How to Navigate a Feasibility Study When Buying Land for a Custom Home

What is a Feasibility Study?

Just like when purchasing a home, where you may conduct an inspection to better understand the mechanics of the home and uncover any defects that may impede your safety and enjoyment of the home.

When purchasing land, this same concept is used. But instead of a home inspection, we call it a feasibiilty study. And just like a home inspection, you are able to do it before you make an offer, or after.

So, what is a feasibility study?

A feasibility study is a period of time in which our goal is to confirm that the land is suitable for your intended use.

Put another way, it’s a safety net you put in place before taking the leap to purchase the property.

For those considering purchasing land to build a custom home, there are a number of great reasons to conduct a feasibility study. First, it gives you a chance to truly understand the land and the various elements needed to build a custom home.

How do you initiate a feasibility study?

You don’t really need permission to study a property. In fact, it’s recommended that if you are really interested in a piece of land you may want to do some arms length analysis before formally engaging with the owner. This means looking up the listing online, doing a respectful drive by, and maybe even reaching out to the county or local office of zoning to gain a basic understanding of what you could possibly “do” with the property.

Then, once you’ve understood some of the surface level details and are still interested, it’s wise to approach the land owner or her designated agent to request a tour and walk the property yourself. Typically, this is done with a real estate agent and an architect or custom home builder, and sometimes with the land owner herself.

In this instance, take the opportunity to ask questions, and to absorb any information that’s being shared with you. Chances are, some of the wisdom gleaned from the tour are going to be quite revealing, particularly if the land owner is motivated to sell. As an example, if the driveway is in poor condition, the owner may have already procured a quote from a local asphalt company to have it paved, potentially saving you thousands in upfront costs. As another example, the parcel may look perfect on paper but you find out through conversations or through local news that there will be a significant development breaking ground next door, or just down the street.

What should be included in a feasibility study?

A feasibility study should be comprehensive in nature, but ultimately the agreement itself is very simple. To back up, when you purchase land, you often use a standard form by a local real estate association. Or, you use a contract that was crafted by the real estate developer who is selling the land. As you read through these contracts, look out for any language that articulates inspection periods or study periods. And if you don’t find anything in the contract that reflects this, it’s time to create your own, to be submitted as an addendum to the sales contract. In this addendum, which you can title Feasibility Study Contingency, you will articulate a few very important elements that will allow you to walk away from the contract if you so choose: a period in days relative to the original ratification date of the sales contract, a scope that outlines what exactly you will do during the timeline, and the buyer’s right to terminate which outlines the exact conditions upon which the buyer can walk away from the deal.

Once the contract is ratified, with a feasibility study contingency in place, let’s talk about the specific items you should verify during this period.

Soil and Geotechnical Testing

A geotechnical engineer should conduct soil borings and testing to determine the soil’s bearing capacity, groundwater conditions, and any factors that could affect foundation design or site preparation for a custom home.

• Perform soil borings across the potential building area

• Collect and analyze soil samples in a lab

• Determine soil bearing capacity for foundation design

• Identify groundwater level and seasonal fluctuations

• Evaluate soil expansion or shrink potential (clay risk)

• Assess slope stability if property has elevation change

• Provide foundation recommendations (slab, crawlspace, basement)

• Estimate excavation and grading considerations

• Produce geotechnical report for architect/structural engineer

Percolation and Septic Testing

A septic engineer or soil scientist should perform percolation testing and evaluate the property’s ability to support an on-site septic system, including identifying appropriate locations for a drain field and reserve area if public sewer is unavailable.

• Identify potential septic drain field locations

• Conduct percolation (perc) tests to measure soil absorption

• Evaluate soil suitability for septic system

• Confirm required setbacks from wells, structures, and property lines

• Determine septic system size requirements based on home size

• Design septic layout and reserve drain field area

• Submit septic plan to local health department for approval

Zoning Regulations, Setbacks, and Building Restrictions

A title or land use attorney should verify the property’s zoning classification and confirm that a single-family custom home is permitted, while also reviewing setbacks, height restrictions, and any deed or HOA limitations. As an example, if there is a conservation easement recorded, it may disqualify you from building the home you imagined. If you are building a waterfront home, verify your riparian rights and your environmental responsibilities to ensure you can enjoy the property as you expect.

• Confirm zoning classification of the property

• Verify single-family residential use is permitted

• Review setback requirements (front, rear, side)

• Confirm height restrictions and lot coverage limits

• Identify HOA or deed restrictions if applicable

• Confirm accessory structures rules (garage, ADU, pool house)

• Verify building envelope and usable footprint

• Review local design or architectural requirements

Survey and Boundary Verification

A licensed land surveyor should perform a boundary and topographic survey to confirm property lines, identify easements or encroachments, and provide elevation data needed for site planning and home placement.

• Conduct boundary survey of the property

• Verify legal property description

• Locate property corners and place survey markers

• Identify easements, rights-of-way, or encroachments

• Produce topographic survey with elevation data

• Identify buildable area vs restricted areas

• Provide survey file to architect and builder

Utility Verification

A builder or civil engineer should confirm the availability and connection requirements for utilities such as electricity, water, sewer or septic, natural gas, and internet service, including estimating any extension or hookup costs.

• Confirm availability of electrical service and transformer capacity

• Verify water service availability or need for well

• Confirm sewer connection or septic requirement

• Identify gas line availability (if applicable)

• Verify internet or fiber service availability

• Determine connection costs and permits

• Identify required utility easements

Site Access, Grading, Drainage, and Topography

A civil engineer, landscape architect, or builder should evaluate site access, driveway placement, grading needs, and drainage patterns to ensure the lot can be developed safely and in compliance with local regulations.

• Evaluate driveway access and road frontage requirements

• Confirm permits required for driveway or curb cuts

• Review site grading and slope management

• Design stormwater drainage plan

• Identify retaining wall needs if slopes exist

• Evaluate clearing and tree removal requirements

• Confirm erosion control measures

Architectural Planning and Preliminary Design

An architect should review the survey and site conditions to develop a conceptual site plan and preliminary home design that fits within zoning constraints and takes advantage of the property’s features.

• Review survey and topography

• Determine optimal house placement on lot

• Develop conceptual floor plan

• Evaluate orientation for views and sunlight

• Create preliminary site plan

• Confirm compliance with zoning setbacks

• Coordinate with geotechnical and civil engineer

• Develop preliminary elevation concepts

Cost Estimation for Site Preparation, Construction, and Financing

A custom home builder or general contractor should review the site conditions and preliminary plans to prepare a rough construction budget and identify any potential cost risks related to the property. If obtaining financing, a lender should review the plan for the underwriting of a construction loan.

• Review architectural concept plans

• Estimate site preparation costs

• Estimate utility connection costs

• Estimate foundation costs based on soil report

• Estimate construction cost per square foot

• Evaluate timeline for permitting and construction

• Identify unusual cost risks (grading, blasting, etc.)

• Prepare preliminary construction budget (for review and approval by lender, if necessary)

Under what conditions should I walk away from a property?

Of course, if you have the means and the time to conduct these diligence items prior to writing a contract, you will be in a much better position — primarily because you can take your findings and use them to help negotiate a more reasonable price for the land and save considerable time and money moving on to the next opportunity. Indeed, if significant obstacles are presented during the feasibility study, you can bring those findings to the land owner, who may be willing to adjust the sale price to accommodate for these findings.

However, if there are specific conditions that are discovered, it’s usually best to walk away.

Failing or Problematic Septic Systems

One of the most common reasons buyers walk away from land is a failed percolation test or soil conditions that cannot support a septic system. If public sewer is unavailable and the site cannot accommodate a standard or engineered septic system — or the required drain field and reserve area — it may make building a home impossible.

Wetlands, Floodplain, or Environmental Restrictions

Environmental constraints such as wetlands, floodplain designations, protected habitats, or conservation easements can severely restrict where — or whether — you can build on a property. Additionally, soil conditions discovered during geotechnical testing can influence everything from foundation type to drainage design. Expansive clay, shallow bedrock, or high groundwater levels may require specialized foundations, deeper footings, or engineered solutions that add complexity and cost to the build.

Zoning or Buildable Area Limitations

Many buyers assume the entire lot is usable, but zoning setbacks, easements, wetlands buffers, and steep slopes often shrink the true buildable footprint. A five-acre parcel might only have a small portion that can legally accommodate a house, driveway, and septic field. This can affect the size, orientation, or even feasibility of the home design. Sometimes a parcel technically allows residential use but setbacks, easements, lot coverage limits, or HOA restrictions leave very little usable building area.

Unexpected Site Development Costs

Raw land frequently requires clearing, grading, tree removal, retaining walls, or rock blasting before construction even begins. Buyers often budget for the house but underestimate the cost of preparing the land itself. In challenging terrain, site work can add tens or even hundreds of thousands of dollars to a project. Additionally, many buyers underestimate how long the approval process can take when building a custom home. Zoning reviews, septic approvals, environmental clearances, and building permits can stretch timelines, especially if additional studies or revisions are required. Even a straightforward custom home project can take months to move through the permitting phase.

Lack of Utilities or Extremely High Connection Costs

Just because utilities exist nearby doesn’t mean they’re easy — or cheap — to connect. Extending electrical service, drilling a well, installing septic systems, or trenching long distances for water and internet can significantly increase development costs. Utility companies may also require infrastructure upgrades before providing service. Utilities that appear nearby on a map may still require long extensions or infrastructure upgrades to reach a property.

Access Problems or Easement Issues

Some parcels lack legal access, proper road frontage, or suitable driveway placement due to slope or easements.