As a rule of thumb, home builders often use the “20-30% rule” when determining how much to pay for land to build a house that they intend to sell. This means that the cost of the land should typically be between 20-30% of the total project cost, which includes the cost of construction, financing, and marketing. This is a general guideline, and the exact percentage can vary depending on factors like location, local market conditions, and the type of home being built.

It’s important to note that this rule of thumb is not set in stone, and factors like land scarcity or desirable locations can sometimes drive up the price of land significantly. Home builders should conduct thorough research and analysis of the local real estate market, factoring in their specific target market, construction costs, and other expenses to determine the appropriate price for the land.