Buying Adjacent Lot—Buildable?

[street]

I would buy it for the simple reason know one else can do something there. It also would be a plus to have the acreage to increase your value of your place.

 

[ExFlyBoy5]

I was told that splitting two parcels, that were once separate, is just as easy as combining. They just bring back the old 'specs' and un-do the combining. Just un-check a few boxes.

Splitting something that was never split before is an entirely different process than combining or un-combining two lots in an already surveyed sub-division. That indeed takes a survey, etc.

Again, this is highly dependent on the location. Property laws vary wildly and YMMV depending on *where* and *what* someone is trying to do. When the government is involved, "unchecking a few boxes" can be quite complicated and if the land has been replatted, very often...the government will require new surveys...even if the end result is the same as what was originally done.

I would buy it for the simple reason know one else can do something there. It also would be a plus to have the acreage to increase your value of your place.

This was our reasoning. The way the lots were arranged, the odds of someone building directly behind us was pretty slim. BUT...that isn't to say that they wouldn't cut down the trees, ride 4 wheelers, or start farming hogs. The cost wasn't anywhere near $150K and if we decide that we want to sell it, we can put a deed restriction on the portion that abuts our property and be done with it.

 

[Gumby]

If I were in the area, I would be sorely tempted to buy that lot, get it approved for a half-way house or methadone clinic and then see how much Al was willing to pay to take it off my hands.

 

[TromboneAl]

And the only way not to sound desperate is to be willing to walk away.

But I am absolutely not willing to walk away.

Note that this lot is a few hundred feet from the Pacific ocean. No view, but close to the beach.

I'm wondering whether a savvy real estate agent would be able to help me get a lower price. If it's $100,000, it would cost me $3K, right? Maybe an agent would be able to negotiate $3K off the price.

 

[ExFlyBoy5]

If I were in the area, I would be sorely tempted to buy that lot, get it approved for a half-way house or methadone clinic and then see how much Al was willing to pay to take it off my hands.

The property I mentioned that we recently purchased also abuts two of our neighbors. The closest neighbor originally wanted to "go in halves" but I wasn't a big fan of that idea. Anyway, not too long after we were under contract he flagged me down and mentioned that he had heard that I bought it alone. I told him that indeed I had as I wanted to get into farming and that a buddy was going to sell me a bunch of hogs for cheap and I had to jump on that deal. The look on his face was FANTASTIC!

But I am absolutely not willing to walk away.

Note that this lot is a few hundred feet from the Pacific ocean. No view, but close to the beach.

I'm wondering whether a savvy real estate agent would be able to help me get a lower price. If it's $100,000, it would cost me $3K, right? Maybe an agent would be able to negotiate $3K off the price.

Well, that is the ASKING price, so it's not unreasonable at all that you offer something less (if the recent sales allow for that). But, if you REALLY want it... and I mean REALLY want it then I (personally!) would offer full price. Of course, only if your finances will allow for that type of discretionary spending.

 

[The Cosmic Avenger]

But I am absolutely not willing to walk away.

Don't let them know that! If that's true, then there's no negotiating, you'll pay whatever they ask. If they asked for a million dollars, you'd walk away, right? So my first step in bargaining is determining the most I'd possibly pay. If I don't determine that objectively in my own time, I'm likely to either drop out too low for fear of being gouged, and they will sell to someone else, or pay too much and torture myself over it endlessly.

This is why I was emphasizing the bargaining strategy of researching the market value and the hidden costs to develop the property. Find a reasonable price and support your reasoning, and you may talk them into a lower price than $150K. But you'll also know if others might be willing to pay $150K or more, which would mean you need to act fast and offer $150K, or close to it, and use the research to convince the seller that the market won't support $150K, even if it will. And you can never account for people with more money than sense; there might be people who would buy the land, then be shocked what they have to pay to develop it before they build on it!

 

[NW-Bound]

.. others might be willing to pay $150K or more, which would mean you need to act fast and offer $150K, or close to it, and use the research to convince the seller that the market won't support $150K, even if it will. And you can never account for people with more money than sense; there might be people who would buy the land, then be shocked what they have to pay to develop it before they build on it!

That's how dot-com stocks got bid up sky high.

People think "just because the price is crazy doesn't mean that I cannot sell even higher". And they are often able to sell higher, so there's that.

 

[TromboneAl]

This came in from the real estate agent a few minutes ago:

Hello Al,
I just wanted to let you know that the owner (Sheila) has signed a listing agreement for $200,000..
In the next day or so, I will put the listing on MLS.
I did not get an affirmative response from county planning as to weather the lot is buildable or not. The planner said a person would need to apply for a permit to actually determine, the size of the house and location of the septic on the lot.
I more or less thought this was the situation. I know Shelia really wants to sell the lot. Please let me know if you have any questions.
Karen​

My reply:

Thanks, Karen,

We're going to the planning department tomorrow. I might put in a lower offer in a day or so. It could save you and Sheila a lot of hassle and money, and I could pay cash.

Al​

 

[The Cosmic Avenger]

...the owner (Sheila) has signed a listing agreement for $200,000..​

Ouch! This is what I was worried about -- if the true market value turns out to be $100K, your best bet would be to wait for them to drop the price...but then, someone could swoop in and buy it, market price be damned! Ugh.

Good luck talking them down!

 

[CardsFan]

Al,

This is sounding eerily similar to the property we sold on Cape Cod. We did get one offer close to the original asking price, contingent on the seller (us) obtaining building permits (or maybe it was just a general finding, it has been a while). After spending a few thousand (on a septic evaluation and a botanist to evaluate the wetlands), it was clear the local environmental regulations would make it almost impossible to build, so we could not comply with the contingency.

But that is not to say someone with local clout couldn't pull some strings and get a permit.

FWIW, I think they are already on to the fact that you are their best prospect to get near the asking price, without proving the property is build-able. They know you have no desire to have ANYONE build on it.

 

[ExFlyBoy5]

The planner said a person would need to apply for a permit to actually determine, the size of the house and location of the septic on the lot.

That could be to your benefit. Most buyers would want to know if they could build on it *before* spending the cash on said permit...especially if the permit process is arduous.

Can you determine how long "Shelia" has owned the property or if there is a mortgage on it? This could help in negotiations. I would also consider talking to a RE agent who could try and do a market analysis on it.

 

[dirtbiker]

This came in from the real estate agent a few minutes ago:

Hello Al,
I just wanted to let you know that the owner (Sheila) has signed a listing agreement for $200,000..
In the next day or so, I will put the listing on MLS.
I did not get an affirmative response from county planning as to weather the lot is buildable or not. The planner said a person would need to apply for a permit to actually determine, the size of the house and location of the septic on the lot.
I more or less thought this was the situation. I know Shelia really wants to sell the lot. Please let me know if you have any questions.
Karen​

My reply:

Thanks, Karen,

We're going to the planning department tomorrow. I might put in a lower offer in a day or so. It could save you and Sheila a lot of hassle and money, and I could pay cash.

Al​

Make sure to talk to your other neighbor whose property borders the lot soon to be for sale. Make sure you and your neighbor aren't bidding each other for the same property for the same purpose.

 

[pb4uski]

If you are dead set on buyng it for other reasons, it may be worth spending some money with a local architect or civil engineer to determine whether the owner could get a septic permit and a permit for a well (unless it has access to county water) and how buildable it is. If it isn't buildable, then the value is a lot less.... perhaps a lot less than the $150k that you might offer. But at least you'll know.

If it isn't buildable, there will likely be much lower demand other than adjacent landowners.

 

[bigcmagor]

Maintaining quality of life makes some of these types of purchases worthwhile. Similarly, although at a considerably lower price point, I am buying the boat slip next to me to ensure the current renter does not return next year.

 

[Another Reader]

Is the property subject to the Coastal Commission jurisdiction? Development of the property would be an interesting discussion with them. If it's under local control, likely a lot easier.

I would start with the local city/county planning department, if you haven't already. Take the various parcel maps and some pictures and talk to someone fairly senior about what can be done with the property. Make friends with those folks so if someone comes in with a development proposal, you can find out about it somehow.

If it's not buildable you can get out the popcorn and watch the show. After a year or two, the seller will give up and you can make an offer then. If it is buildable, the finished house should sell for around $800k to make $200k for the raw lot a reasonable price to pay. Maybe more if the land development costs are very high.

 

[TromboneAl]

If it's not buildable you can get out the popcorn and watch the show. After a year or two, the seller will give up and you can make an offer then. If it is buildable, the finished house should sell for around $800k to make $200k for the raw lot a reasonable price to pay. Maybe more if the land development costs are very high.

That's encouraging.

I do think they're trying to take advantage of our desire to not have a house built there. The lot has no view of the ocean and is far from town. I don't see it as very desirable—not good enough for an $800K house.

Current thinking: Make a very lowball offer. If it's refused, and someone else buys it, and a house goes up, we move. Our house is too big anyway.

 

[dirtbiker]

That's encouraging.

I do think they're trying to take advantage of our desire to not have a house built there. The lot has no view of the ocean and is far from town. I don't see it as very desirable—not good enough for an $800K house.

Current thinking: Make a very lowball offer. If it's refused, and someone else buys it, and a house goes up, we move. Our house is too big anyway.

If push comes to shove, what's the maximum you'd pay for the lot?

 

[TromboneAl]

That could be to your benefit. Most buyers would want to know if they could build on it *before* spending the cash on said permit...especially if the permit process is arduous.

Can you determine how long "Shelia" has owned the property or if there is a mortgage on it? This could help in negotiations. I would also consider talking to a RE agent who could try and do a market analysis on it.

I think she's had it for over thirty years. No mortgage. People say her husband bought much of the land here years ago.

Zillow estimates it's worth $13K (not reliable).

I think I need an expert to eyeball it and say something like, "Definitely not buildable" or "Maybe, but it would be difficult" or "Probably buildable."

 

[karen1972]

Hopefully you can figure out if it is build able and a fair price, out where my mom lives, they require 1 acre to put septic in.

Neighbor got approval to build, had the entire house built and some other agency came along and said his house was too close to a navigatable stream and he couldn't put any lawn in.

ie zoning sucks...and even when you think you have the answer, you still don't.

I'm terrible at land values, we own a swamp (beavers dammed it up in the 80s and we weren't allowed to do a darn thing about it).. they now claim its worth $3k/acre so $120k for a 40 acre swamp with cattails every inch of it. It makes good hunting land when it freezes but thats about it.

 

[TromboneAl]

If push comes to shove, what's the maximum you'd pay for the lot?

Hard to say. If $200K was a fair price, and I was very likely to be able to sell it for that much or more in the future, I'd pay that. It would be an investment.

 

[Another Reader]

That's encouraging.

I do think they're trying to take advantage of our desire to not have a house built there. The lot has no view of the ocean and is far from town. I don't see it as very desirable—not good enough for an $800K house.

Current thinking: Make a very lowball offer. If it's refused, and someone else buys it, and a house goes up, we move. Our house is too big anyway.

I can't remember what city/county you are in up north, but you should search your MLS for other lots for sale. Realtor.com and Zillow for starters, if Zillow has any information in your area. You can also search sold properties on both sites. Any further conversation with the neighbor's agent should include the question, what comparable sales and listings did you consider when you set the list price? When you visit with the planning people, ask them if there are any other new houses approved or under construction in the area. You can then research the land sales that preceded the construction.

My guess is the lister is trying the "throw it against the wall and see if it sticks" approach to pricing. If you corner her on the basis for the list price and no information is forthcoming, that supports my guess. Be sure to ask her how many other lots she has sold in the last couple of years and where they were. Save that question for last, because if she hasn't sold vacant lots before, she won't like being challenged.

If you come up with comparable sales that support a nice, low number, you can send them to her, noting the differences between the sold properties and her listing. As the listing nears expiration, she may try to talk the seller into being more realistic to get the commission. Meanwhile, lay in a supply of popcorn...

 

[CardsFan]

I think she's had it for over thirty years. No mortgage. People say her husband bought much of the land here years ago.

Zillow estimates it's worth $13K (not reliable).

I think I need an expert to eyeball it and say something like, "Definitely not buildable" or "Maybe, but it would be difficult" or "Probably buildable."

Bingo. If you are serious, it might cost you a few grand to get a preliminary determination, BUT, you need access to the land to get a really dependable determination. You can put it on the owner. Make an offer with a contingency to provide the proper permits.

Or, make an offer contingent on you having access to determine build-ability. You can then spend several thousand on perk tests, environmental issues, etc., which could be money well spent. But, if they know it is really not build-able, they will turn you down. If you determine it can't be built on, and show them the data, then they need to disclose that to any future buyers (at least in MO, could vary)

 

[TromboneAl]

I spoke with a contact (who mentored DD) at a high-quality engineering/geology firm nearby. He's going to have an engineer take a look at the lot and give us a verbal opinion for about $500.

 

[pb4uski]

^^^^ Good idea.... wise investment.

 

[aja8888]

If your current house is too big (like you stated earlier), why not just use your time and money to find a new place rather than dealing with this overgrown, cliffed, and possibly unbuildable, high-priced lot?