In my experience you put down the lot where you can, on uneven ground. Place a house that fits a smaller lot on it, THEN use the terrain tools to level and smooth. If you level and smooth before hand, you cannot place an existing house on that lot without the land distorting and swallowing the house. However, you can smooth the lot and then build from scratch on it. What will happen is your foundation will be taller and shorter where it's needed and the land will be fine. Did I make any sense?