I ran into an amazing opportunity, and I don't know how to handle negotiations. Hopefully BP can help!
To make a long story kind of short, a developer bought roughly 40 acres in the year 2005ish, paid an engineer to create the subdivision layouts (and whatever else), and he also had all the excavation done for plumbing/sewer, etc, BUT then the market crashed a few years later and the developer gave the land back to the banks. The developer bought the land from two different banks. One part with about 3-4 acres from bank A, and one with about 36-37 acres from Bank B. The one with 3-4 Acres, owned by Bank A, had a house on it still that hadn't been torn down yet. In 2010 I bought it from Bank A. Now 4 years later, Bank B wants to buy part of my land. About half an acre.
Here's why. They need about half an acre from me, to finish the plans the original engineer planned out. They need it to put in the start of a road, as well as to have full ownership of two planned lots. Ultimately they just want the land from me so they can resell it to a developer with plans already laid out.
Originally they offered me 10k for the land, I said no, and then told them I already had an offer for 35k prior (I made that up for negotiations purpose). They said they'll just have to look into other plans then, and we ended the call. But a week later (today), they emailed me saying they're prepared to offer me 35k. (If they're willing to meet the fake offer exactly, then I suspect they're willing to go even higher most likely)
My issue is this. I'm a lowsy investor who flips/wholesales and obtains rentals, but I know nothing about building, or undeveloped land values etc.
Right now as it stands, they'll give me 35k, + some land right next to the roads/plumbing/eletric/sewer they'll put in, which I can then subdivide into a few 'road side' lots, which will probably be worth quite a bit judging by houses in the area being worth 300-500k. On top of this, I'll also be able to keep my original property with 3.76 acres, (it'll then be about 3.26), and the value of it will hardly be affected from what I understand. It might even go up, because it'll be around houses worth 500k, same sqft but on only .14 acre lots. So I'm getting a good deal either way you shake it.
That being said, there is still room to negotiate. I have a good feeling they'll go up on their offer cash wise. And I also want to make sure I set myself up best to be able to build on these lots in the future, because flipping is fun and very profitable, but frankly it's gotten a little boring and redundant for me and I'm excited to get into building.
So my question is, how do I go about handling negotiating this? Obviously I need to be informed on the value of the land, and get an Idea of how much its worth to the other party, maybe I need to seek council, a developer, a real estate attorney, a commercial broker with experience in such matters?
What would you do?
I would look for sale comps in the area for recently sold land in that area. That way you will be able to get a better idea of how much your land is actually worth (who knows it may be worth more than the 35k). The bank stands to gain a good profit if they buy your land from assemblage of the properties. This means they are motivated and may pay much more for the land than the market price.
I understand you want to ring out the towel here, But lets not lose a gift.
Maybe have a unofficial appraisal done if you know someone who would do that for you. that will let you know where your at.
For me seems like a pretty good deal not knowing everything. Also see your lawyer acct and code enforcer about future building if this sale goes thur. Meaning what can and can't you do. Either way CONGRAT'S and well done.
Speak to a local architect and/or civil engineer, and smart real estate agent. What will your original parcel and the 'new' parcels from the bank require in order to be developed?
You might also see if you could have the bank's development add utilities to your adjacent parcels (or gain an easement such that you could connect to their lines if you develop your land in the future). That would make your adjacent holdings worth much more and be more buildable.
Don't get overly greedy though - as you noted, your land should be worth more if the other development goes up.
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