Land Assembly: No Big Deal by Geraldine Santiago
When selling a single detached home for sale, Realtors® look at active, expired, cancelled and sold listings for price guidance. In a land assembly, your Realtor® should also provide you with current information on the cost to build per square foot. This will give you a more reasonable price on what builders are willing to pay based on a pro forma that clearly outlines and provides detailed costs the developer will incur for the entire scope of the project.
Without a pro forma, it is likely that the values are not in line with the developer’s pricing, and home owners expectations will fall short and not sell.
Many people think that selling to a developer is a windfall, like winning the lottery-- when it is not. Developers will look at the present real estate market but will also look at future costs and calculate anticipation of future benefits. Remember, from the time it takes to acquire land, to completion will take years. It is imperative to look at the current market, Covid-19, borrowing risks, etc. to fully determine whether your land assembly is a go or no go from a developer's perspective.
Realistic pricing from the beginning is always important, whether you are selling your home in a land assembly or individually as a single home sale. Not all Realtors® have access to detailed information as to what price per square foot developers purchased, and when. Make sure your commercial Realtor® has this information to give you. If not, give me a call today at 60-764-6873.
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