The Pros And Cons Of Buying A Lot Before Hiring A Builder

February 17, 2023

The Pros And Cons Of Buying A Lot Before Hiring A Builder 

If you’re planning on building a custom home, there are some major decisions to make. One of them is whether to buy a lot first or work with a builder from the start. The answer depends on your needs, but there are some pros and cons to both options. We’ve compiled them all here for you to consider. 


Buying a lot without hiring a builder can sometimes be an attractive option. A buyer may be in a hurry to move into their new home and simply don’t have time to consider who will construct it. However, there are a few key reasons to hire a professional builder and get them involved in the process before you buy your land. The first of which is that a builder has a wealth of knowledge and experience in the building industry that you simply don’t have. Also, they have a team of experts ready to conduct the necessary due diligence on your potential property and prepare an offer for you. 


One of the most time-consuming parts of building a home is securing and preparing a lot for construction. For example, you must determine whether the property is a raw lot or has already been built upon and is connected to utilities. This will have an impact on the cost of land acquisition as well as any possible financing options. If you have a clear idea of what your new home will be and where you want it to be, the search for the perfect lot should be a breeze. A real estate agent will be able to assist in identifying the right property for your needs. Once found, the next step will be to secure a loan to purchase the lot. There are many different types of loans available, so it is best to consult with a mortgage expert to find the right one for you. 


When preparing to build on land, there are several financing options you can consider. Some borrowers look to cash, loans from family members, and home equity loans from their existing residence to fund the purchase. Another popular option is to get a land loan or construction loan. These are typically available at banks and credit unions and can be used to finance both the land and the construction costs. Usually, lenders will require you to make a down payment of 10-20% when getting these types of loans, and they often have lower interest rates than traditional mortgages. They also offer a draw system, in which you or your builder can request funds for specific tasks as the construction progresses. 


While you may be tempted to shop around for the best price, it’s a good idea to have a clear vision of your goal before you start shopping for the perfect lot. A top-notch builder will have the resources and expertise to help you plan your homebuilding endeavors in a way that’s both efficient and rewarding. 

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