What is the Difference Between Raw Land and Unimproved Land?

Is there any difference between raw and unimproved land? They sound like the same thing. Some people use these terms interchangeably. But yes, there are differences. Land types can be broken into several categories. Land lenders mostly use those categories. 

Different Types of Land

Land can be divided into three main categories — raw, unimproved, and improved.

Raw land is completely undeveloped. It has no access to utilities such as electricity, water, or the internet, and there may not even be a way to drive to it. For the most part, this is land that remains untouched by humans.

Raw land has a few benefits — it is cheaper than comparable unimproved and improved land. Taxes are also generally lower on raw land.

Of course, the major drawback is that it will be expensive to develop the land for building a house. How much depends on how difficult it is to access utilities. If the land is close to all utilities (maybe just at the road), then the owner is in luck. Dirt work may also be required to level the land.

This land might need to be zoned. The owner will need to work with local land authorities to determine how the land should be zoned. It’s also important to know if there are any property easements. But this applies to all properties.

Some raw land may not have any access to utilities or a road. In this case, the land owner may have to pay for utility poles, wiring, piping for water (or dig a well), and build a road to the property. This can get extremely expensive.

On the other end of the spectrum from raw land is improved land. This is land ready for a home to be built on it. It has access to utilities, internet, a road to the property, the soil tested, and pretty much everything needed to build a home on the land.

Improved land is the most expensive land type. It is more expensive to purchase, and taxes are higher. Additionally, the land might sit inside an HOA (homeowners association). While there isn’t a home on the property, the HOA can still charge its fee.

In the middle of raw and improved land sits unimproved land. This land has more amenities than raw land but less than improved land. In other words, someone did some work to improve the property but didn’t go all the way, and it isn’t yet ready for a home to be built. 

Difference Between Raw Land and Unimproved Land

From the previous section, we can see that raw land hasn’t had any development. This is usually the cheapest type of land and can have the lowest taxes. 

Unimproved land will have some improvements over raw land. It might be closer to a road; utilities might go up to the property and be readily available for connecting. But it isn’t home-ready yet. The owner still has some work to do before building a home.