5 Land Due Diligence Steps Every Custom Home Builder Should Know
Buying land to build a custom home is an exciting step—but it’s also one that requires careful planning. Before you design your dream house or break ground, there are several important things to check about the land you’re buying.
In this post, we’ll break down five essential land due diligence steps you should never skip when evaluating land for custom home construction.
Due Diligence Matters! Here’s Why
Due diligence for land purchase simply means conducting a thorough investigation of the property before buying – you check for anything that could hamper your building plans like zoning laws, availability of utilities, soil quality, and title issues.
Ignoring this crucial step may prove to be extremely costly later on. For example, you buy a seemingly perfect piece of land, and are ready to begin construction – or even midway during construction – and you find out the lot lies in a flood plain, or has zoning or title issues.
That’s why land due diligence is so important—especially if you are a custom home builder and cannot afford the mistake of overlooking the buildability of the lot.
Not sure how to proceed with due diligence for your next land purchase? We’ve got you covered. Below are 5 essential steps to follow before you close your next land deal.
Step 1: Check Zoning and Land Use Regulations
Before you purchase a piece of land for your project, the first thing you should know is what you can and can’t do with it.
Why It Is Important
Every city or county has zoning rules that define how land can or cannot be used. Some land may be zoned for agriculture, commercial use, or single-family residential. Even if the lot looks perfect, you might not be able to build the kind of home you want if the zoning regulations don’t allow it.
What to Do
Check with the local planning or zoning department.
Ask for the current zoning designation and allowable uses.
Find out if there are any land use restrictions, overlays, or development codes that apply.
If the lot isn’t zoned correctly, you may need to request a zoning change or variance, which can be time-consuming and expensive. It is always helpful to keep a custom home builder land checklist which includes these critical steps before you move forward with a project.
Step 2: Evaluate Utility Access and Easements
Utilities are one of the most important, yet overlooked part of land due diligence. However, evaluating whether a lot has access to utilities and easements is extremely important as it can make or break a deal.
Why It Is Important
Every home needs basic services like electricity, water, sewer (or septic), and possibly natural gas. Some lots such as rural lots or infill sites might not have access to some or all utilities, and getting them installed can be a costly affair that could mess up your budget.
Easements are legal rights that allow others to access part of the property. Some properties come with easements, usually for utility or road access, which can significantly affect your building designs and plans.
What to Do
Contact utility providers to confirm access to utilities, and connection costs.
Check whether the lot has existing utility connections or if you'll need to extend lines.
Request a copy of the plat map to see if any utility easements cross the property.
This is a crucial part of a land inspection checklist to help you ascertain what you’re dealing with before you commit to a project.
Step 3: Check Soil, Topography, and Drainage
You need to know what’s under the surface you’re planning to build on! This is yet another crucial, yet often overlooked part of due diligence.
Why It Matters
Some lots may have soil conditions or drainage issues that make construction difficult or expensive. For example, highly expansive clay soils (common in Texas) can shift and crack foundations if not handled properly.
Also, the slope of the land (called topography) affects how you place the home, how much grading you need, and whether retaining walls or drainage systems are required.
What to Do
Conduct a soil test before building a house (hire a geotechnical engineer for this).
Physically verify changes in elevation. Walk the lot!
Avoid lots in flood zones or with obvious standing water or runoff issues.
Use FEMA flood maps to confirm the flood risk.
This is often the most expensive part of site analysis for home construction, but it's money well spent. Fixing a bad foundation or managing water issues after the fact can cost far more.
Step 4: Conduct a Thorough Research for Title, Deed, and Property History
A beautiful piece of land means nothing if the ownership isn’t clear—or worse, if there’s a lien or legal issue attached to it.
Why It Matters
When buying land, you need to be certain that the seller has clear, legal ownership and the right to sell. Title issues like unpaid taxes, unresolved estates, boundary disputes, or missing easements can delay or kill a project.
What to Do
Order a title search through a reputable title company.
Make sure the deed includes legal access to a public road.
Check for liens, judgments, or other encumbrances.
Consider getting a professional survey done.
Never skip title research to ensure you’re not caught off guard and your investment is safe.
Step 5: Estimate Development Costs and Timeline
Buying land is just the first step of the process. You need to get the lot ready to build, before you can actually start construction. A realistic view of what it will take to get the lot ready will help you plan and budget accurately.
Why It Matters
Even if a lot seems affordable, it could cost much more than expected to prepare it for construction due to issues like grading, permits, impact fees, or utility installation. Understanding the full land development process for builders is crucial to help you make informed decisions.
What to Do
Create a due diligence checklist with estimated costs for each task: permits, clearing, grading, utility installation, etc.
Contact the local permitting office to understand timelines and requirements.
Get estimates from site contractors or developers.
It would be a good idea to use a residential land due diligence template to compare lots based on total cost and not just purchase price.
Bonus Tips for Custom Home Builders
A few additional pointers for your land acquisition strategy:
Drive the neighborhood at different times of day to get a feel for traffic, noise, and safety.
Talk to neighbors, if possible, to find out about drainage problems or other red flags.
Consider resale value. Even if you’re building a forever home, things change. Choose land that holds value.
Check for HOA rules if the land is in a subdivision.
Buy land from a reputable company. At Builders Land Source we vet every lot thoroughly and operate with complete transparency. You can check out our available lots at www.buysellsolve.com
Common Mistakes to Avoid
Even experienced builders and buyers make mistakes when buying land. Here are a few to avoid:
Not confirming zoning or assuming you can rezone later
Skipping the soil test to save money
Underestimating utility costs
Overlooking land use restrictions or HOA limitations
Not getting a professional survey
These can result in major issues, delays, and extra costs. However, these pitfalls can easily be avoided by following a solid land due diligence process.
Conclusion: Do the Homework Before You Build
Buying land to build a custom home comes with its own set of challenges. But by taking the time to follow these five land due diligence steps, you can avoid costly surprises and move forward with confidence.
No matter where you’re buying land in Texas – whether you’re planning a custom build in Austin, or expanding your homebuilding business in DFW or Houston, understanding how to evaluate a property before you buy it is of utmost importance.
If you’re a custom home builder, create your own land inspection checklist, and make it a standard part of every land purchase. If you’re a buyer working with a builder, make sure they’re checking all these boxes on your behalf.
After all, smart due diligence is more than just avoiding risk – it protects your investment and sets the foundation for a successful project.
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