What is Different about buying Land?
The statistical possibility of default increases with a bare land purchase. That translates into a higher interest rate and a larger minimum down payment for land loans. Typically around 20 percent. A few years ago that minimum was closer to 50%, so they are adjusting that requirement, but this can still be substantial. Please scroll to lenders if you are looking for local lenders for your land purchase.
A builder may be willing to purchase the land for you if you are going to use them to build, but this will cost you more in the long run. Usually increased risk comes with a price. They will be taking on that risk in your place, and will charge you a surplus fee for it.
On most land listings you will see a term “due diligence”. This is a fancy way of letting the buyer know they had better do some research because if they can’t use the land for what they want it won’t be on the seller. What is involved in due diligence? Keep reading to find out.
Please keep in mind that every property is unique. These rules are generally what you need to place a residential structure on the property. We are trying to be all encompassing and I am here to protect your interests, but it simply isn’t possible to mitigate all possible loss. This list should cover most large ticket issues that could come up.
Zoning/Subdividing
Zones are specific areas that the municipality has quartered off with requirements/limits for use. Residential, Recreational, Commercial, Multi-use, Multifamily and Farm are basically most of them, but there are more. For instance maybe the planners and council want to keep retail space in a certain location (usually the case) because they have an overall plan for parking lots, access and volume of vehicle traffic. It keeps the intended areas contained so you don’t have a loud night club in the middle of a subdivision intended for residences. That might be great in your in college, but we try to let sleeping children lay.
One issue is that there is not a standard for zoning codes. Each city and county just called them what they wanted. R-2 for example could mean two residences per lot, two residences per acre, or whatever they dreamed up for a system at the time. So if you are looking in a specific area to your bare land ownership, the first thing is to understand the zoning for that municipality.
Speaking of municipalities, know which one governs your bare land lot before you get too far. Know where the county line is draw and the city line as well. There is a cut-off somewhere make sure you haven’t crossed it. Zip codes cross lines, and that’s basically what the listing service uses to call it city of Eugene. It does not guarantee that it is, in fact, in the city of Eugene proper. Lane county could be the governing body of that lot (which means you possibly learned the wrong zoning codes).
Here are the links for each zoning area in our service area:
Albany (city) – Info hub map (you can get zoning here)
Corvallis (city) – generally very confusing website, but they do have provisions for updating zoning
Lane County – county site is contained by the planning tab (scroll down to zoning)
Benton County – interactive Zoning Map
Oregon passed HB 2001 in 2019. This bill allows for additional dwelling units on property. It’s a great bill, but most municipalities zoning laws prohibited adding units on lots with homes already there. Mainly because it violated the density plan for the area. This bill passed to try and increase the density without causing urban sprawl. Most city and county planning divisions have not implemented the change for this new allowance. Most are working on the full change, but you would be surprised what a little ingenuity and a planning outline sent to the commission panel will get you. This news is great if you already own the property. If you are looking to buy one and then work on this submission…you can see why land purchases can be more risky.
Amenity Checks
Electricity
You could really rough it and not have any utilities on the property at all, but I am thinking most people don’t want to live in the 1800s. I know my husband would love it, until he couldn’t run a very hot shower every day. Most people need wifi services and until Starlink came along this was the limited factor for living in the “sticks”. Wondering how much it will cost to get a company to provide a line down to the house and possibly shop so you can get the electricity flowing? The PUC (public utility commission) basically doesn’t exist any longer. Back when it did, something called a rate payer facilitated the costs for providing the equipment to hook up the service that you will pay a premium every month to use. Well, that’s just not the case any longer. With a pole at the street (meaning services are basically right to corner of your lot) you will likely have to give them $10,000 to connect. I would say you own that pole now…not really, but you probably should. It can climb from there in price. If the house isn’t close to the service then it will run more (and possibly need a repeater). This could be a factor in determining where you place the house.
You could look into Solar with battery backup because frankly hooking up to electricity is just about the same costs.
Sewer/Septic
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Loan Information Pages
Here are links to bare land financing. These are typically higher interest and larger down payment requirements. We have linked out the page with the information if the banks have that information listed.
AgAmerica Lending – for larger plots of land (over 25 Acres)
