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Published on June 18th, 2018

How to Get Smart About Selling to a Developer

If you’re the lucky owner of a larger block, you may find it more lucrative to sell it to a developer than to bring it to open market.

 So just how do you know if your land is suitable for development? Have a look around your neighbourhood: is your block one of the largest around? Are medium or high-density developments popping up around you?

Another catalyst for such a big change could be just how liveable your neighborhood is becoming, if new services, shops and other places of interest are popping up, or there are infrastructure projects in the works, you might find yourself the next target for a keen eyed developer.

Of course, developers aren’t usually backwards in coming forwards, so the first inkling you may have that your block is in their sights is when they call you to tell you so!

For some people, the idea of their family home being knocked down to make way for higher density housing is too distressing to contemplate. For others, it represents a new start without having to spruce up your dwelling for market. If you’re in the latter group, read on.

What makes a block a catch?

Size

The most important thing for you to know is whether your block is able to be redeveloped. That will depend on your council’s zoning and subdivision laws, which you can usually find on their website. Look for:

  • Their minimum block size, which will determine whether yours is big enough to subdivide. It will need to be at least double that size to subdivide. While they do vary, blocks of 700sqm or more are more likely to qualify.
  • Be aware, too, that some councils have a larger block size requirement for sloping land, so if your block slopes, make sure it falls within that requirement.
  • Regulations pertaining to driveways. If you’re hoping to subdivide, both (or all) of the resulting smaller blocks will generally need enough space for a driveway between the boundary line and the house. Different councils have different regulations as to how wide that driveway should be.

Location

Developers are very astute at knowing where and when to purchase blocks, based on their experience marketing to buyers.

For example, a block may prove to be a real catch to developers if it is close to creature comforts, as well as sought-after school zones, transport and local community attractions. Natural location is a drawcard, too, so if your land is in a coastal area, it’s likely to be desirable.

New infrastructure projects are also a plus, because they signal a growing population and a willingness by the government to encourage that growth. Many a sleepy country town has been transformed into a bustling commuter hub by adding a highway or two.

You can see what’s in the works by checking with your local Government department, but there’s a good chance that any developer interested in your block will be way ahead of you.

How can you maximise the price?

Once you know that your block is going to make an attractive lure, you’ll be in a stronger position to negotiate its selling price. Developers will only pay wholesale prices for land, because they’re planning to knock down the house anyway, but often the number of potential dwellings on the land will outstrip the price of the house anyway.

It’s well worth getting an independent appraisal of your land before you start talking turkey with the developer. That way, you’ll guard yourself against being low balled and be able to negotiate the price higher.

Another emerging trend is for neighbours to band together to negotiate with a developer as a team. This is particularly useful where the plan is for a large scale development rather than a smaller subdivision, because the property developer will need a number of adjoining blocks to realise their vision.

This can be tricky, as anyone who remembers group projects from their education years can attest. But those who have managed it successfully have realised a price between 15 and 25% higher than that they would have achieved individually.

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