Feasibility Study for a Custom home

A feasibility study is for clients interested in purchasing property to build a custom home but want assurance that they will be able to build what they intend to prior to closing the land deal. A 90-day feasibility contingency period in the purchase agreement allows us time to complete a feasibility study, and you’ll close the deal with the answers to these questions.

  • Will the property accommodate the custom home you would like to build?

  • Are there easements or restrictions in place that might limit development?

  • Identify major cost drivers such as easements, covenants, development restrictions, steep slopes or utility fees?

What’s included in a Feasibility Study?

There are two sections to a feasibility study. In the first section we research local zoning and building codes and talk with local building officials to get information about the property including:

  • zoning district

  • lot area + dimensions

  • allowable building area + allowable total lot coverage

  • maximum building height

  • required setbacks

  • open space requirements

  • other requirements that may apply 

This list may vary with different sites if they are more or less complex, but it’s a good start for most custom home feasibility studies.

This is an example of a Feasibility Study we completed. The owner wanted to purchase the property but wanted confirmation that they would be able to build a new home. This site is in Bellingham, WA but the process is the same in other jurisdictions.

An area plan locates the property, identifies streets, waterways and establishes neighborhood density

Zoning and Building Code Summary

Development Summary

The property’s rear yard setback is ~117’ per the Auditor’s File.  Additionally, if the proposed project is in the ECA (environmental critical area, any slope that has more than a 30% grade)  it’s required to apply for a Critical Area Review and a soils report from a Geotechnical engineer.  Anticipated cost is ~$4,000-$6000 for a Geotechnical engineer and an additional ~$2000 for permit review as well as a longer review time. To avoid this, the home must stay 50’ away from the sloping area.

The second part of the study includes drawing a site plan that illustrates all the information that we’ve uncovered about the site.  The example site plan illustrates a few complexities of this particular site including setbacks, deed restrictions, ECA boundaries and a potential location for a House and Garage.

feasibility study site plan

feasibility study site plan

The seller of this land lives on the adjacent parcel and does not want a new home impacting their view of Bellingham Bay.  To preserve it, they are selling the land with a deed restriction that requires a setback to prevent any new house from being closer to the view than their own home (see Prohibited Building Area per Auditors file on the site plan).  Further limiting our client from obtaining the maximum view, building near a steep slope requires Critical Area Design Review, a lengthier and more expensive building permitting process than the standard permit review. When land slopes down quickly (greater than 30%), as it does on the southern end of this site, the area is classified as an Environmentally Critical Area (ECA). If the project proposal is to build within 50 feet of the beginning of an ECA slope in this jurisdiction, it’s required to hire a Geotechnical Engineer to test the soils as well as go through Critical Design Review during the building permitting process.

Are Utilities at the Site?

Since this site did not have a house on it there were no utilities or services currently in place. Rather than simply connecting to existing sewer, storm and water lines from a previous house or development, our client will need to plan for the cost of making new utility connections as part of their construction budget.  These costs can add up, so our feasibility study included a summary of the costs:

Sanitary Sewer
There is no existing sewer to the property.  The city sewer main runs on the south side of Eldridge Avenue.  A certified and bonded right-of-way contractor is required to do the work (cost TBD). The permit cost is $7637.

Note: the sewer line of the neighbor crosses the subject property on the NW corner. 

Traffic Impact Fee
New development charge for Bellingham traffic improvements is $1907.

Water connection
There is a ¾” water stub to the property. The city water main runs on the north side of Eldridge Avenue.Service development charge for water is $3956. A 5/8” water meter is $255

Storm water
There is no storm drainage on the property.  The storm main runs on the north side of Eldridge Avenue.  The storm drain will need to tapped and brought across Eldridge Avenue by a certified and bonded right-of-way contractor (cost TBD). Storm water fee is $678 and a Level 2 storm water permit is $316.  To avoid bringing storm water to the property, onsite treatment and infiltration will be required with an infiltration trench or planter. 

The view to downtown from the site above the  Mill,  a plywood manufacturing facility

The view to downtown from the site above the Mill, a plywood manufacturing facility

Once all the research was complete, the final step is preparing a summary and sharing our findings with our client to further explain any nuances of the site.

Why prepare a Feasibility Study?

  • Ensure that you can develop the land

  • Understand how easements or local zoning regulations may affect the project size, height or location on the site

  • Know the limitations of the property before finalizing the purchase

  • Save money and time if the concept is not viable

  • A positive feasibility study will give confidence when raising capital for the project

A feasibility study for your custom home is the first step to a successful project.  While you are contemplating making a significant investment, having the information in hand gives the buyer the confidence to purchase a property knowing that their project is feasible.

John Wolters