circumstances where the land has already gone though the development phase and a meeting with the city planner with your seasoned Realtor will confirm that. In other words, a PACKAGE might already contain all of the completed studies, drawings, receipts for work done and notes from the city may be in place. Then you could be close to beginning construction. However, such PACKAGES often have a TIME CONSTRAINT on them before they have to be completed all over again (3 years from date of approval), so be informed. Best advice: Never ASSUME.

Finally, since I do NOT work the Seattle area, FIND a REALTOR who has verifiable experience with land development. He/she will earn their commission. Believe me.
1 vote Thank Flag Link Mon Jul 7, 2008
1. Check Zoning.
2. Soil test and engineer the foundation.
3. Check with building department for any other restrictions...type of house, height, setbacks, area zoning, etc.
4. Crime Rate
5. Availability of services.....water, sewer, electric, cable, internet?
6. What was there before? You likely don't want an enviornmental cleanup. Was it a farmer with storage tanks, gas station, farm house with septic tanks, lead smelter, or what?
7. Sat photo of area so you can see what is behind the trees.
8. Check wetlands, architectural, heritage, or other historical/environmental restrictions.
9. Easements.

Those are just a few....there could be more depending on the size, scope, location of project.
Web Reference: http://www.teamlynn.com
1 vote Thank Flag Link Tue Jul 3, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
HI there -
I suggest hiring an agent. Besides having a complete feasability checklist and a broad network of professionals for you to consult on various topics, an agent can provide a market analysis of the proprety to help you determine the fair market value. Wheather listing a home or representing a buyer I provide a three part market research analysis.
1. Comparable "like property" sales in the area
2. Compable priced listings and sales (for an inventory comparison)
3. Assessed Value Ratio of solds in the area (tax assessed value vs. sold price)

These three statistics toghether provide a thorough basis for estimating the sq foot value for home and or land.

I am happy to help if you need it.

Jennifer Blum
Coldwell Banker Bain
(206) 679-4171
0 votes Thank Flag Link Sun Jul 6, 2008
When purchasing land on which to build a home, it is important to verify the current zoning. If you need variances from current zoning, it can be a long and uncertain process. You will also want to conduct soil tests (structural tests and, if needed, a septic soil test). In addition, you want to verify what utility lines are present and how accessible they are. You should also talk to the local government to find out if your plans are in line with building ordinances. Find a good attorney to represent you and make your purchase contingent upon your due diligence.
0 votes Thank Flag Link Tue Jul 3, 2007
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