A client recently asked me a slew of questions about a property he was interested in. While I would be happy to answer any and all questions, as I suspect any realtor would, I thought about how it would be helpful to have a list of FAQs that anyone interested in buying in NH could use as not only a way of finding some answers but sometimes people don’t even know what questions to ask. While this isn’t an exhaustive list, I will do my best to update it as I think of more questions.
Why is it so hard to find the right property in NH?
What are some potential pitfalls when buying land?
What if zoning laws change after I buy a piece of land?
Should I overpay for land in a competitive market?
How do you appraise a piece of land?
Can I use other listings for sale to compare my land’s value?
What is the typical cost of installing a septic system in NH?
What is the cost of installing a well in NH?
What is the difference between a Drilled Well and a Dug Well?
Why would someone choose a Dug Well over a Drilled Well?
What Should I expect to pay in closing costs as a buyer?
What should I expect to pay in closing costs as the seller?
Why is it so hard to find the right property in NH?
Finding land to purchase in New Hampshire, like many other areas, can be challenging due to a variety of factors. Here are some possible reasons:
- High Demand: New Hampshire’s natural beauty, good schools, low crime rates, and overall quality of life make it an attractive place to live. This high demand, coupled with limited supply, can make finding available land challenging.
- Limited Supply: Much of New Hampshire is covered by mountains, forests, and bodies of water. This naturally limits the amount of land suitable or available for development.
- Zoning and Land Use Regulations: Strict zoning laws and land use regulations can further reduce the availability of land suitable for specific purposes. Some areas are designated for commercial or residential use only, while others have restrictions on the type or size of buildings that can be constructed.
- Conservation Efforts: New Hampshire has robust conservation efforts in place to preserve its natural landscapes and ecosystems. Large areas of land are protected from development to preserve their natural state, which reduces the amount of land available for purchase.
- Ownership Concentration: In some cases, large tracts of land may be owned by a small number of entities or individuals, reducing the amount of land available on the market at any given time.
- Economic Factors: In periods of economic growth, competition for land can increase, driving up prices and making it harder to find available land within a certain budget.
What are some potential pitfalls when buying land?
When buying land, it’s crucial to do your homework to avoid potential pitfalls. Here are some of the most common issues that can arise:
- Zoning Restrictions: One of the most common issues with buying land is not fully understanding the zoning restrictions. Zoning determines what you can and cannot do with the property. If you plan to build a residential home but the land is zoned for commercial use only, you will face significant problems.
- Access Issues: Not all land has guaranteed access. There might not be a public road leading to the property, or the access could be through an easement on someone else’s property. If there’s no legal right of way, you could end up with land you can’t access.
- Environmental Concerns: Environmental problems like contamination, protected species, or wetlands can restrict land use and potentially lead to high clean-up costs.
- Lack of Utilities: If the property doesn’t already have access to utilities (water, sewer, electricity, gas, internet), getting these services can be very expensive.
- Soil Problems: The quality of the soil can greatly impact your plans. Poor soil quality, high water tables, or unstable soil can all make construction challenging and costly.
- Unforeseen Costs: From property taxes to insurance to the cost of clearing and grading the land, the costs of land ownership can add up quickly. Make sure you’ve accounted for all potential costs in your budget.
- Financing Difficulties: As mentioned earlier, getting a loan for land can be more difficult and more expensive than a traditional mortgage. You might need to have a larger down payment and pay a higher interest rate.
- Resale Difficulties: Land generally takes longer to sell than residential property. If you’re buying land as an investment, keep in mind that it might not be easy to sell quickly if you need to.
- Legal Complications: Land ownership can come with legal complications, like liens, easements, or disputed boundaries. Make sure to conduct a thorough title search and consider title insurance to protect against these types of issues.
- Future Development: Future development nearby could impact your property’s value and your enjoyment of it. For instance, a new highway or industrial park could lead to increased noise, traffic, or pollution.
These potential pitfalls highlight why it’s so important to conduct thorough due diligence before buying land. Hiring a team of professionals, including a real estate agent with expertise in land sales, a real estate attorney, and possibly an environmental consultant or land planner, can be a good investment.
What if zoning laws change after I buy a piece of land?
Zoning laws can indeed change after you buy a piece of land, and these changes can potentially impact your planned use of the land, its value, and more. However, there are some protections and options to consider:
- Grandfathering: Generally, if you’re already using the property in a way that’s compliant with the current zoning when it changes, you’re usually allowed to continue that use. This is often referred to as a “non-conforming use” or being “grandfathered in.” However, there may be limitations to this, such as if you want to expand or substantially change the use, or if the property is left vacant for a certain period.
- Variance or Special Use Permit: If the new zoning law doesn’t allow for your intended use of the property, you may be able to apply for a variance or a special use permit. A variance allows for an exception to the zoning law, while a special use permit allows for uses that are not typically permitted in that zone but are considered to provide a benefit to the community. Both processes typically involve hearings and approvals from the local zoning board or similar entity.
- Rezoning: In some cases, you might be able to petition to have your property rezoned, especially if the current zoning seems out of line with the surrounding properties or with the city or county’s comprehensive plan. However, rezoning can be a complex, time-consuming, and uncertain process.
- Legal Challenge: If a zoning change negatively impacts your property value or use, and you believe it’s unjust or illegal, you might choose to challenge it in court. However, this can be an expensive and lengthy process, and there’s no guarantee of winning.
- Sale or Development Partnership: If the new zoning increases the value of the property for a use you weren’t planning (for example, commercial use on what was residential land), you might consider selling the land or entering into a development partnership.
As with any legal matter, if you’re facing zoning changes, it’s a good idea to consult with a real estate attorney or land use consultant to understand your rights and options. To stay ahead of potential changes, you can also keep an eye on local government meetings and announcements, which often provide information about proposed zoning changes.
Should I overpay for land in a competitive market?
Whether to overpay for land in a competitive market is a complex decision that depends on various factors. Here are a few considerations to bear in mind:
- Purpose of the Land: If the land is critical for a specific purpose – for example, you intend to build your dream home and the location is perfect – you might decide that overpaying is worth it. However, if the purchase is purely for investment purposes, overpaying could erode potential returns.
- Market Dynamics: Real estate markets can be cyclical. If you’re buying in a seller’s market where competition is fierce and prices are high, you may need to pay more to secure a property. However, remember that market conditions can and do change. If the market cools or if there’s a downturn, you could find yourself in a negative equity situation (where you owe more than the property is worth).
- Affordability: Your financial situation is a crucial factor. Overpaying should not place you in financial hardship or stretch your resources too thin. If a land purchase is going to create financial strain, it might not be the right move, regardless of how much you want the land.
- Availability and uniqueness of the Land: If the land is unique and such parcels rarely come on the market, it might be worth paying a premium. However, if comparable land is readily available, overpaying might not be the best strategy.
- Potential for Appreciation: If the land is located in a high-demand area with strong growth potential, paying a bit more now could pay off in the long run. However, predicting future land values can be tricky and there are no guarantees.
- Carrying Costs: Remember to account for the ongoing costs of owning land, including property taxes, insurance, and maintenance. These can add up, especially if you plan to hold the land for an extended period before developing or selling it.
Given the complexity of this decision, it may be beneficial to work with a real estate professional who understands the local market. They can provide valuable guidance on what constitutes a fair price, considering all the unique attributes of the land and the current market dynamics.
As with any investment, it’s crucial to do your due diligence. Make sure you understand all the potential costs and risks before deciding to overpay for land.
How do you appraise a piece of land?
Appraising a piece of land is a complex process that involves assessing a variety of factors to determine its value. Here’s a basic overview of how it’s typically done:
- Identify the Highest and Best Use: The highest and best use of a property is the most profitable, legally permissible, feasible, and physically possible use of the property. Determining this can help set the context for the appraisal.
- Use Appropriate Appraisal Method: Land can be appraised using different methods. The sales comparison approach is the most common and involves comparing the property to similar properties that have recently sold in the area. Adjustments might be made for differences in features, location, size, etc. Another method, the income approach, is used for income-producing properties and involves capitalizing net operating income. The cost approach, which is less commonly used for land, involves estimating the value of the land as if it were vacant and available to be put to its highest and best use.
- Conduct a Site Visit: An appraiser will typically visit the property to assess its physical characteristics. This can include the size, shape, topography, location, available utilities, road access, and other relevant features.
- Research Zoning Laws and Market Conditions: Understanding local zoning laws can help determine the property’s potential uses and thus its value. It’s also important to understand current market conditions, including demand for land, recent sales, and trends in land values.
- Consider Other Factors: Other factors that might affect the value of the land include its proximity to amenities or services, any legal or physical restrictions, potential for future development, environmental conditions, and more.
- Prepare an Appraisal Report: The appraiser will compile their findings into a detailed report that explains the reasoning behind their valuation.
It’s important to note that this is a complex process that requires significant expertise and local market knowledge. If you need an appraisal for a land purchase, sale, or loan, it’s best to hire a professional appraiser. In many cases, especially for loan purposes, this is actually a requirement.
Can I use other listings for sale to compare my land’s value?
Yes, you can use other listings for sale to get a general idea of your land’s value. However, there are a few important things to keep in mind when doing this:
- Compare Similar Properties: Look for properties that are similar to yours in terms of size, location, zoning, available utilities, and other key features. The more similar the properties are, the more useful the comparison will be.
- Consider Market Conditions: If the market is changing rapidly, the asking prices of current listings might not accurately reflect the value of your land. Keep an eye on market trends and consider how they might be affecting prices.
- Listed Price vs Sold Price: The listed price is just the asking price, and it might not reflect what the land will actually sell for. If possible, try to find out what similar properties have recently sold for, as this can give you a more accurate idea of your land’s value.
- Adjust for Differences: If the properties you’re comparing aren’t exactly the same, you’ll need to adjust for differences. For example, if a similar property has utility hookups and yours doesn’t, you might need to subtract the value of the utility hookups from that property’s price to make a fair comparison.
While comparing other listings can give you a rough idea of your land’s value, for a more precise valuation, you may want to hire a professional appraiser. A professional appraiser can conduct a thorough assessment of your property and the local market to determine your land’s value. If you’re planning to sell your land, a real estate agent can also provide valuable guidance on pricing.
What is the typical cost of installing a septic system in NH?
Installing a septic system is a complex process that requires careful planning, adherence to local regulations, and specialized equipment. Additionally, there are many environmental factors that also play a huge role in the design which can vary greatly in cost. For these reasons, it’s not possible to give even a broad answer. Here’s a quick overview of the typical steps involved:
- Site Evaluation and Design: A soil and site evaluation is conducted to understand the soil type, drainage, and other factors that will influence the system’s design. An appropriate system is then designed based on these factors. Things like wetlands and ledge can play a pivotal role in the design process.
- Permitting: Once the design is complete, it will then need to be approved by the NHDES. This process generally takes a few weeks. While designing and installing a septic system on your own is legal in NH, you will still need to have your plans approved by the State. I highly recommend hiring a licensed septic designer.
- Excavation: Once permits are secured, the site is excavated. This involves removing soil to prepare for the installation of the septic tank and the leach field. In some cases, the soil is adequate for proper drainage. But this is one of the areas where the cost can vary greatly. If septic sand is required, the cost can increase greatly.
- Tank Installation: The septic tank, usually made of concrete, fiberglass, or polyethylene, is installed in the excavated hole. It’s typically placed at a level where it can accept wastewater from the home via gravity. However, due to factors such as the leach field needing to be installed above the home due to slope, or, if the field is required to be installed in a raised bed, a septic pump will need to be installed. This not only costs more but also requires additional maintenance and the potential for pump failure which can lead to potential damage to the home due to a backup.
- Leach Field Construction: The leach field, also known as the drain field or leaching field, is the area where effluent from the septic tank is dispersed into the ground. there a several types of septic fields available. Finding the right type of field will depend on your site’s specific situation.
- Plumbing Connections: The plumbing from the home to the septic tank and from the tank to the leach field must be installed.
- Inspection: After the system is installed but before it is covered, it will need to be inspected. This ensures that the system is installed according to the approved design and complies with all local regulations.
- Backfilling: After passing inspection, the system is backfilled with soil, and the area is graded to promote proper drainage.
- Landscaping: The final step is often to restore the site with appropriate landscaping, being careful to use plants that won’t interfere with the septic system’s function. Grass is by far the best cover for a septic field as hedge and tree roots will likely infiltrate the field and cause premature failure. the life of a septic field varies but the general consensus is that it should last approximately 30 years.
- Ongoing Maintenance: Proper care and maintenance are vital for a septic system’s long-term function. This includes regular pumping of the septic tank, typically every 3-5 years, and avoiding putting materials down the drain that might harm the system. Baby wipes and anti-bacterial soaps are particularly harmful to a septic system. The wipes can clog up the plumbing and anti-bacterial soap can kill the bacteria in the tank that brake down the waste
Given the complexity and importance of a septic system, it’s often advisable to hire professionals with experience in septic design and installation in your specific region. They will be familiar with the local regulations, soil conditions, and other factors that can influence the design and installation process.
What is the cost of installing a well in NH?
Like a septic system, installing a well in New Hampshire is a complex process that is a regulated and requires attention to legal requirements, geological conditions, and proper construction techniques. Here’s an overview of the steps generally involved:
- Site Selection: Choose a site that is appropriate for drilling, taking into consideration proximity to potential contamination sources like septic systems, distance from buildings, local geology, and groundwater resources.
- Permitting: Obtain the necessary permits from the state and local authorities. In New Hampshire, this often involves submitting a Water Well Construction Permit application to the Department of Environmental Services (DES). This step may require detailed information about the well’s construction, location, intended use, and more.
- Hiring a Professional: It’s typically advisable to hire a licensed well driller who is familiar with the state and local regulations, as well as the geological conditions in the area.
- Drilling: The driller will use specialized equipment to drill the well to the required depth and width. This process can vary depending on the type of well (e.g., drilled or dug) and the underlying geological formations.
- Casing Installation: To prevent the collapse of the borehole and to keep out contaminants, a casing (usually made of steel or PVC) is installed in the well.
- Screen Installation: If needed, a screen may be installed at the bottom of the casing to filter out sediment and allow water to enter the well.
- Grouting: A sealant may be placed between the casing and the borehole wall to prevent surface water and potential contaminants from entering the well.
- Development: The well is then developed to remove fine materials and to ensure that it can yield the required amount of water.
- Pump Installation: A pump system is installed to bring water from the well to the surface. This includes the pump, pressure tank, and necessary plumbing.
- Water Testing: Water samples are often taken and tested for contaminants like bacteria, nitrates, and other potential health concerns.
- Inspection and Reporting: In some cases, an inspection by state or local officials may be required. Additionally, well completion reports typically need to be submitted to relevant authorities.
- Ongoing Maintenance: Regular maintenance and periodic testing will be required to ensure the well continues to operate safely and efficiently.
- Record Keeping: Keep all documents related to the well construction, permits, maintenance, and water quality tests in a safe place. These may be needed for future reference or if the property is sold.
Given the complexity and the potential health and safety considerations involved in well construction, it’s generally advisable to consult with or hire professionals who specialize in well installation in your specific area in New Hampshire. They’ll be familiar with the unique regulations, permitting requirements, and geological conditions that apply.
What is the difference between a Drilled Well and a Dug Well?
Dug wells and drilled wells differ primarily in their construction method, depth, diameter, and potential water yield. Here’s a breakdown of the differences:
1. Construction Method:
- Dug Well: Traditionally constructed by hand using shovels or heavy machinery like backhoes, dug wells are excavated from the ground.
- Drilled Well: Constructed using specialized drilling equipment, drilled wells bore into the ground, often reaching deeper levels of the aquifer.
2. Depth:
- Dug Well: Typically shallower, with depths ranging from 10 to 30 feet. They are usually dependent on water close to the ground surface.
- Drilled Well: Can be much deeper, ranging from 100 to several thousand feet. This allows access to deep water-bearing formations.
3. Diameter:
- Dug Well: Generally larger in diameter, often ranging from 3 to 6 feet across, allowing for more substantial water storage within the well itself.
- Drilled Well: Usually much narrower, with diameters ranging from 4 to 8 inches.
4. Water Source:
- Dug Well: Since they are shallower, dug wells are more dependent on surface water or shallow groundwater sources, making them more susceptible to drought and contamination from surface pollutants.
- Drilled Well: Access deeper, more stable sources of water, which can offer a more consistent supply and are typically less vulnerable to contamination.
5. Cost:
- Dug Well: Can be less expensive to construct since they don’t require specialized drilling equipment, but the shallowness may lead to issues with water supply and quality.
- Drilled Well: Generally more expensive due to the specialized equipment and expertise required, but often provide a more reliable and cleaner water source.
6. Material:
- Dug Well: Often lined with brick, stone, or concrete rings.
- Drilled Well: Cased with steel or plastic to stabilize the well and prevent contaminants from entering.
7. Longevity and Maintenance:
- Dug Well: May require more frequent maintenance, and the shallower depth may lead to issues with water availability or quality over time.
- Drilled Well: Often longer-lasting and require less frequent maintenance due to the deeper construction and controlled drilling process.
In summary, while dug wells may be suitable for certain applications and might be less expensive initially, drilled wells often provide a more reliable and sanitary water source. The choice between the two will depend on factors like local geology, intended water use, budget, and applicable regulations.
Why would someone choose a Dug Well over a Drilled Well?
Choosing a dug well over a drilled well might be influenced by several factors. Here’s why someone might opt for a dug well:
- Cost: Dug wells are generally less expensive to construct than drilled wells, mainly because they don’t require specialized drilling equipment. For those on a tight budget, this could be an appealing option.
- Accessibility: In some remote or difficult-to-access locations, bringing in heavy drilling equipment might be challenging or impractical. A dug well can sometimes be constructed with more basic tools and machinery.
- Water Table: If the water table is relatively high, and water needs are modest, a dug well might be sufficient to provide the necessary water.
- Traditional or Aesthetic Reasons: Some property owners might prefer a dug well for its more traditional appearance or because it fits better with the historical or cultural context of a property.
- Simplicity of Construction: Drilled wells require expertise and specialized equipment, while a dug well might be constructed by a broader range of contractors or even a skilled property owner. This might make the process seem simpler or more accessible.
- Soil Conditions: In areas with certain types of soil or geology, a dug well might be more feasible or practical than a drilled well. For example, in areas with large amounts of rock just below the surface, drilling might be prohibitively expensive or complicated.
- Emergency or Temporary Use: A dug well might be suitable for temporary or emergency water needs, where a more permanent and expensive drilled well is not justified.
However, it’s essential to recognize the potential downsides of a dug well. They are typically shallower and therefore more susceptible to contamination from surface water and other pollutants. They may also be more affected by drought or other changes in the water table. The choice between a dug well and a drilled well should be made in consultation with water well professionals who are familiar with the local geology and regulations, and who can assess the specific needs and conditions of the property.
What Should I expect to pay in closing costs as a buyer?
While there isn’t a “typical fee”, as a buyer, the following list should help you understand what the closing cost could be. Every situation is different and will vary greatly in a cash purchase versus a mortgage purchase. These figures are examples that are not to be considered accurate in any way.
- Loan Origination Fee: Usually, the buyer pays this fee, which may range from 0.5% to 3% of the loan amount.
- Appraisal Fee: This is typically the buyer’s responsibility and might range from $300 to $700.
- Credit Report Fee: If required by the lender, the buyer usually covers this cost, which can be around $20 to $50.
- Home Inspection Fee: If the buyer chooses to have a home inspection (highly recommended), this will be their responsibility and can range from $300 to $700. Other inspections you may want to consider would be septic and well. These are separate from the home inspection and can range from $400 – $600.
- Soil Test: Land buyers may want to consider testing the soil for contaminates.
- Percolation Test: Land buyers should also consider having a septic evaluation which includes a perc test to make sure the soil drains adequately for a septic field.
- Prepaid Costs: These include any prepaid interest, homeowners’ insurance, and property taxes, which are typically paid by the buyer.
- Private Mortgage Insurance (PMI): If the down payment is less than 20%, the buyer may be responsible for PMI, with costs varying based on the loan amount.
- Title Insurance: While the seller often pays for the owner’s title insurance, the buyer usually pays for the lender’s title insurance. This can vary widely but may be around $500 to $1,000 or more.
- Property Taxes: Depending on the closing date, the buyer may need to reimburse the seller for prepaid taxes. This could also be a credit to the buyer.
- Recording Fees: These are usually paid by the buyer to the local government to record the new deed, costing a couple of hundred dollars.
- Escrow Deposit: The buyer may be required to put down an escrow deposit for property taxes and mortgage insurance.
- Survey Fee: If a survey is required, the buyer may be responsible for this cost, which can range widely.
- New Hampshire Transfer Tax: It’s common for the buyer and seller to split this tax, but it can be negotiated. If split evenly, the buyer would pay $7.50 per $1,000 of the purchase price.
These are general guidelines, and actual costs can vary based on many factors, including the specific property, loan type, lender, and terms of the purchase agreement. It’s always wise to work closely with a local real estate agent, lender, or real estate attorney who is familiar with New Hampshire’s regulations and customs to understand exactly what your responsibilities will be as the buyer. They can provide a Loan Estimate and Closing Disclosure that outlines all the specific costs you’ll be responsible for paying.
What should I expect to pay in closing costs as the seller?
As with buyer fees, the seller’s fees also vary greatly depending on the transaction. Here is a guide that should help you get an idea of what you might expect to pay as a seller. there are only examples and should not be considered accurate.
- Real Estate Agent Commissions: This is often the largest seller’s closing cost, typically ranging from 5% to 6% of the sale price. It’s generally split between the buyer’s and seller’s agents.
- Title Insurance: While the buyer typically pays for the lender’s title insurance, the seller often pays for the owner’s title insurance. This cost can vary widely.
- Transfer Tax: New Hampshire has a real estate transfer tax. As of my last update, it was $15 per $1,000 of the purchase price. Often, the buyer and seller split this cost, meaning the seller would pay $7.50 per $1,000.
- Property Taxes: The seller may be responsible for property taxes up to the closing date. This amount would be prorated based on the date of closing. This could also be a credit for any prepaid taxes.
- Legal and Escrow Fees: Sellers may need to pay for a real estate attorney or escrow fees to handle the transaction. These costs can vary.
- Recording Fees: Depending on the local jurisdiction and the specifics of the deal, the seller might be responsible for some recording fees.
- Repairs: If repairs are negotiated as part of the sale, the seller may be responsible for these costs.
- Seller Concessions: If agreed upon, the seller might pay some of the buyer’s closing costs, which can vary based on the agreement.
- Deed Preparation: The seller is generally responsible for preparing the deed. This can vary but is typically $250 to $400.
- Miscellaneous Fees: These could include costs for obtaining certain certificates, like a certificate of occupancy, or meeting other local requirements.
- Mortgage Payoff: If there is a mortgage on the property, the seller will need to pay it off, including any prepayment penalties, if applicable.
It’s worth noting that all of these costs can be subject to negotiation between the buyer and seller, and the actual costs can vary based on the specific property and terms of the sale. If you’re selling property in New Hampshire, it would be advisable to work with a local real estate agent or attorney who can provide a detailed breakdown of the costs you’ll be responsible for and help you navigate the process.
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