Presenting a land development deal to a cash buyer

6 Replies

This is not a wholesale. It is off market. I am not getting a fee from buyer or seller. All i am trying to do is find a cash buyer for a 5 year land development deal. I would require exclusive listing rights to all new homes produced from the site. The deal would produce 10 + new single family homes. I am wondering if i should create some sort of prospectus to show potential buyers. how are multi million dollar deals like this solicited. I already have many possible buyers to contact but i want to give them something that goes over all the details, risks, and rewards. I could probably come up with something from scratch but i wanted to see what the pros put together for their buyers to review. 

I already have a third party appraisal done and the title work. The seller has agreed to a price close to the appraisal amount. No engineering, surveys or environmental studies have been done.

Jay Hinrichs podcast #222 is a good primer on building and land development, particularly raw land. It doesn't specifically address what goes into a prospectus but it does touch on what to do in the beginning.

This is a discussion on creating a subdivision, and the information is also relevant to your question on what might go into a prospectus.

https://www.biggerpockets.com/forums/48/topics/722891-how-do-you-start-a-subdivision

There are so many variables to take land from raw to PINs, but I would begin with a trip to your planning and sewer departments to verify what's possible (zoning, # homesites, locations utilities, sewer/septic, water, etc). Then visit a civil engineer to get an idea of what's required to get your development approved. The raw land value for residential development will be greatly influenced by two factors: the total cost to turn it into homesites and the price of the final product. It can be a moving target over time. The closer you get to estimating that number the better idea you'll have about what the land is actually worth to a developer.

"Buyer to verify".... is a ton of work, so any and all legwork one can do for a prospectus will be valuable.

you should check with your broker but in many states you cant enter into right to sell in the future like this.

list backs for bringing dirt deals is a hand shake thing.. not a contractual one..  do some checking on that.

@Jay Hinrichs thanks for bringing this to my attention. I am the principal broker so there is no one else to turn to except an attorney which I can do. So you are saying there is no way to secure a listing agreement with the buyer to prior to closing on the land that would ensure I get a commission for any sales on the parcels? I would only be able to get a hand shake?

Originally posted by @Rich Hupper :

@Jay Hinrichs thanks for bringing this to my attention. I am the principal broker so there is no one else to turn to except an attorney which I can do. So you are saying there is no way to secure a listing agreement with the buyer to prior to closing on the land that would ensure I get a commission for any sales on the parcels? I would only be able to get a hand shake?

in Oregon and west coast states.. yes that's correct you have nothing to list the parcels are not yet created.. you can list the entire property.. as a builder developer we deal with this on every property.. its an unwritten rule that broker that brings us the deal gets the list backs.. but no way can they force us or have us sign a listing before the parcels are created.. talk to your MLS system or board of realtors for clarification.. or your state department of real estate or whatever the state agency is called.. in our states we have a free hot line to an attorney for these questions ..