What to Know Before Buying Land in Maryland | How To Buy Land & Lots in Maryland

Friday, September 18th, 2015 at 12:00pm. by Northrop Realty

Whether choosing a lot in a trendy new subdivision or an out-of-the-way patch of land to enjoy the countryside, there are important factors to consider when buying vacant land in Maryland.

Buying a vacant lot is a different--and sometimes more tedious experience-- than purchasing a property with an existing home. However, if you understand what you’re getting into and the process involved, building your perfect home from scratch on your own beautiful piece of Maryland can be exhilarating as well.

Buying an empty plot of land has many advantages, including freedom and flexibility, the potential for significant savings, and better investment prospects. After all, it's typically the value of land that accounts for the appreciation of real estate investments.

So read on to learn more about the land buying process in Maryland and beyond. And note, none of the information here is a substitute for sound professional advice, so make sure to contact Northrop Realty today to get in touch with the experts in Maryland real estate.

Set Your Goals

The first and most important step to buying land is deciding exactly what you want. A crystal-clear vision for your land-holding dreams will guide everything from your budget, location, and what features your proposed piece of land should have.

To that end, here are some questions to ask yourself:

Are you buying the land for recreation, investment (perhaps to rent out, develop, or subdivide), to build your dream home, or to start a business, like a working farm?
Are you planning to live on your property full-time, part-time, or not at all?
What features are important to you, like proximity to the coast or urban centers, views, or potential land uses?

Buying A Lot in Maryland

Size and shape are just two small factors when it comes to evaluating a lot. Where the lot is located in the state could make the buying experience a vastly different process than buying in another location.

Here are some things that could differ a lot from lot to lot. Make sure to check the following issues before buying land:

Zoning – It may be worth a trip to the zoning office in the Maryland county where the lot is situated. Looking at what future construction projects are scheduled in the area can give you valuable insight into the long-term value of the lot. There is also information about environmental factors that may impact your overall happiness there.
Restrictive Covenants – Some lots may let you build anything you want as long as it meets building codes, but other lots may have restrictions. These might be as simple as square footage restrictions or can be as detailed as colors you can’t paint a home’s exterior. They could also be included to protect historic or environmental elements, like property located within the Chesapeake Bay Critical Area.
Legal Issues – A given piece of land may be subject to back taxes, prescriptive easements, and title disputes. Get professional help to investigate and resolve these issues.
Environmental Protections – If a piece of land is home to a protected species or habitat, this could require special permits to go ahead with any changes. However, it could also mean entitlement to special development grants.
Soil and Site Evaluation – Also called Perc Tests, these evaluations must sometimes be performed on a piece of land you intend to buy, especially if the land is not part of a pre-planned subdivision. The test evaluates your lands topography, water table, and other factors to determine the best place to install a septic system. Planned subdivisions will likely have taken care of these tests before offering the lots for sale.
Utilities – If there are utilities already existing at the property, you’ll have to pay the county to tap into them. There are additional and often very costly fees if the utilities need to be brought onto your property.
Access – How is the property accessed? Is there a suitable road or easement, especially for building materials and vehicles?
Zoning – Check with your local zoning or planning department whether the land is marked for commercial, residential, agriculture, or mixed usage. These come with different restrictions, fees, and taxes.
Condition – Make sure to check for things that may affect the quality or usability of the land, like old foundations, pipes, tree stumps, and so on. You can negotiate for these to be removed by the seller.

In light of the above, here are some important steps to take when buying land:

Determine your budget first. Speak to multiple lenders to determine what you can afford.
Find a team of professionals to help you find the perfect piece of land, and to identify what you can or can't do with it. This could include real estate agents, architects, and legal experts.
Call your local planning office for information about any piece of land you plan to buy. Check the current zoning, history, potential hazards, future developments in the area, etc.
Hire the relevant specialists. These will include professionals to conduct perc tests and land surveys (very important!).
Establish ample "discovery" time between an accepted offer and the finalization of sale. This time will allow you to find and address any "deal breakers" before committing to the sale.

Land Use & Challenges In Maryland

Between 1973 and 2010, over 1 million acres of forest and farmland were developed in Maryland. Available land is now at a premium, and Maryland has some of the highest cost-per-acre in the country. Of course, this can vary a lot by location, type of land, and so on, but overall you can expect to pay more for land in Maryland than in most other states.

To compound matters, a lot of once fertile land in Maryland is being lost, or will be lost, to salinization. Various factors are contributing to the general rise of water levels and the rise of the water table around Chesapeake Bay. If you intend to farm your land, or are interested in the long-term outlook of property values, these are important matters to investigate.

Where to Buy Land in Maryland

Maryland includes two large urban centers, around Washington DC and Baltimore, and the counties they occupy are thus heavily urbanized. The most developed counties in Maryland are Montgomery, Prince George's, Anne Arundel, Howard, and Baltimore. However, the further you move away from those two cities, the more rural Maryland becomes.

Counties like Washington, Frederick, Carroll, and Harford, as well as those on the Delmarva Peninsula (shared with Delaware and Virginia), are covered by a patchwork of farms, woods, and small communities. Maryland's western panhandle region is heavily wooded and lined with deep valleys and hills.

Towns like Frederick, Mt. Airy, Westminster, and Bel Air usually include many lots and available land for sale, as existing properties are subdivided or their fringe areas are earmarked for development.

The Contract

A contract for the purchase of vacant property differs from a contract for an existing residence because it often addresses the issues listed above. It is a legal arrangement that allows for the final sale to be contingent upon the lot meeting certain conditions when all tests and surveys are completed. Moreover, it may even designate whether the responsibility of paying for these feasibility tests lay with the buyer or the seller.

A contract may also request the seller provide:

An approved septic system installation permit
Water quality tests on well water systems
Hazardous material testing
Any surveys that may be required to meet underwriting requirements

A good realtor specializing in land purchases in Maryland can help write a contract that should better ensure you are going to get the type of land you are expecting to suit your needs.

Land Loans in Maryland

Vacant lots will usually require a construction-to-permanent loan. These types of loans convert to a standard mortgage after you meet certain requirements and milestones. These requirements include closing on the land purchase, building the escrow to build the residence, and meeting government and lender occupancy requirements.

Once you get your loan, be smart about choosing your piece of vacant land--just as you would when choosing an existing residence. Research home values in the areas and have your real estate print your MLS listing for homes in the areas you are considering. If you build a $350,000 home in a neighborhood where most homes are being valued at considerably less, you won’t experience the growth in value like you would if you built in a neighborhood where values were comparable or higher.

If you take all of these factors into consideration and consult a knowledgeable real estate professional—like the experts at the Creig Northrop Team—purchasing a vacant lot in Maryland will be the positive, rewarding experience it should be.

Building A New Home On Your Land

The phrase "build your own home" is used to refer to anything from choosing the features offered by a builder in a residential development to hammering together the timbers with your own bare hands. Here we mean something in the middle: hiring a contractor to design and build a home according to your specifications.

This kind of custom homebuilding has many advantages, such as:

No Compromise - House hunting is often an exercise in compromise. You can often find something that meets your needs, but not your wants. With a custom build, you can get the home of your dreams.
Custom Spaces - You can design custom spaces that perfectly suit your hobbies and storage needs. Need space for a home gym or a well-lit studio? You got it!
Quality - When you're guiding the process from step 1, you can ensure that no corners are cut. At least not any corners you don't want to be cut.
Knowledge - Building your own home means that you'll know that home inside and out. This knowledge is invaluable for property maintenance and when the time for making renovations comes around.

Perhaps the most important step in building your home is choosing the right builder. It's important to know what to look for in a new home builder, which you can learn more about here.

But, thankfully, there are more than enough quality and trustworthy builders to choose from in Maryland.