Updated February 19, 2025

How the Lot Can Affect the Price of a Home

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Learn how the land a home is built on influences the price of a home with this guide to lot premiums and other land topics.

Homebuyers often experience some confusion about how the homesite can influence the price of a new home. The answer can often get lost somewhere between the industry lingo and the many other moving parts that go into the process of building and purchasing a new home.

To help new Homebuyers better understand the topic, we’ve created this easy guide to answer questions about how the homesite impacts the final price of a new construction home.

Since there isn’t a one-size-fits-all way to answer questions about homesite premiums, we’ve separated this guide into a few sections. Take a look at the information that’s most relevant to your situation.

What is a Lot Premium in New Construction Homes?

A “lot premium” or “homesite premium” refers to an additional cost incurred for the land when building a home from the ground up. Not all homesites include a lot premium. Common factors that impact whether or not a homesite will include a lot premium include:

• A more desirable location
• Additional space
• Added privacy
• Improved views of local scenery

A “premium homesite” refers to a homesite with a lot premium.

Lot Premiums for Quick Move-in Homes

Lot Premiums are a standard part of the homebuying process when it comes to purchasing a new home in a community still being built.

Homes that have already been built, or are still in the construction process, will include the lot in the overall purchase price. Since the homesite has already been selected, it becomes an essential feature of the home in the same way that the cost of flooring, cabinets, and other construction materials are already incorporated in the price.

While existing home sales don’t typically include a lot premium as a line-item in the overall price of the home, they’re still factored into the listing all the same.

Lot Premiums and Building a New Home

Homesite selection and potential lot premiums play a larger role when building a new home from the ground up. First, you’ll have a selection of floor plans and homesites to choose from. Keep in mind that some floor plans will only be available on certain homesites because of size, features or HOA requirements.

Each floor plan will have a base price that assumes the home will be built on a standard homesite for that community. There won’t be a lot premium on homes built on non-premium homesites, meaning it won’t increase the price of the home.

As part of the overall home building process, a homesite factors into the price of the home much like the personalized selections you make inside the home. In the same way that choosing higher-cost appliances or construction materials will increase the price of a home, so too will an especially desirable homesite.

Premium homesites may be oversized or located on a corner of two streets, offer waterfront views or additional privacy from not having back neighbors. These homesites often come with a lot premium, meaning it will cost more to build the same home on that homesite than on a standard one.

You should discuss homesite availability and any potential lot premiums with your Sales Consultant during the early stages of your new home search.

Build on Your Lot

Another popular route to a new home is to buy the land first, then build a home on it at a time of your choosing. This method, known as Build on Your Lot, allows you to find the homesite that works best for you, whether it’s in an established community or a little off the beaten path.

The homesite is not included in the price of building the home in this situation, as you have already purchased the homesite. Still, there are lot-related elements that can impact how much it will cost to build your home. These include:

• Homesite clearing
• Foundation and utilities
• Topography and drainage
• Local requirements

Remember, every homebuying experience is unique. Do your research, ask questions and always work with trusted professionals to make sure you are fully informed before making this big decision.

To learn more about new homes and available homesites in a community near you, fill out our Contact Us form and our friendly Internet Advisor will be able to answer your questions promptly.