Lot Changed?! Are They Just Fishing?
I searched listings for land in my area and found "5 recorded buildable lots" at edge of the nicest neighborhood around (area is lower socioeconomic status).
The asking price was $415,000.
So I called. Turns out that the listing is not current, they changed their minds to only letting 3 homes, and then now 2 homes for the 5 lots (about .4 and .25 acres). The owner claims to be putting a "covenant on the deed" with her attorney. I used as much knowledge as I could (I ran 1 year comps, drove the whole neighborhood twice, discussed home types with builder). So I offered low 300k's for the lot (about 600k per home when sold).
I spoke with the agent Thurday and he said "just put something in writing, I will be back in the office Saturday morning." So Friday I faxed my offer (letter of intent, I guess.)
When this guy doesn't call me, what should I do? I think they are VERY ignorant about what it takes to put 3500-4500 sf homes to sell for around maybe $650,000 each.
BTW, Nancy's book has been great!
The agent did say that while they were changing their minds on #homes another person was submitting revised offers, then that buyer recently lowered his price... and this may explain the seller's "attitude".
Are they fishing?
Is this agent behavior common? (*see my other post about agents)
How can I convince them that it is complicated and risky to develop especially when the new home market is potentially cooling off for 2005 and 2006?
[ Edited by Cliffrock on Date 03/28/2004 ]
Cliffrock,
Thank you for your kind words.
Land brokerage is a specialty. Unfortunately, it has been my experience that the overwhelming majority of agents who list and sell houses do not understand land brokerage in large part because there are virtually no courses or books on the subject. I don't know if the seller is "fishing" so much as groping blindly. Consumers and agents who are not land educated do not think in terms of X$ per building lot, but rather X$ per acre or per parcel. One key is to try to get across the fact that value is relative to use. If the parcel is restricted to permit only 2 lots (2 houses) instead of 5, then the land value is not $415K.
However, if the value of the end product (house on lot) would sell for $600K, then depending on lot improvement costs, $83K/lot ($415 for 5 lots) sounds to me like a great deal so long as the seller won't deed restrict the other 3 lots.
By the way, see my post on your other topic.
Nancy
Nancy, its so wierd. "They" are so happy that they have lots "worth" so much. They get big visions of dollar signs dancing in their heads. BUT, they want to restict the very thing that makes it valuable - development.
If they do not accept my offer, I am tempted to ask them what the heck they think I can do with an 11kSF lot and an 18kSF lot as far as final sales on 2 homes. Then I will show them all the entries in my Excel spreadsheet, including paying someone to write a soil/erosion/tree report!
I should get the lots because I know I am willing to do this less so for money and more so for a real education. NOw that I think about. I want to make contacts and establish relationships NOW so I can do this over and over again... not just to make 50k per home (if that).
"Blindly groping"... that seems to fit
:-D
Thanks
Cliffrock,
Oh, the stories I could tell you about landowners' $$ fantasies --they'd curl your hair!
Why not submit an offer on per-lot basis? Make it full price but on a per-lot basis: $83K/lot for 5 lots = $415K. What the heck? Perhaps if the seller get a full price offer in their hot little hands, the seller will cave in on deed restricting to 2 lots.
Nancy, funny you should mention that. My last conversation with the seller included..."NOw are you absolutely certain she'll restrict the deed?"
-"Oh yes, absolutely, she has her mind made up."
I will act upon it when I see it recorded with the deed.
They're likely waiting to make me build only two, to save them the hassle of making it an official covenant on the deed. ONce they see me trying to build only 2... what's the point of them going through the hassle.
Again, thanks! :-D