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finding your land or your builder. what first?
good morning 
a little background. DH has his realtors license, but doesn't practicie it professionally (he usually buys 1 or 2 'flips' a year with a friend). but having his license and access to MLS really helps us with our searches.
we want to move to a more rural part of our metro area. DH wants a minimum of 5 acres. and i have my criteria for location as well. we've been looking at land on MLS and other websites. and we also drive around areas that we like looking for empty lot for sale signs. we're leaning towards building now.
for others who are in this same process, i'm just curious ... did you already have an idea of the homeplan (estimated cost) that you wanted while you were looking at land? i feel like that would help us get an idea of what our land budget would be. because if we shop land that is more $$$ than that money has to come out of the house budget somewhere (less sq feet, etc..).
i'm just confused on where its best to start. we haven't talked to a builder. we have an overall budget but it's hard not knowing house cost AND land cost.... the way it will all pan out in the end.
Re: finding your land or your builder. what first?
In the inquiry phase, we did both land & builder at roughly the same time.
There weren't that many lots that met our criteria, and I can't imagine that there are that many lots that meet yours. The local MLS only had maybe a dozen listings in our price range (our gut feeling of what was reasonable for +/- an acre plus sold comps). We narrowed it down to 3 or so lots that met our criteria and they had about a $20k price variance, so we had a land ballpark price in mind. (I mean, the land research was minimal - only a few eligible choices and they all were about $XX, so ok, that's our planning number.)
Our realtor shopped our plan to the builders and they all came in $150k higher than comparable existing homes, so it didn't matter. (Yep, you read that right. This was in 2009 and I often wonder what tune they're singing now.) It stunned us and shocked our realtor; the prices were nowhere near what either of us considered reasonable or realistic. (Luxury homes in this area go for $100/sq ft, but their quotes for our average, non-luxury house were $152/sq ft.) But all the builders gave similar quotes, so we just went existing.
I wouldn't rule out an existing home yet if I were you. Don't get married to the idea of building until you've shopped your plan around and heard real quotes.
Here's one thing you need to know about building: it costs SO much that having an extra $10k or $20k from a cheaper piece of land really won't make a difference. When we were trying to make it work, we were like, "Ok, if we go with this land that's $15k cheaper and we don't finish the bonus room that's $7k and if we downgrade our finishes..." and then we wouldn't have gotten the house we wanted.
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Thinking of doing cosmetic updates to a dated home? These were our costs.
We did focus on location/neighborhood. We had a budget in mind, but due to the location and type of house we want, our estimated total cost now is about 62% more than our original budget.
We did contact a few builders while checking out lots. I gave the builders a basic house plan to get an idea on cost. I wanted to make sure we were being realistic with our budget.
I agree with PP, the difference in lot cost is probably not going to have a huge impact on the overall cost.
It's unlikely you will find a builder that owns 5 acres + of land. If you were searching for an acre or under it would be more likely that a builder would have such a lot on his inventory list.
So in YOUR case ... I think this is a side by side search. I wouldn't make a move until they both come together though (ie: start looking at 5+ acre land sales ... and start interviewing builders in the area).
I personally think one of the best ways to see a builder's work is without the builder. Our area has a large inventory of new homes on the market and because of the saturated market REA 95% of the time are ONLY having open houses for NEW construction. So we just went to a ton of open houses looking at varies builders style. I think after awhile you begin to get a feel for the individual builder's style and quality (ie: if the builder's general style is traditional but you want a more modern design ... you probably shouldn't select the builder that seems to specialize in traditional .... or, if the home looks like there were lots of short cuts and cheaped out items - that probably tells you a bit about the builder's quality of home and his professional standards).
If your area isn't higher in new construction - you could interview builders and request to see homes that he has built that would be equal in price point as you would want to buy.
You won't get a deal on custom construction like you would a 'cookie cutter' new construction or existing home. Custom construction costs what it costs. New custom construction appraisals are really soft right now because the cost of materials and labor have not decreased as much as home values have in general. So it is important to communicate with custom construction builders about how to make sure your home comes in properly in the appraisal.
This also applies to where you buy your land. The bank will appraise your home based on the area ... so that might help lean you towards land purchase over another to help your home appraise. Rural is really hard.
Don't drive yourself crazy right now with trying to estimate the cost of the build because it isn't easy to estimate until you talk with a specific builder ... as I said, custom construction is different pricing than 'cookie cutter' new construction (meaning where you get in with a builder who has homes going into a development and you select from one of a few floor plans) or existing homes (even new existing homes).
I would not purchase the land until you decide on a builder. While they will probably be two separate transactions - I found it to be very helpful to have the builder give us his opinions on the land and location (they often have a good working knowledge about what other builders are planning and where developments might be going in as well as getting utilities in for various locations of land). There are lots of added costs when you buy a large piece of land that may or may not be close to other properties and therefore the utilities and the such might be added labor.
1. interview builders, directly or indirectly
2. start looking at lots but don't make a purchase yet
3. once you have narrowed down the builder you want - start talking with them about the land you are thinking of buying.
We had one piece of land picked out and after the builder looked at it and we had the soil tested it was discovered that there was a lot of 'expansive' soil which would have added to the cost of building the home. Good thing we had our builder involved in the land purchase!
Jacks brought up some great points about purchasing land. I would also suggest when you are looking for a lot to check with the city/county about the history of the land in the area, get some kind of geological information on the land you are looking at for purchase.
Also check into water/sewage/electricity to the land - are there power lines nearby or will a brand new one need to be run to your property? Would you have to dig a well and install your own sewage? How much per foot would it cost for a well and how deep should you dig?
All these things need to be factored in when purchasing land to build on and will cost above and beyond the cost of the structure itself.
As well, make sure if you are going build in a rural area, check into the fire districts. If you fall "in-between" two districts, you may run into an issue if you have a house fire. When I lived in Idaho, our realtors told us about a house they had owned burned to the ground because they lived just outside of the fire district boundaries. The firefighters did show up, but stopped just before their property line - to make sure their neighbor's house did not burn, which was in the district.
DH and I are planning to move back to WA state within a year - one of our ongoing discussions lately is "do we build or do we buy exsisting?" Lots to think about.
Good Luck!