Recently I had a conversation with a young man that was trying to find information for his grandfather that owns a good sized piece of land with his primary home on it. He has lived in the area for over 50 years and many of his neighbors have sold their homes only to have a developer subdivide the property and build additional homes on it. It seems that the older gentleman that owns the property does not want a lot of lookyloos coming to the home just to see whats inside it so he is trying to look for a solution where he can sell directly to one of these developers who won’t care about the home but will give him more for his property which will become a development.
This can be a tricky situation because each property is going to be valued differently based on the future expectation of subdividing it. However there are a number of things that the owner can do to reduce the foot traffic and also get as much as he can for the property.
The first thing that the owner should do is consult a realtor that works with developers. Many do not because they don’t always get good payback when selling a home from a development. Home developers have a lot of restrictions on how they can sell homes and property. The first being that there is no negotiation in the price. So not all realtors have good relationships with developers. The best thing is to just go in for an interview and don’t sign anything or agree to anything just ask them how they can help you.
The seller also has the option of subdividing the property and then selling it but this can be complex because normally engineers are required to provide plans for any streets, rain runoff, sewers and utilities and that can be very expensive.
One thing you have to remember is when the property is subdivided the neighbors might want to fight the subdivision. If the owner has a problem with the building official then the land might end up restricted. In this case it is probably best to just sell and let the developer handle all the work but I have known people that did turn a higher profit by subdividing land and a home with a parcel and selling them independently.
Setting Your Sales Price For Your Property
Probably the best suggestion that I can give the seller is that they should just set a price that they want for the property with all the considerations they might have about its value after it is subdivided and then set a price accordingly.
Even if their next door neighbor sold to a developer and the resulting homes brought 10 times more than their neighbor got you have to understand that property has value based on its location, improvements and the need of the buyer to pay that price. A developer has a lot of overhead when they are building homes in a development and they just can not afford to pay you final sale value that they will receive.
But what this property owner can do is set their asking price higher to avoid the casual lookyloos and this will result in a different type of buyer.
Again though bare land has a much lower value than developed land so the per acre asking price should be within the market range or he won’t attract anyone.
Final Note
Many sellers believe that they should receive more for their home and property than it is worth. Other sellers who have lived in homes might have the opposite feeling and not price their property high enough because they are considering the price they paid vs today.
The best thing to do is find comparable properties in your area and then price your property accordingly. If your property is a small home on 10 acres and there are 5 other properties like yours that have sold in the past year with a small home on 10 or so acres then those are the prices you want to first consider and then secondly any property that is currently listed that is similar to yours.
And you have to be fair when you are comparing property. If you have two properties with 10 acres and one of the properties has a steep cliff or hill that makes 50% of it unbuildable then you can’t say they are the same.
So, do your research, price your property fairly but at a price you want to be paid and then consult with a few realtors but don’t sign contracts or agree to have them represent you until you have talked to a number of them and had them prove their results.