Developing real estate for dummies
April 26, 2017 3:50 PM Subscribe
I'm considering buying an empty lot in California to build my dream home. Whose professional advice do I need and when?
There's an empty 2 acre lot in unincorporated Santa Clara county that's caught my eye, I'd love to build a home for myself there but I don't know much about the process. Obviously I would rely on some combination of lawyers, agents, architects, contractors, and who knows what else, but I don't even know where to start.
A few quirks about the property:
1) It has a high voltage PG&E transmission tower and an easement for a dirt road that runs through the neighboring property. The lot is on a public road but the front face is very steep, but the seller's agent said there's an easement that would let me use PG&E's road. There is a small (about 4000 sqft by my estimate) approved build area just outside of the power line no-build zone, and the seller's agent said they would be willing to include build permit approval as a contingency, so that limits my zoning risk to just the sunk cost.
2) It's actually two parcels that are separated by a thin strip of another parcel. I asked about just buying the one with the approved build area but the seller only wants to sell them together. He said he already got an offer that ended up failing because they failed to get a build permit for this other lot, I guess that was one of their contingencies. So I suppose in my offer I should either price in the other lot as worthless or try for the same contingency.
3) One of the disclosures lists it as a quitclaim deed, but the seller's agent says it's actually a grant deed. That page of the disclosure also misstates the acreage of that lot so this isn't totally surprising. I understand a quitclaim isn't really worth anything, definitely want to protected against any kind of title risk.
None of these are real problems for me as long as I can build, and the upside potential is definitely there, but it's been on the market for almost a year, which makes me suspect there's something problematic about the property I just don't see.
I'd like to build a 1500 sq ft home which I imagine would cost $200-300k, but I don't know what combination of well/septic, retaining walls (build area is on a flattened ridge top, think a slight slope on top surrounded by steeper dropoffs), road development, etc will be needed. What kind of planner can help me scope that cost out before I'm too deep in this? I asked a friend who does geological studies, no big red flags on the hazard maps, but that's just one aspect of it.
I distrust buyer's agents, because I want someone who will tell me why this won't work, and their interests are just aligned with getting the deal done. I found a real estate attorney who seems good, they charge $395 for the initial consultation and need a $5k retainer to engage them. If this works out this would be money well spent, and I think it could make sense to use them instead of an agent (lowering the offer price accordingly), but I'm not sure at what point I should bring them in.
There's an empty 2 acre lot in unincorporated Santa Clara county that's caught my eye, I'd love to build a home for myself there but I don't know much about the process. Obviously I would rely on some combination of lawyers, agents, architects, contractors, and who knows what else, but I don't even know where to start.
A few quirks about the property:
1) It has a high voltage PG&E transmission tower and an easement for a dirt road that runs through the neighboring property. The lot is on a public road but the front face is very steep, but the seller's agent said there's an easement that would let me use PG&E's road. There is a small (about 4000 sqft by my estimate) approved build area just outside of the power line no-build zone, and the seller's agent said they would be willing to include build permit approval as a contingency, so that limits my zoning risk to just the sunk cost.
2) It's actually two parcels that are separated by a thin strip of another parcel. I asked about just buying the one with the approved build area but the seller only wants to sell them together. He said he already got an offer that ended up failing because they failed to get a build permit for this other lot, I guess that was one of their contingencies. So I suppose in my offer I should either price in the other lot as worthless or try for the same contingency.
3) One of the disclosures lists it as a quitclaim deed, but the seller's agent says it's actually a grant deed. That page of the disclosure also misstates the acreage of that lot so this isn't totally surprising. I understand a quitclaim isn't really worth anything, definitely want to protected against any kind of title risk.
None of these are real problems for me as long as I can build, and the upside potential is definitely there, but it's been on the market for almost a year, which makes me suspect there's something problematic about the property I just don't see.
I'd like to build a 1500 sq ft home which I imagine would cost $200-300k, but I don't know what combination of well/septic, retaining walls (build area is on a flattened ridge top, think a slight slope on top surrounded by steeper dropoffs), road development, etc will be needed. What kind of planner can help me scope that cost out before I'm too deep in this? I asked a friend who does geological studies, no big red flags on the hazard maps, but that's just one aspect of it.
I distrust buyer's agents, because I want someone who will tell me why this won't work, and their interests are just aligned with getting the deal done. I found a real estate attorney who seems good, they charge $395 for the initial consultation and need a $5k retainer to engage them. If this works out this would be money well spent, and I think it could make sense to use them instead of an agent (lowering the offer price accordingly), but I'm not sure at what point I should bring them in.
At least talk to a structural engineer and see if they can help you; they generally specialize in how to build the structure so that it will stay standing, rather than telling you whether such a building can be placed on a given parcel, but they do have to know about seismic issues, ground conditions, etc., to do that. So they might be able to say whether you can put what you want, where you want.
And yeah, your cost estimate is nowhere close. Contractors out here are super provincial and so even if you're in unincorporated Santa Clara, you're basically competing with the San Jose / Mountain View / Palo Alto jobs which are waaaaaay higher. Like, realistically I don't think you're going to be pulling in guys from the Central Valley or wherever contracting rates might be more reasonable. Call around to a few different contractors and ask, but they might not be able to even give you a reasonable estimate without seeing at least bare bones plans.
posted by Joey Buttafoucault at 4:26 PM on April 26, 2017
And yeah, your cost estimate is nowhere close. Contractors out here are super provincial and so even if you're in unincorporated Santa Clara, you're basically competing with the San Jose / Mountain View / Palo Alto jobs which are waaaaaay higher. Like, realistically I don't think you're going to be pulling in guys from the Central Valley or wherever contracting rates might be more reasonable. Call around to a few different contractors and ask, but they might not be able to even give you a reasonable estimate without seeing at least bare bones plans.
posted by Joey Buttafoucault at 4:26 PM on April 26, 2017
You might try stopping by the Santa Clara County Department of Planning and Development to find out more about what applications have been made for work on these parcels and why they didn't work out, and to ask about what you'll need to consider for this project when you do submit an application.
In my experience, most building/zoning departments would rather spend a short time up front to talk with you about application requirements than spend months on a series of resubmittals or worse. Don't expect to get all that much of their time if it's busy and you're not submitting anything right then, but at least it should be free. Having a general idea of how the process works can't do anything but help.
posted by asperity at 4:33 PM on April 26, 2017 [7 favorites]
In my experience, most building/zoning departments would rather spend a short time up front to talk with you about application requirements than spend months on a series of resubmittals or worse. Don't expect to get all that much of their time if it's busy and you're not submitting anything right then, but at least it should be free. Having a general idea of how the process works can't do anything but help.
posted by asperity at 4:33 PM on April 26, 2017 [7 favorites]
At least talk to a structural engineer and see if they can help you; they generally specialize in how to build the structure so that it will stay standing, rather than telling you whether such a building can be placed on a given parcel, but they do have to know about seismic issues, ground conditions, etc., to do that. So they might be able to say whether you can put what you want, where you want.
This more the realm of a geotechnical or soils engineer - structural engineers get their information on how much the ground can support and what kinds of foundations they need from soils report recommendations, which are produced after testing by a soils engineer. For both a structural and geotechnical engineer, they may have done work very close to the lot in question and thus have some knowledge of its underlying geology and bearing capacity, but they won't be able to give you anything definite until they get a drill out there. I think you're still too early in the process to worry about that. However, if you're going to do septic (you may not have a choice), they may be the guys who figure out how much sewage your lot can handle from a septic tank. In every jurisdiction I've worked in with a septic project (SoCal only), the number of bedrooms has been limited by a "perc test" that measures how fast the soil can absorb liquids. The lot may have a 4000 s.f. build area that can only support one or two bedrooms.
A civil engineer will be the one to figure out how much you'll have to grade the site and where your roads can go and still have adequate drainage and no ponding.
If you're doing a dead-simple building that doesn't require any special construction, you won't need an architect or structural engineer, but one benefit of an architect is that they'll have working relationships with every other profession that gets mentioned in this thread and can act as a sort of design team general contractor. A good general contractor may be able to do the same thing - they'll typically know a few engineers.
posted by LionIndex at 4:42 PM on April 26, 2017 [2 favorites]
This more the realm of a geotechnical or soils engineer - structural engineers get their information on how much the ground can support and what kinds of foundations they need from soils report recommendations, which are produced after testing by a soils engineer. For both a structural and geotechnical engineer, they may have done work very close to the lot in question and thus have some knowledge of its underlying geology and bearing capacity, but they won't be able to give you anything definite until they get a drill out there. I think you're still too early in the process to worry about that. However, if you're going to do septic (you may not have a choice), they may be the guys who figure out how much sewage your lot can handle from a septic tank. In every jurisdiction I've worked in with a septic project (SoCal only), the number of bedrooms has been limited by a "perc test" that measures how fast the soil can absorb liquids. The lot may have a 4000 s.f. build area that can only support one or two bedrooms.
A civil engineer will be the one to figure out how much you'll have to grade the site and where your roads can go and still have adequate drainage and no ponding.
If you're doing a dead-simple building that doesn't require any special construction, you won't need an architect or structural engineer, but one benefit of an architect is that they'll have working relationships with every other profession that gets mentioned in this thread and can act as a sort of design team general contractor. A good general contractor may be able to do the same thing - they'll typically know a few engineers.
posted by LionIndex at 4:42 PM on April 26, 2017 [2 favorites]
Response by poster: Ah, well $400-500k would still be affordable. Shows how little I know about this and why I'm so concerned about finding good professional advice, thanks for catching that.
I tried calling the department of planning a couple times but it always went to voicemail and they never returned my calls. I'll try a visit in person though.
I guess if I were to boil my question down into an actual question it would be this: What kind of professional do I want to start with when evaluating:
-challenges with the property, whether in engineering or permitting
-writing an offer with enough room to escape any problems that come up
-in a manner that doesn't sink too much cost into it this early in the process?
Should I first get an engineer to look into engineering issues (can they make a sort of initial estimate, like getting a mechanic to inspect a used car?), talk to a county planner about any zoning issues they see, then ask an attorney to write up the offer? Can I expect this all to be done for $5k? $2k?
posted by ilikemefi at 5:12 PM on April 26, 2017
I tried calling the department of planning a couple times but it always went to voicemail and they never returned my calls. I'll try a visit in person though.
I guess if I were to boil my question down into an actual question it would be this: What kind of professional do I want to start with when evaluating:
-challenges with the property, whether in engineering or permitting
-writing an offer with enough room to escape any problems that come up
-in a manner that doesn't sink too much cost into it this early in the process?
Should I first get an engineer to look into engineering issues (can they make a sort of initial estimate, like getting a mechanic to inspect a used car?), talk to a county planner about any zoning issues they see, then ask an attorney to write up the offer? Can I expect this all to be done for $5k? $2k?
posted by ilikemefi at 5:12 PM on April 26, 2017
I guess if I were to boil my question down into an actual question it would be this: What kind of professional do I want to start with when evaluating:
-challenges with the property, whether in engineering or permitting
With engineering, you can't get much info on anything other than the site itself at the moment, so that's pretty much a soils/geotechnical engineer. For information on any special permit requirements beyond just a building permit, you'll want to talk to the building/zoning/planning department or hire an architect.
-writing an offer with enough room to escape any problems that come up
I would eliminate "can I actually build anything without really special construction practices" as a question before even going there.
-in a manner that doesn't sink too much cost into it this early in the process?
Should I first get an engineer to look into engineering issues (can they make a sort of initial estimate, like getting a mechanic to inspect a used car?), talk to a county planner about any zoning issues they see, then ask an attorney to write up the offer? Can I expect this all to be done for $5k? $2k?
Any engineering issues that prevent you from building a regular old house on a vacant lot are bound to be exotic. Building a 1500 s.f. place shouldn't cause too many problems. Beyond discussing the site with your government, the only prep I might do is a perc test (for septic). One might have been done already. When I used to work in residential architecture, a pretty key part of my job was figuring out how to maximize our client's lot quickly to see if it was worth buying or not, so hiring an architect might be a thing, but you'd have to talk to them about how much it would cost. It might be worth it just to have an initial consultation (like a one hour meeting) with an architect just to get a better grip on what our process will be, and that could very well be free.
posted by LionIndex at 5:33 PM on April 26, 2017 [2 favorites]
-challenges with the property, whether in engineering or permitting
With engineering, you can't get much info on anything other than the site itself at the moment, so that's pretty much a soils/geotechnical engineer. For information on any special permit requirements beyond just a building permit, you'll want to talk to the building/zoning/planning department or hire an architect.
-writing an offer with enough room to escape any problems that come up
I would eliminate "can I actually build anything without really special construction practices" as a question before even going there.
-in a manner that doesn't sink too much cost into it this early in the process?
Should I first get an engineer to look into engineering issues (can they make a sort of initial estimate, like getting a mechanic to inspect a used car?), talk to a county planner about any zoning issues they see, then ask an attorney to write up the offer? Can I expect this all to be done for $5k? $2k?
Any engineering issues that prevent you from building a regular old house on a vacant lot are bound to be exotic. Building a 1500 s.f. place shouldn't cause too many problems. Beyond discussing the site with your government, the only prep I might do is a perc test (for septic). One might have been done already. When I used to work in residential architecture, a pretty key part of my job was figuring out how to maximize our client's lot quickly to see if it was worth buying or not, so hiring an architect might be a thing, but you'd have to talk to them about how much it would cost. It might be worth it just to have an initial consultation (like a one hour meeting) with an architect just to get a better grip on what our process will be, and that could very well be free.
posted by LionIndex at 5:33 PM on April 26, 2017 [2 favorites]
One additional point: the construction market is going fairly bananas at the moment, so you may have a hard time getting anyone interested in a theoretical project. Just be prepared to have to contact a bunch of different firms; for my renovation ("only" 125K of work), only one firm in five was interested enough to even swing by and check out the property, and in the end I got two bids.
...not counting the design/build firm that said they'd be interested if I wanted to expand the scope but another 50K or so. Nice folks, but ... not for me I guess.
posted by aramaic at 6:54 PM on April 26, 2017
...not counting the design/build firm that said they'd be interested if I wanted to expand the scope but another 50K or so. Nice folks, but ... not for me I guess.
posted by aramaic at 6:54 PM on April 26, 2017
You really should talk to a design professional before talking to the zoning/permitting office. It's one of those things that because the building code is a public document, the people in the office probably would not be receptive to a casual chat about what you could do with the property. They want to review drawings.
You're not gonna get out of it cheap, you may have to put up a few thousand dollars before you even get an offer in on the property because engineers and architects don't really work on contingency.
posted by hwyengr at 7:36 PM on April 26, 2017 [1 favorite]
You're not gonna get out of it cheap, you may have to put up a few thousand dollars before you even get an offer in on the property because engineers and architects don't really work on contingency.
posted by hwyengr at 7:36 PM on April 26, 2017 [1 favorite]
I think you are looking at a minimum of 500k for construction costs. Construction, like the housing market here is booming. You'll have to compete for contractors with so many other builds prices rise dramatically.
posted by saradarlin at 7:40 PM on April 26, 2017
posted by saradarlin at 7:40 PM on April 26, 2017
You really should talk to a design professional before talking to the zoning/permitting office. It's one of those things that because the building code is a public document, the people in the office probably would not be receptive to a casual chat about what you could do with the property. They want to review drawings.
It may depend on the department, but quite a few jurisdictions have some counter service that performs the function of "what will I run into if I try to build something here?" that can be really helpful for navigating local zoning codes (as opposed to building codes). The person you speak to at that counter might not have super-fine grain knowledge about the recesses of their code, but can at least point out the limitations of your zone and what permits you'll need. A design professional may be able to get more definitive answers on contentious issues or be able to navigate the records department if necessary, but that really shouldn't be a thing for an empty lot. Trying to find out why previous attempts at building failed is a good idea though.
posted by LionIndex at 8:09 PM on April 26, 2017 [2 favorites]
It may depend on the department, but quite a few jurisdictions have some counter service that performs the function of "what will I run into if I try to build something here?" that can be really helpful for navigating local zoning codes (as opposed to building codes). The person you speak to at that counter might not have super-fine grain knowledge about the recesses of their code, but can at least point out the limitations of your zone and what permits you'll need. A design professional may be able to get more definitive answers on contentious issues or be able to navigate the records department if necessary, but that really shouldn't be a thing for an empty lot. Trying to find out why previous attempts at building failed is a good idea though.
posted by LionIndex at 8:09 PM on April 26, 2017 [2 favorites]
You are getting way ahead of yourself. In CA there are three things you MUST know abouta lot
1. Water- does it have water, can you get water?
2. Perc testing. Will it perc.
3. Geotech. Can you meet seismic standards.
Most genuine buildable lots are going to be sold with a current perc test and water info (test well, public hookup negotiated). If the seller is not pushing those into your hands the moment you call about the lot in your market there is a reason. And that reason is likely that the seller hasn't done the test because they know or strongly suspect the lot will fail. Or it did fail and they're doing something shady to avoid disclosing. Perc tests are registered with the county btw most places so they don't want you to do them as if the lot fails all prospective buyers will know that. If it won't perc you have to be on sewer. You already know the second lot was denied a building permit you should find out why and I bet it's because it didn't perc.
Seismic is different as the buildability of a lot with poor soils is more of a cost issue. They will possibly need to drill a few borings which can be expensive though.
Unlike most people here I think it will not cost you $500K to build the house unless you are a total sucker. Just bring in a contractor. But I do think you DESPERATELY need an agent or a residential architecture firm on your side right now so you don't get saddled with an unbuildable lot as you don't know much about the process.
First things first though- go into the office and talk to a human. Likely they will now about this lot and will tell you what they know. Free and informative. Then
posted by fshgrl at 8:19 PM on April 26, 2017 [4 favorites]
1. Water- does it have water, can you get water?
2. Perc testing. Will it perc.
3. Geotech. Can you meet seismic standards.
Most genuine buildable lots are going to be sold with a current perc test and water info (test well, public hookup negotiated). If the seller is not pushing those into your hands the moment you call about the lot in your market there is a reason. And that reason is likely that the seller hasn't done the test because they know or strongly suspect the lot will fail. Or it did fail and they're doing something shady to avoid disclosing. Perc tests are registered with the county btw most places so they don't want you to do them as if the lot fails all prospective buyers will know that. If it won't perc you have to be on sewer. You already know the second lot was denied a building permit you should find out why and I bet it's because it didn't perc.
Seismic is different as the buildability of a lot with poor soils is more of a cost issue. They will possibly need to drill a few borings which can be expensive though.
Unlike most people here I think it will not cost you $500K to build the house unless you are a total sucker. Just bring in a contractor. But I do think you DESPERATELY need an agent or a residential architecture firm on your side right now so you don't get saddled with an unbuildable lot as you don't know much about the process.
First things first though- go into the office and talk to a human. Likely they will now about this lot and will tell you what they know. Free and informative. Then
posted by fshgrl at 8:19 PM on April 26, 2017 [4 favorites]
Your heading the seventh floor in the County Building, which is shared by Planning and by Building. Get the paperwork for the "approval" that has allegedly been issued by the County, and see what it entails. When was it approved? The requirements for building become more and more stringent each year. What are you zoned? Is it "hillsides" zoning? Get a map for the lots (do you know its APN number?), and find out. At the Planning office. Be polite when you're there, and try not to waste their time.
Build site on a flattened ridge top? County of Santa Clara no longer issues permits on some of those locations, as they are in the visual watershed of the valley. Better check. I know of three red-tagged sites that I can see from where I am right now that are ridge tops that are *never* going to have buildings on them, even though the owners started grading. Was there a Percolation test for a Septic field? Is it in a Geological Hazard area? Are there any geological hazards on record (historical slides are well documented, and the County operates from an aerial survey).
When the site was approved, it might have only had to have a single septic field. Now the county requires that you have two septic fields, and that you have a way to alternate between them, every year or three.
Is the road of allowable grade for a fire truck to get up to it? Is there enough room to install a fire-truck turn-around at the house site? Even though the County of Santa Clara will *never* dispatch a fire truck to your house (unless you are in the Los Gatos fire district, or the South County Fire District) they will mandate that the road be some number of feet wide, with pullouts. One neighbor spent 100K on the road down to her building site, because of the Fire Marshall (she abandoned her effort after building the road). How wide is that easement for a dirt road? Does PG&E say you can use their easement? On what document?
Are you in a SRA (State Responsibility Area) for firefighting? That is, does the County rely on CDF (CalFire) now to do firefighting? Then welcome to ISO 10 fire protection rating, which basically means that you have no fire protection at all as far an insurance company is required. With modern GIS support, they now know this.
That thin strip between the two parcels is worrisome. Is there an easement across it? Law on easements in California is moderately enlightened: you can't be landlocked by a denial of easement, but you will have to pay the owner for grant of easement.
I'm tired of typing and being negative, but I want to give you some impression of how difficult it could be.
What you want is someone who has recently built a house in unincorporated Santa Clara.
posted by the Real Dan at 1:00 AM on April 27, 2017 [9 favorites]
Build site on a flattened ridge top? County of Santa Clara no longer issues permits on some of those locations, as they are in the visual watershed of the valley. Better check. I know of three red-tagged sites that I can see from where I am right now that are ridge tops that are *never* going to have buildings on them, even though the owners started grading. Was there a Percolation test for a Septic field? Is it in a Geological Hazard area? Are there any geological hazards on record (historical slides are well documented, and the County operates from an aerial survey).
When the site was approved, it might have only had to have a single septic field. Now the county requires that you have two septic fields, and that you have a way to alternate between them, every year or three.
Is the road of allowable grade for a fire truck to get up to it? Is there enough room to install a fire-truck turn-around at the house site? Even though the County of Santa Clara will *never* dispatch a fire truck to your house (unless you are in the Los Gatos fire district, or the South County Fire District) they will mandate that the road be some number of feet wide, with pullouts. One neighbor spent 100K on the road down to her building site, because of the Fire Marshall (she abandoned her effort after building the road). How wide is that easement for a dirt road? Does PG&E say you can use their easement? On what document?
Are you in a SRA (State Responsibility Area) for firefighting? That is, does the County rely on CDF (CalFire) now to do firefighting? Then welcome to ISO 10 fire protection rating, which basically means that you have no fire protection at all as far an insurance company is required. With modern GIS support, they now know this.
That thin strip between the two parcels is worrisome. Is there an easement across it? Law on easements in California is moderately enlightened: you can't be landlocked by a denial of easement, but you will have to pay the owner for grant of easement.
I'm tired of typing and being negative, but I want to give you some impression of how difficult it could be.
What you want is someone who has recently built a house in unincorporated Santa Clara.
posted by the Real Dan at 1:00 AM on April 27, 2017 [9 favorites]
This thread is closed to new comments.
posted by brainmouse at 4:06 PM on April 26, 2017 [10 favorites]