The Costs of Settling Raw Land: What to Know before You Make an Offer

This post was originally published shortly after we purchased land and edited in 2020 to include links, photos, and hindsight.

by Beth

Buying land sounds like a great plan. Land is finite, so as the population increases, so should the price of land. That acreage you pick up for a song today could be worth an album tomorrow.

Or not. When it comes to figuring out what a parcel of land is really worth, a little homework can go a long way. In our case, it helped us better understand the costs of our goals and adjust our offer to stay within budget.

Our Perspective

Land goals and topography come in infinite variety. What we’ve experienced in the Southern Appalachians may be extremely different from the Ozarks, bayou, or Sierra Nevada. Here’s more about us so you know more about our perspective.

We shopped for land in the Southern Appalachians, so this post discusses features you encounter in misty, lower-elevation mountains, like steepness, rocky soil, karst hydrogeology, and tree density.

We wanted land for an on-grid homestead. Flat, cleared space and access to utilities were paramount.

We chose our county for its beauty and convenience to family, a National Park, and several cities. It also happens to be have extremely light permit requirements, which would let us build something non-traditional (geodesic dome home) with fewer barriers.

This means we don’t know much about permits, codes, zoning, or inspections. In fact, I called the County Manager’s office to inquire about local code requirements, and the County Manager answered the phone himself. He said we could pay a building inspector if we wanted to, but there isn’t one serving the county.

Lastly, we shopped for land as outsiders, meaning we had to learn not only about buying land but about the local community, from crime to future development plans for various areas. We had to build contacts and friendships from the ground up. It did help to work with Realtors who grew up here.

#landgoals

Though it would evolve, we had a basic vision to direct our search for land. We wanted to be on-grid, build alternative housing style (geodesic dome), hunt, raise animals…aren’t baby chickens so cute?

Land can have zoning that would preclude certain types of structures or activities. If you’re reading this, you may be thinking of escaping restrictions, but oversight isn’t always a bad thing. The same zoning that keeps you from raising hogs keeps your neighbor from starting a strip mine or junkyard.

In our case, there are no restrictions and no noise ordinances, so we chose land where the homesite would be buffered from future development as much as possible. We observe common courtesies (our yard is kept up, our dogs aren’t left outside to bark or roam) and enjoy planning our land’s layout with total freedom.

Be aware that rural HOAs exist and can restrict livestock and commercial activities. A property’s listing should immediately clue you into whether restrictions exist. Talk to your Realtor, and to neighbors if they’re available, and carefully read all documents to make sure your land comes with the level of oversight you desire.

Land Pricing

Have you noticed that, in the same ZIP, 1 acre is listed for $80K while down the road you can get 80 acres for the same price? Why the difference in price??

One answer is that, in rural areas, unfortunately there can be a, “Let’s see if we can dupe cityfolk into paying X” approach. It’s common for sellers to list land at a hopeful price but be willing to take far less. It’s also common for people to list at an exorbitant price because they don’t really want to sell but will for the right amount. You’ll have to catch them on a good day if you want the price to come down.

There are plenty of other less shady reasons for dramatic variation in price per acre. Aesthetic features increase value, like water frontage or a mountain view. The following can also be worth thousands to you:

• Driveway – Not just a dirt track, but a graded, surfaced access road
• Cleared, flat space – Especially if it’s southern facing; full sun is a commodity
• Water well – Be sure it’s tested for quality, in good working order, and not ancient, since wells have a shelf life
• Septic or sewer connection
• Power connection
• House pad – It should be inspected to make sure its compaction or structure will bear weight safely, and it may not be in the spot you want, but if it checks out, a completed house pad is an asset

Meanwhile, the 80 acres for $80K may be steep with a rutted driveway, no cleared space, and more invasive plants than native trees. Not only could it easily cost 6 figures to build a reliable driveway, run power, and excavate a building site, the area has been so logged that you’ll be fighting a battle against dangerous erosion for the rest of your days.

Research BEFORE You Offer

The more homework you do pre-offer, the happier you’ll be with your land and what you paid for it. Here are some critical considerations that can alter your offer or even help you avoid purchasing land you can’t use.

Remember: if your offer isn’t accepted, the land wasn’t for you. You may have dodged financial ruin or other kinds of misery that can be caused by FOMO land purchasing, and there really will be more land on the market that strikes your fancy.

The Almighty Perc
A “perc” or percolation test is the standard diagnostic for determining viability for a septic system, and it’s critical unless your land hooks to a municipal sewer system, in which case, skip to the next section.

If there’s no city sewer and your land won’t perc, you can’t build any kind of significant dwelling there. If land only percs in one area, you can only build at that area. Even if you’re planning an alternative or composting wastewater system, the construction of a new dwelling just about anywhere requires some form of permit. It’s a public-health thang.

Not planning to build? The perc is still important because the market value of the land – and your offer – will be greatly reduced if the soil won’t perc.

How do you know if a piece of land will perc? With some soil types, it’s possible to eyeball. Hard red clay or marshy land could be a concern. Dry, sandy soil is best. Our land sits over sandstone and limestone, and everybody who walked it with us was so confident it would perc that we didn’t hire a professional to confirm before making an offer. However, we did make our offer contingent on a successful perc at our chosen building site (the one with the view of the Smokies).

If you don’t have a sense of confidence, google “perc test [your county]” and pay someone to confirm the land will perc prior to making an offer. It’ll cost a few hundred $, but it’s too important a step to skimp on.

Power
Running power can be expensive, especially if your land isn’t near a road or existing line. To determine costs to connect to the grid, call the local utilities company and ask a representative to walk the acreage with you for an assessment, along with an overview of their pricing and finance options. They can point out obstacles such as trees, rocks, and right-of-way access to help you factor in excavation costs.

Do this before making your offer. If you aren’t planning to be on-grid, your offer should still take power into account, since land without easy grid access has lower market value.

In our case, to stay within budget, we reduced our offer by $20K after learning the potential cost to run power to our land.

Water
If your land doesn’t already have a working well or a connection to municipal water, costs for water can add up fast.

In our area, people still hook to springs for their water supply, with the costs being a few spools of water line + excavation to bury it below the freeze line. The catch is that you have to have rights to that spring, or the spring’s owner will put an axe through that line about as soon as you put it in.

You can source water elsewhere and carry it to the homestead. People who do this say it’s one of the fastest paths to homestead burnout. Water is a heavy, constant, pressing need, and money spent on access is well spent on your quality of life.

Since no water system was established on our land, we reduced our offer by another $7K, not enough to cover the eventual cost of our well but a comfortable middle ground for our budget. If you plan to hook to municipal water, estimate the cost by balancing quotes from 3 excavators to trench and run water line.

Please note that if it sounds like a lot of work to walk your potential land with 3 contractors prior to making an offer, homesteading will be too much work for you. This is nothing compared to what you’ll be doing after you close. That’s real talk.

If you decide on a well, there’s no such thing as predicting the cost, but there are ways to identify a price range. Have 2-3 licensed, respected well companies out to provide quotes (poorly installed wells can cost much more in the long run, so this is another place not to cut corners). Talk to neighbors about their well depths and what they filter and treat for.

If you’ve never commissioned a well, see our well story for one idea of what to expect.

Right-of-Way and Access
If your acreage lacks direct access to a road, make sure that a right-of-way has been surveyed and deeded to your land. It should not only be open to you in perpetuity; it should give you the right to run utilities up this route if necessary.

The italics are there because this is so important. Get this in writing and make your offer contingent upon it.

Here’s our right-of-way in all its glory. May not look like much, but access is everything. Our future home will be 1/4 mile up this road…if construction trucks can get to it.

Confirm there’s a current survey in place. If not, propose the seller have one completed. Surveys are vital to protecting your rights as an owner, and there ought to be one on file before they sell the land to you. It’ll cost them a grand or more but is a legal necessity, so walk away if there’s no survey in place and the sellers won’t work with you. That’s shady.

If your right-of-way isn’t graded and surfaced, you could be looking at a massive cost, but it’s another necessity. Consult 3 excavators for quotes to grade and crown a long-term driveway into your property.

Prepare for sticker shock depending on length, drainage, and obstacles. Excavation is expensive, even if you do it yourself, because equipment and gas are expensive.

Here are our guys helping us clear kudzu and dead trees for power up the right-of-way, with healthy trees flagged. Years later, the persimmon on the right wearing the pink flag is still dropping fruit for happy wildlife.

Easements, Zoning, and Restrictions
Zoning can protect you as much as it can restrict what you’re allowed to do with your land. We were sensitive to restrictions because we’re planning to build a geodesic dome, raise animals, hunt, and want the flexibility to change our minds about any of that. Maybe we’ll dig an earthship into the hillside or start a commune. For better or worse, our land has no zoning, so we can technically do as we wish. I’ll note it’s critical to weigh your wilder ideas against your neighbors’ wishes because neighbors become dear friends, lifelines, and your partners in rural life.

An online listing for a property should note whether there are any restrictions or zoning to discuss. No matter what, you should always ask the seller’s agent and/or your Realtor to confirm in writing details of any zoning and easements.

Oh yeah: easements. This is someone else’s right to your land. Have you ever seen a City erase a chunk of someone’s yard to expand a road? Easement. Our right-of-way is an easement, too. It cuts across land belonging to 3 other owners. Of course, they use it as their road, too, and now we help them maintain it. Easements can be bad, benign, or beneficial. Sometimes you’ll receive royalties for resources like oil or gas pulled off an easement on your land.

Some easements, like mineral rights under the ground, can be exceedingly difficult to track down. They may have been sold off so long ago that the seller doesn’t realize another entity had rights to their land. If this is uncommon in your area, you may choose not to worry about this, but if the cost of a piece of land is suspiciously low or you know of other properties in the area that have been logged or mined out from under the owners, here are tips:

• The easiest thing to do is to look on the deed for the term “fee simple,” meaning the land is being sold as one parcel from core to heavens.
• Ask everyone who will listen if the land has easements: the seller of course, the Tax Assessor’s office, the title company who does your title search for the closing, etc.
• With patience and an eye for bad handwriting, you can try your own chain-of-ownership search through decades or centuries of titles at your local Register of Deeds – or find a title professional friend who will play Sherlock for you.
• Invest in the title insurance at closing. It’s cheap but will pay off anyone who comes out of the woodwork years later and says they have rights to your land that your closing’s title search didn’t reveal. Be aware that title insurance usually won’t cover extras like mineral rights, so it’s still worth doing the extra research if you live in an area where mineral rights are often severed from surface rights.

Environmental and Geological Considerations
A quick check with the Tax Assessor or a website like this one should confirm whether a parcel sits in a floodplain and let you adjust your decision or offer accordingly.

Even if there’s no flood threat, look for clues about drainage issues from creeks, like sinkholes, which can be expensive in the future. Here’s how we know. That link describes the story of an unexpected sinkhole that tried to eat our driveway 2 years after we bought the land.

We were alert to the fact that sinkholes are common in our region, so we did gamble one large expense to confirm the solidity of our chosen homesite. The driveway was one thing, but the homesite was totally another.

There was one spot on the acreage where we knew we wanted to build. It’s a private spot with a view of the Great Smoky Mountains National Park. If that site were un-buildable, the land wouldn’t have been as attractive to us. Therefore, our offer was contingent on whether that site was buildable. This means that, if diagnostics identified a sinkhole or other issue on that site, we could withdraw our offer and get our earnest money back.

The diagnostic we chose was pricey: $3,500 for geotechnical drilling and analysis by a soil scientist. Realtors, along with the geotechnical drilling guys, looked at us like cuckoo birds, but we were determined to be certain. Plus, the resulting detailed, 15-page geotechnical report will tell our builders how much concrete is needed for our foundation and how deeply to dig, which may result in savings then and when we insure the home.

Even if it doesn’t, since Chris and I are so invested in living in a safe, sound home, the knowledge of how to do the foundation right was worth it for peace of mind.

We also had a geologist named Barry from the State Department of Environment & Conservation come out (for free) to inspect the sinkholes around the property and give his opinion on whether they might open up more or if litter disposed there decades ago is an environmental concern.

A free consult like that won’t usually result in official approvals but can help guide your offer and other decisions. Along with giving us a strong thumbs up on the perc status of the land, which was reassuring, Barry gave us confidence we weren’t up against environmental hazards or urgent costs for litter removal. He provided a number for the state’s sinkhole expert in Nashville, who spoke with me for 30 minutes about sinkholes in Tennessee, and that was fascinating. Barry also provided fun topographical maps and information about the ground underneath us.

Other environmental concerns can include plantlife. We had one obvious problem area; see below. This kudzu was surprisingly easy to get rid of, by the way. It would come back if we let it, but weekly mowing is enough to keep this…

…looking like this:

A forester can help you identify invasive plants that may be less obvious than kudzu but will need management over time.

A farmer or permaculture expert can tell you where what might grow. A stream conservationist can give insight on groundwater issues. How deeply you journey into the discovery process depends on how important these aspects of the land are to you.

One last tip: become friends with the friendly folks in your Tax Assessor’s office! In rural areas especially, they can be part of that local body of knowledge who provide ongoing, important insights about your property. They are true land experts. Speaking of which…

Taxes
Your Realtor and the local Tax Assessor should be able to share what kind of taxes your land will have, if you’re worried about it. Is the land within annexed area, or will you be exempt from city taxes? What taxes will there be for any structures you inherit, including that shell of a rickety shed? Do you qualify for tax breaks based on the size or location of your land?

Tennessee has the Greenbelt, a tax break for owners of 15+ acres with certain features. Pay a local forester to walk your acreage and write a report that says you qualify, then submit that to your assessor’s office.

Forester Freddie, who works our area, loves trees. He’s generous with his time and gave us all kinds of tips for caring for our natives long term.

Taxes are taxes, but research may help you find some breaks.

Tools and Supplies
Remember that different topographies may require different tools to maintain. Any significant acreage will have you wanting a truck, heavy-duty chainsaw(s), barn, tractor, tiller, gravel, fencing, shed, grass seed, and on and on, and on.

That won’t change your offer, but if you’re eyeing a piece of land at the top end of what you think is your budget, be careful. It’s a safe bet that unexpected costs will begin the moment you sign closing documents.

In Conclusion
In our case, 2 weeks of research, estimates, and speaking with local experts let us better understand our land’s value and our budget, which helped us make an offer that was luckily reasonable to all parties. We added specific contingencies that provided adequate time to research the land as the loan processed. The hard work let us come to the closing table with a sense of confidence that let us comfortably-ish make our first major leap off the cliff into life on the land.