If you are browsing properties, then you are probably seeing classifications like residential undeveloped land being thrown around, but what does it mean?
Residential undeveloped land means that a parcel of land has not yet been developed but has been zoned specifically for residential use. The land will have no permanent structures, a lower market value, and it may or may not have utility access connected to it.
If you are in the market for buying land for either real estate/financial opportunities or simply to establish your private residence, then you are probably feeling a little confused when you start seeing so many different types of land classifications like residential undeveloped land being used within the industry. This is completely understandable, as there are so many different categories and sub-categories for land parcels these days. With that being said, it is important to understand each of these classifications and what they entail for the property - given that each land category can greatly influence the specs of the property. Keep reading to learn more about what residential undeveloped land means.
After years of working as a real estate agent, I have had a lot of different experiences dealing with properties that are residentially undeveloped lands. My experience has taught me that while you can estimate what the qualities of a residential undeveloped land parcel will be by its classification, you should always put the property under a microscope to ensure that it has the qualities that you are looking for.
Table of Contents
Residential Undeveloped Land
As the real estate industry continues to expand across the United States, we are finding that there are more and more classifications for land parcels being used today. The primary reason for this is that developers, local governments, and real estate organizations are trying to make it easier to distinguish the features of a land parcel by labeling properties with more defining terminology.
With that being said, while this has made classifying properties from a professional standpoint much easier, it does leave many aspiring landowners scratching their heads while trying to make sense of it all - which does not necessarily speed up the process of people buying land in some cases.
A common classification that we see is residential undeveloped land, which is a term that usually future homeowners have to deal with more than anyone else. This type of land parcel is usually found in areas that are specifically designated for residential use above all else. While its intended use is generally pretty straightforward, the specs and features of the property can greatly vary, which is why you want to know exactly what you are in for when you assess this kind of real estate.
It is easy to feel convinced that a land parcel that is classified as residential undeveloped land will automatically come with certain land features that are associated with private residences. While this may be the case oftentimes, you should always confirm this with the seller beforehand so that you do not have unrealistic expectations. To help you understand this further, we are going to break down residentially undeveloped lands in more detail.
A common aspect of buying any type of property is to deal with the zoning laws that are attached to it. Zoning laws are essentially guidelines and restrictions that dictate certain rights and freedoms that you have to the property. While as the landowner you can expect to have rights to the land, you may be denied the ability to develop or use your property in certain ways.
With residentially undeveloped land, the most defining zoning laws will pertain to the property’s classification. Building authorities that enforce zoning laws will generally designate certain land parcels to be used solely for specific purposes.
A property that is classified as residential undeveloped land will most likely only be used exclusively for residential use. This means that a property labeled as such will not be allowed to be used for a commercial business, agriculture, or industry - with the only development that you can pursue being a private residence.
With that being said, zoning laws can be seen virtually everywhere, but what you will find is that these restrictions are much more common in urban areas that have strict regulations for development. If you have a plot of residentially undeveloped land and you are not satisfied with the classification of your zoning laws, you can always try to contest this with your local building authority so that you have more versatility for how the land can be used.
A common factor that determines the classification of residential undeveloped land is its location. More often than not, land parcels are classified based on where they are located so that city planning has more logic behind it.
That is why you can commonly see specific types of areas being used for specific purposes such as businesses in busy downtown districts, farmland in rural areas, and private residences in urban neighborhoods.
A property that is classified as residential undeveloped land will most likely be located in an area that already has a lot of private residences surrounding it - or it is the location of a neighborhood that is still in development but has been established specifically for homes and apartments.
With that being said, the most common places that you will see residential undeveloped land will likely be in cities and towns. The reason for this is that these areas generally need more government oversight so that urban areas are well organized.
However, that does not mean that you will never see residential undeveloped land out in the countryside, as rural areas also have these types of land classifications. This can occur if a private landowner has established their property to be used for a specific purpose and has begun a form of development or design that is better suited for a private residence. More on this next.
No Permanent Development
The first thing that you will likely notice when you review a property that is classified as residential undeveloped land is that it has virtually no development on it. What you will see commonly is that the property is completely barren and may even be labeled as an empty lot.
The key feature tied to the development of residentially undeveloped land is that it can have no development on it that is permanent. This means that the property may actually have some kind of development on it so long as it is not ingrained into the foundation of the land. This would include the following:
- No Homes
- No Buildings
- No Barriers
Technically, a property with this kind of title may have certain structures that are in place so long as they are easily movable and not intended to be in place for more than a total of 6 months. In addition, residential undeveloped land may have also seen some form of upkeep and maintenance on it, which is especially the case for properties that are on the market with owners that want to get rid of their land.
These sorts of properties will generally have their yards maintained, unwanted debris cleared, and an overall sense of presentability to attract potential buyers.
Lower Land Value
There are a lot of different factors that determine the value of a land parcel - with its classification and level of development being major influences. A property that has been defined as residential undeveloped land, will likely be limited to being used for this specific purpose, which could potentially lower its value.
With that being said, a property that is labeled as residential undeveloped land is still much more attractive to buyers and real estate investors than a parcel simply titled as raw land, as you can expect the property to have some form of upkeep. However, if the property is located somewhere completely desolate then its value will probably be quite low, as the parcel is a clean slate in a location that is not attractive to most buyers. An exception to this would be if the land is situated somewhere that has a great location and there is a lot of competition on the market for real estate.
The biggest reason that a residential undeveloped property would be lower in value is that it has not received a significant amount of development. While we do usually value land parcels based on things like location, surrounding scenery, and local economy, a property that is residential undeveloped land will have seen little to no investment.
This lack of investment means that there are going to be a lot of upfront costs by the developer to get the project in motion. The land will need to undergo things like surveying and environmental impact reports, which will all need to be paid for out of pocket. In addition, a plot of residentially undeveloped land may also have a lack of utilities connected to the property.
If there are no basic utilities connected to the land, then the developer or landowner will need to take care of these themselves. This can be problematic and very costly if the property is located somewhere that has poor access to utilities. Ultimately, the more equipped and presentable a plot of residential undeveloped land is, the higher its value will be.
About THE AUTHOR
Cameron Scott has been in the land development industry for over 20 years. During that time, he has worked on hundreds of development deals ranging from 5 acres to over 100 acres. Most of his work has been in Utah and Texas, where he has worked for large, national home builders as well as local companies. He has worked as Land Entitlement Manager, Land Development Manager, and most currently as Land Acquisition Manager.Read more about Cameron Scott