Developer wants to buy my house

[panda00]

My house is not in the rezone area, but 3 blocks beside me are in it. The agent called me to say that the developer need my block to build 5-storage-units. I just extended my house so it is really not good timing.

Did anyone have experience or acknowledge how to negotiate with the developer? Is the price base on the market price of the house or the land value?

 

[sanj]

the price is somewhere in between market value and the max the developer can afford to pay while still making sufficient profit. Work out current val and then add a premium for pain in the **** since youre not a keen seller and see if the developer agrees.

 

[Ideo]

It's based on whatever you can get out of them.

And there is zero obligation to sell. It is not a compulsory acquisition.

You may however end up with a unit block next to you.

 

[panda00]

It's based on whatever you can get out of them.

And there is zero obligation to sell. It is not a compulsory acquisition.

You may however end up with a unit block next to you.

Yes. I know it is no obligation. My question is
1) why they can get my house to develop but mine is not in the rezone area.
2) How to make a right price?

 

[Mr. Fabulous]

The price will be based on whatever number you agree to sell at. I would be looking for a hefty premium, over and above market value, as per sanj's suggestion.

 

[panda00]

the price is somewhere in between market value and the max the developer can afford to pay while still making sufficient profit. Work out current val and then add a premium for pain in the **** since youre not a keen seller and see if the developer agrees.

How much do you think of the premium part?

Thank you.

 

[westminster]

My house is not in the rezone area, but 3 blocks beside me are in it. The agent called me to say that the developer need my block to build 5-floor-units. I just extended my house so it is really not good timing.

Did anyone have experience or acknowledge how to negotiate with the developer? Is the price base on the market price of the house or the land value?

The price they will offer is as little as possible. The price you want is what you want.
I would let them lead the negotiation. Ask them for their best offer and see what it is. If it's acceptable to you then ask for some more and see if you can get some cream for your cake

 

[ket]

think outside the square

You are in the position of power. You do not need/want to sell, but he wants your land. If you can find out more about what he is planning it will put you in an even more powerful position for negotiation.

So, how about talking to him and finding out what he wants to do and seeing what he is willing to offer? Maybe some sort of profit share?

Remember you are in the hot seat, he wants your land! I know I said that once but that is important.

Also remember to be polite, patient and sensible! You do not want to put him offside by being rude, objectionable or just down right unrealistic. But at the same time don't let him pressure or bully you into a sale. Get advice before agreeing to anything (these forums are a good start but professional advice will probably be a good idea).

Communication is the key.

 

[panda00]

The price they will offer is as little as possible. The price you want is what you want.
I would let them lead the negotiation. Ask them for their best offer and see what it is. If it's acceptable to you then ask for some more and see if you can get some cream for your cake

You are so right, mate!

 

[FormerLurker]

Yes. I know it is no obligation. My question is
1) why they can get my house to develop but mine is not in the rezone area.
2) How to make a right price?

1) they probably need some additional m2 of land to get the 5 story development (number of units + height restrictions) i.e. they have 1900 m2 of land atm and need 2000m2 to get council approval for an x number of units 5 story development - they don’t want your house per se they just need a little extra land to get their proposal over the line I would suggest.

2) Ask them for their best offer and see if you are happy with it, if so try and squeeze more before accepting if not propose a number you are happy with I suggest least 20% over market (look on realestate.com.au or similar to see what houses similar to yours are going for).

 

[devank]

I have seen small houses trapped between units! You don't want to be too difficult and get stuck like that. How about checking out what he has for sale? You might be able to get something for bellow market value and also potentially sell yours for a good price.

 

[Ideo]

Yes. I know it is no obligation. My question is
1) why they can get my house to develop but mine is not in the rezone area.
2) How to make a right price?

Split zoning is not an impediment if you do it right. A decent argument could be made on a number of grounds

e.g. they need more open space to meet the requirements, so open space some minor services will be located on your parcel of land, thereby creating a nice transition to surrounding residential areas, rather than a blank building facade.

Your land may not be developed upon at all, but they have calculated the extra yield they can get from having a bigger lot size is worth it for purchasing the house. More Land equals bigger development. Not knowing the area or LEP there is also the possibility that it is required for building setbacks.

The right price is up to you. You have the upper hand. Base it on market value + 20% for your pain.

 

[wylie]

You could ask your local council what the developer can build with your block and what he can build with the other houses but without getting yours.

Eg. If he can build up to four levels without your block, then you may end up with a four storey monstrosity blocking your light and breezes and you may lose whatever privacy you now enjoy. This would be enough for me to seriously consider selling. Your "overanxious buyer" is clearly the developer but he will be looking to get your block at the cheapest possible price, whereas you will be wanting a premium.

As devank says, you probably don't want to be plonked beside a beast of a development next door. I don't envy you the decisions you need to make. Either way, you will likely have a multi-level unit block next door. How do you feel about that? Would it be enough for you consider moving? If so, then only you can decide whether you want to negotiate a price you are happy with and that the developer is happy with.

You may decide you are happy with (just choosing random prices here) $600K because that is what it would take for you to find another house you are happy with, and/or that price is what your house is worth to you. Developer may decide he can only make his development work if he gets your place for $500K.

You can tell him "no way" but don't lose sight of the fact that any future buyer will not want to pay a premium for your house once a big block of four level units is next door. So, you could hold out for more from the developer, lose him as a buyer, and he goes ahead and builds the units anyway, and you will risk losing more due to what is now next door than what you perceive you are losing by selling to him.

Tricky...

 

[panda00]

Split zoning is not an impediment if you do it right. A decent argument could be made on a number of grounds

e.g. they need more open space to meet the requirements, so open space some minor services will be located on your parcel of land, thereby creating a nice transition to surrounding residential areas, rather than a blank building facade.

Your land may not be developed upon at all, but they have calculated the extra yield they can get from having a bigger lot size is worth it for purchasing the house. More Land equals bigger development. Not knowing the area or LEP there is also the possibility that it is required for building setbacks.

The right price is up to you. You have the upper hand. Base it on market value + 20% for your pain.

Thank you very much for information, Ideo. Very appreciate.

 

[panda00]

You could ask your local council what the developer can build with your block and what he can build with the other houses but without getting yours.

Eg. If he can build up to four levels without your block, then you may end up with a four storey monstrosity blocking your light and breezes and you may lose whatever privacy you now enjoy. This would be enough for me to seriously consider selling. Your "overanxious buyer" is clearly the developer but he will be looking to get your block at the cheapest possible price, whereas you will be wanting a premium.

As devank says, you probably don't want to be plonked beside a beast of a development next door. I don't envy you the decisions you need to make. Either way, you will likely have a multi-level unit block next door. How do you feel about that? Would it be enough for you consider moving? If so, then only you can decide whether you want to negotiate a price you are happy with and that the developer is happy with.

You may decide you are happy with (just choosing random prices here) $600K because that is what it would take for you to find another house you are happy with, and/or that price is what your house is worth to you. Developer may decide he can only make his development work if he gets your place for $500K.

You can tell him "no way" but don't lose sight of the fact that any future buyer will not want to pay a premium for your house once a big block of four level units is next door. So, you could hold out for more from the developer, lose him as a buyer, and he goes ahead and builds the units anyway, and you will risk losing more due to what is now next door than what you perceive you are losing by selling to him.

Tricky...

Yeah, I agree with you. But since I have extended the current house, I could get a good benefit if I rent it out. If units beside me, I definitely would move home and leave it as IP.

 

[Ausprop]

if there is a developer around hold onto your wallet and don't offer them a cup of tea because they will say yes and call it dinner

 

[INVSTOR]

My granny owned an old house in Sydney Street, New Farm, Brisbane. Prime location. Developers bought blocks all around her and just needed hers to go ahead. She wouldn't sell. Eventually they offered a ridiculous amount of money so she sold.

 

[mattnz]

What you need to understand is whether yours is the only block they could purchase, or do they have a number of other options that they are looking at?

You don't want to hold out for a huge price, then find out that they purchased one on the other side which achieved the same objective for them and in a couple of years you have a 5 storey build looking into your back yard.

I saw a Selling Houses Australia episode where this happened and the lady who owned it couldn't sell the house. She lost tens of thousands in value.

 

[oc1]

Unpleasant much??

 

[scha9799]

It depends on so many things.

1) if council allow to build muiti-stories unit ?

2) how experienced it the developer ?

3) how are you comfortable with the selling price ?

4) If the multi stories unit did eventuate will you be happy and still live in your house ?


A big development takes a long time from settlement to settlement.
Any not-so-experienced developers can easily overlook some problems and development on hold or even never start.

I have seen some developers bought a site and realised that it's impossible to profit from it then re sale the site after couple of years...

More experienced developers tend to buy DA approved site, which this information you can find out from council.

Not every development sites have enough profit to justify the risk developers willing to take.