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Feb 5, 2018
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I've got a realtor quite interested in purchasing my 35' lot in the inner city, along with 3 adjacent lots to build a 3 or 4 story residential building. Any guesses on how much (if any) extra I can ask for it, considering the assembly opportunity and the increased FAR?
Good question. are you at the end of the group of lots? The reason I ask is my aunt lived up near Rotary park years ago and was offered this type of deal. She held out for more money, but was on the end of the group, and the developer went ahead and built with the other lots. She ended up squeezed between two apartment buildings.
I asked my brother in law, who used to be a realtor and he said take the appraised price of the home and tack on 10-20% is a good rule of thumb.
You should also look at the heads of compensation model used for expropriation, as that accounts for the difficulty of finding a similar residence, cost of moving, etc.
Thanks for your replies so far. I have the lot in the middle of the assembly, and the two on the ends are rental properties, so those owners will be a little more willing to sell. I'll check out the expropriation compensation model, if I can find it. :)
If I were you, I would pull a bunch of nearby comparables and then look at a 10-15% mark up. There is a good point made above related to holding out for too much and having the realtor walking. Part of my job is assembling sites like this and there have been a number of times where I have walked from a potential sale where the owner had unrealistic price expectations (and then just built a project beside them!). The future development still has to have a positive return so a smart developer will know where the threshold is for their land acquisition cost.
I think the 10-15% markup makes sense, it's fair, and a win-win for both parties. Definitely don't want to push it much higher. People do funny things, I was talking to a friend about this after reading the post and told me a story about a guy who asked for an exorbitant amount for his house and ended up pissing off the developer. The developer eventually bought and developed on both sides leaving him the lone house in the middle, to make matters worse he painted the side walls facing the house a bright purple.
On the agreement side, it's good to get a premium up front (non-refundable) from the developer. The developer pays you an option amount and then if they are able to get rezoning (may be other conditions) they will buy out your lot. The middle lot(s) are valuable because the consolidation often won't work without them.
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Selling the right of first refusal is a fun one. Then you can still sell if you need to move in the mean time.