Should You Pay a Lot Premium When Building a Home?

To Pick a Lot or Not?

One of the most asked questions when buying new construction is the location of the lot and is it worth it to pay a lot premium. Builders charge lot premiums on oversized lots, lots with a view such as a lake or the marsh, lot on a golf course, and lots with privacy, etc.

When paying a lot premium one should consider the uniqueness of the home site. The location of the lot is an important factor when it comes to re-selling the property since a great home site will remain a good investment throughout the life of the home.                                                                                                                                      

However, it is not always clear that one would be able to pass on the premium when selling but “special” home sites could fetch a “value” increase of possibly 5 percent.

Still, one has to be cautious and do not expect that added “value” always comes true when selling the home. The lot premium has little or no value in the eyes of appraisers.  

In the end, it does not matter what one spends on a home. It only matters what comparable homes have sold for in the last six months.

There are a variety of different lot types. Below are brief descriptions and pros and cons:                                                                                                                      

Interior Lot    

This is the most common lot type because it “fronts” on only one street. It located between homes on the left and right side, facing the street with a yard behind the house. There are not any major pros and cons to this type of lot from a real estate perspective since its the norm.

Corner Lot

A corner lot is how it sounds, a piece of property that is located on the corner of two intersecting streets, causing frontage on two sides of the home. Corner lots allow easier access to the rear of the home, as well as the option for two separate entrances to the home. For this reason, they can draw a premium over standard lots. Still, if the corner lot is on a very busy through street the increased traffic could hurt the value. Corner lots may be larger than standard lots.

Cul-de-Sac Lot

A cul-de-sac lot is a lot sitting in a cul-de-sac, or a dead-end street with a curved turnaround. The lots lose some of the front yard because of the curved frontage but have usually larger backyards, less traffic, and more privacy. Cul-de-sacs are oftentimes favored because of the perceived safety of the street for children and the larger backyards, meaning one can generally fetch a higher sales price.

Key Lot

A key lot is fairly uncommon and exists when a lot has several other homes backing onto the side of the home. Another home may sit directly behind the backyard of a key lot as well, giving it a landlocked feel.

T-Intersection Lot

A T-intersection lot sits at the end of a T-intersection when facing the “T”. The increased exposure to traffic makes these lots less desirable.

Looking to buy new construction or looking for vacant land or building lot? I just sold 1015 Diana St in West Ashley, a  beautiful lot on a quiet street, and I can assist you to find a building lot too.  Simply contact me and I put my boots on and we walk the land! 

My mobile app is at your fingertips to locate a vacant lot for sale!

www.DefinitelyCharleston.com 

Ute Appleby

Real Estate/Leasing/Property Management

UAppleby@gmail.com
(843) 345-2625