Q: My single cul-de-sac street of 18 homes is exploring selling our small neighborhood to a developer.
We have new home construction on one side and a church on the other and infill housing is going up all over the community (but usually lot by lot). Most of the neighbors are on board and we want to have all of our ducks in a row before contacting a developer.
Now we don’t know what to do. We’d like to have a professional evaluate the lots and advise us on the usability of each lot. For example, neighbor A has 2 acres but it looks like only .5 acre is really usable, while neighbor B has 1 acre of completely usable land.
We are struggling with how each owner should be compensated. Should each seller receive an equal amount for his or her lot (no matter the size) or should each be paid by acreage? If we can determine the usable acreage per lot (and people agree), we could pay each owner based on usable acreage.
We’d also like someone to recommend what can be done with each lot. Perhaps someone who has looked at the zoning and can tell us whether townhomes, single family houses or a condo building is the best use for the land.
I guess what I’m asking is, where do we go from here? Do we need an appraiser or survey company? Or do we need to have a feasibility study conducted? Do we need a real estate attorney this early in the process? Any advice you can provide would be appreciated! Thank you.
A: What you’re proposing is complicated, but possible. Let’s take a look at a few important issues.
First, I think you’d want to talk to a top real estate agent or developer to see what would be involved in selling the entire area in one fell swoop. Also, since you’re on a cul-de-sac, it’s possible that the street could be taken over and turned into more usable square footage (depending on what gets built and with the municipality’s approval, of course).
The question you need to ask is if your 18 lots are worth more as a whole than as individual pieces of property for sale, particularly in an area where $100,000 homes are being torn down to make way for $500,000 homes. Frequently, however, individual owners may get more for their properties than negotiating with a group.
If the answer to the question about value is that your neighborhood is worth more as a whole than as individual lots, you need to sit down with an attorney who can help everyone figure out what his or her fair share of the total property will be. And, you need to talk to some top agents about what the market value of the entire cul-de-sac might be.
Frankly, with so many owners, selling your block as a single unit sounds like a nightmare. That doesn’t mean it can’t be done — only that it won’t be easy.
In reading your letter, I’m reminded of the town that listed itself on Ebay. In fact, it was recently relisted. Which brings me to my final suggestion.
While I’m not suggesting you actually list your neighborhood on Ebay, the idea of auctioning your block might make the entire process of selling as a unit more streamlined. There are several top auction companies in the country. You should call to find out what would be involved and then bring that information back to the board about whether this could be an option for you and your neighbors.
If you decide to proceed, you probably should sit down with a land planner to determine what would be the best type of development for your neighborhood. Also, you might decide to approach a developer and set certain ground rules, the developer has to offer each owner money for his or her lot and only if all the owners are satisfied would the whole neighborhood get sold.
However, if you proceed down this route, one holdout could kill the deal, but each owner would get a “market price.” If you find out that the market price as set by the developer is too low, they you will know that you are better off selling the homes individually over time.