Setting the price of buildable land in Seattle

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Setting the price of buildable land in Seattle

Lisa Toner
Member since 2019 · 11 posts · 9 votes

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!)

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Michael HaasBusiness Member
Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes
5y

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. 

[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
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  • Sherief Elbassuoni
    Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
    5y

    Most probably you will need a CMA (Comparative Market Analysis) to see the current value, how it appreciated in the past (% wise), and how how the comparative houses appreciated as well.

    You are right, DADU typically averages $140K-$160K, but I have seen ones cost way more because of high-end finishes.

    0Reply
  • Michael HaasBusiness Member
    Real Estate Agent · Sammamish, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 725 posts · 3k+ votes
    5y

    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. 

    [email protected]408-439-7873
    HouseHack Seattle | Michael Haas & Team572 Reviews
    WebsiteView Page
    5Reply
  • Lisa Toner
    OP
    Member since 2019 · 11 posts · 9 votes
    5y

    Hello! Yes, Michael, I have a large lot corner that cannot be formally split but has a great DADU site. I'd like to "condo" the lot and sell to a developer. I'm familiar with comps. I think a brand new, 1000 square foot DADU could go for 600-650 in my neighborhood. I am trying to set a price that will be worth it for me but also competitive enough to sell. Developers need to make money and so do I :)

    0Reply
  • Corrie Watterson
    Flipper/Rehabber · Seattle, WA · Member since 2017 · 2 posts · 1 vote
    5y

    Lisa, did you end up selling part of your lot to a developer for a new DADU? I'm a realtor, and a friend asked me to help her set an offer price for a DADU lot in Seward Park (~ 50% of a 6000 sqft lot). 

    Everyone: any further thoughts on valuation models for Seattle DADU lots? It seems that the value shouldn't be the same as for an otherwise comparable vacant lot, because the condoized DADU lot only conveys the right to develop a single 1000s sqft home AND because the land will be held in common. Potential complications abound. 

    You could approach it backwards from the finished value after construction (ie, $600K value = typically a $200K land value), though that's still predicated on the traditional vacant lot with full single family development potential. Thanks for any thoughts!

    0Reply
  • Lisa Toner
    OP
    Member since 2019 · 11 posts · 9 votes
    5y

    Update: we are holding the property. Some developers we met with were willing to do some work to get the foundation poured and condo-split the lot, but the process sounded messy to us, and would involve a lot of trust and months of work before closing. Also, in the end, they couldn't offer us that much for the land--totally understandable. Most developers wanted to buy the whole property. Ultimately, we we figured out we can comfortably afford to buy our "forever" home and keep the Seattle starter home as well. We plan to rent out the Seattle home and its detached shop while we save up for a DADU build, build it, and then do the condo split. It will take us a few years to complete the process, and there will be opportunities for us to change our minds and just sell it if needed. But it sounds fun and quite worthwhile!

    2Reply
  • Sherief Elbassuoni
    Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
    5y

    @Lisa Toner, I like your plans and decisions. 

    Best of luck!

    0Reply
  • Valerie Vozza
    Real Estate Broker · Seattle, WA · Member since 2017 · 10 posts · 1 vote
    4y

    Hello all! My big question about building a DADU on a SF lot is this: Does the value of the original, and very nice home decrease because the lot size for that home has decreased?  I realize developers are making bank because they end up selling 2 brand new homes. Would a homeowner also make a nice profit after selling both homes?  Thanks for the help!

    1Reply
  • Jim Doyle
    Member since 2021 · 37 posts · 19 votes
    3y

    That's a really good question @Valerie Vozza - I'm curious did you ever get an answer to this? Or have a hypothesis now that it's been over a year? 

    1Reply
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