Setting the price of buildable land in Seattle

[Lisa Toner]

Seattle real estate experts, I'd love some feedback! 

How much does a singe family home property in Seattle increase in value if it has an ideal DADU site? One thing I've heard is that the land is typically worth 1/3 of the future price of the house. I know that DADUs are more expensive to build per square foot because they're small but still have all the demands of a full house, new sewer line, etc. Is $150-200k a reasonable amount for a piece of land that could have a cottage that sells for $650-700k?

(This is a request for feedback on how to set a price, not solicitation for a deal, so hopefully it doesn't go against the forum's rules. If it does, moderators can delete. Thanks!)

[Michael Haas]

Hey @Lisa Toner - welcome to BP!

I'm happy to help, but I think we need to clarify a few points here to make sure we're on the same page. When you say "DADU", we're talking about a dethatched accessory dwelling on the same lot as an existing single family home. Building a DADU does not require subdividing the lot, and as Seattle DADU rules are incredibly generous ( 3200 sq ft minimum lot size, typically less than 35% lot coverage, 5 ft setbacks unless there is alley access, then 0 lot line ), a lot of lots in Seattle are well positioned for DADU's. The reason there aren't many being built just yet is that a 1,000 square foot DADU ( the max size) typically costs between $200,000 and $300,000 all in, and includes a 12 week wait for permits.

Correct me if I'm wrong, but it sounds like from your post that you're actually thinking about selling part of your lot to someone to build a DADU, or looking to build a DADU on your lot and sell it separately. There are two options that I know of for doing this:

1. Split the lot: in this case, you have a whole new lot, so the house you're building on it is just a house, not a DADU

2. Condo-ize the lot: This is super new and super cool. Essentially, you build a DADU on your lot, and since you can't legally split your lot and can't legally sell your DADU separately you create a Condo Association with two members - the DADU owner and the SFH owner. The lot is the "condo" and the SFH and DADU are the two "units". Now, you can sell both the SFH and DADU separately, in just the same way that you can sell each unit in a condo building separately.

"Condoized" DADUs will not sell for $650,000-$700,000 except in the very best neighboorhoods (Laurelhurst, Queen Anne, North Capital Hill). In most good neighboorhoods (North Beacon Hill, Mount Baker, Ravenna, etc) a "condoized" DADU will sell for $400,000 - $600,000.