INSIDE REAL ESTATE: Do your homework before buying lot
Alaskans love their land. And we have lots of land as the largest physical state in the nation with more than 663,300 square miles, but the amount of fully private land is less than 1 percent because 99 percent of Alaska’s land is owned by the government or Native corporations.
So when it comes time for a homebuyer, after living on a 6,000 square foot lot in an Anchorage subdivision, to look for a little more land to build their dream home on, there’s not much to choose from. Currently, in the statewide Alaska Multiple Listing Service, or MLS, there are 2,093 active lots for sale ranging in size from 1 to 10 acres.
The Mat-Su Borough has 585 listings; Kenai has 853. In the Anchorage bowl, there are only 225, ranging in asking price from $30,000 to $6.1 million which includes all zoning districts. The 2017 average R6 lot sold for $183,000.
But, when it comes to buying a lot without a publicly built road with public water and sewer, it is buyer beware. So here are some things you need to know before buying a piece of dirt.
Not every lot is going to percolate sufficiently for a septic system. Check the surrounding lots to see if they have holding tanks, or the more expensive Avantec system. There is also significant difference in cost and installation for a four bedroom septic versus a three bedroom.
Water is still the source of all life. The depth and flow volume of the well will add to the cost of your lot. Check your neighbors well depth at the Municipality of Anchorage or the State Department of Natural Resources, which is a good, but not guaranteed, indication of what you will have to spend to develop your water source.
The minimum standard for a four bedroom house is 0.42 gallons per minute or 600 gallons per day. However, underground water sources shift and wells do run dry so there is no guarantee you will have a continual water source.
Then you have to verify the quality of your well water to make sure it’s OK to drink. There are mineral areas that cause contamination, that can be filtered, but again another cost.
The lot, if it is not accessible by a public road, may be part of a LRSD, a limited road service district. Find out how much it costs to maintain the road and who is in charge of the LRSD. That is not always a static cost, depending on the winter snow fall and annual maintenance.
The topography of the lot is going to determine its initial development cost. Extra excavation and haul off adds cost but do not add value to a lot. Haul off costs are calculated by the round trip miles to and from the dump site so needless to say the location of the lot and dumpsite may significantly impact your cost.
Poor, especially wet soils conditions will require often large excavation out and gravel haul in for a stable building pad. Most sellers will allow one or two test holes as part of due diligence as long as there is not unnecessary damage to the topography.
You can also look at test holes required to build the access road if it has been recently constructed and approved by the MOA.
There may be easements or restrictions to the lot that are not visible to the human eye so please order a property profile which is a nominal cost from any title company. A full title report is ordered prior to the closing and may reveal any additional information.
Although a title report is not required to purchase a lot most real estate professionals will not participate in a sale without a title report. Some restrictions or easements that commonly pop up are gas and electric or even public access. There may also be setback requirements that may be more restrictive than the ones required by the MOA.
MOA driveway standards may not exceed 10 percent, which may mean, on steep lots, one or two switchbacks that add to the cost of the driveway. Some lots may have buried fuel tanks, basement foundations or have been used for storage and repair of old vehicles. In that case, a Phase I environmental assessment should be done.
Finally, after you have gathered all of the information, I strongly suggest you hire a builder or an engineer to review your findings and walk the lot with you. This spring, wearing a pair of snowshoes or muck boots is also probably a good idea.