How best to add value to piece of land?

[D12345]

Hi,

I have recently purchased on old farm house with 3.5 acres of land and an associated farm yard. Note: The house and land was previously bought during the boom for big money (in the interest of future development). The property was repossessed and we purchased the property from the bank for a fraction of the boom sale price.

We have finished renovating the house and this is my family's primary residence.

Currently the land and yard is let to a local farmer.

The land is in a good location on the outskirts of a major town. ~ 10 minutes walk to town centre and 30 minutes drive to Dublin. There are 2 majors housing developments currently being built within a stones throw of our place.

The land is zoned residential.

I was recently approached / cold called by a developer. Following a meeting in a local hotel, certain offers were put on the table, interested in buying the whole lot (house and land) but we have only recently moved in with a young family so we would not be interested in selling the house at this stage. The land was still on the table, joint ventures were spoken about etc etc. Offers were made but I was thinking that they were too low.

I was at this meeting on my own and it was alot to take in. I would not have any experience in these kind of negotiations and naturally I am cautious dealing with a guy I have met for the first time who is experienced in these kind of negotiations.

I am not too sure on how to proceed or how to realise the true value of the land? This could potentially setup my family's future nicely.

My main query would be as follows, would it make sense for me to engage with a local architect and go down the road of obtaining planning permission and then put the land up for sale? Would this make sense? (I am not and do not want to be a property developer) Does this make the property more attractive to a potential buyer? What kind of costs would be involved for an architect to do this front end study / planning permission application. I suppose it is worth a conversation.

Is there anybody else I could engage with to get professional advice?

Any comments / questions welcome.

 

[David1234]

Why not put the land up for sale via an estate agent? The EA will advise on a reasonable price to put it on the market and then potential interested parties can submit offers accordingly. This will create a transparent where you can accept/reject bids as they come in.

 

[cremeegg]

My main query would be as follows, would it make sense for me to engage with a local architect and go down the road of obtaining planning permission and then put the land up for sale? Would this make sense?

It might make sense but it would be a major undertaking. You could certainly put a toe in the water by asking a few architects to price the work. It would hugely increase the value of the land, as it could then be used as collateral by a developer. But it would cost you up front.

As a rule of thumb the land (without the planning) is worth 1/3 the sale price of the houses that could be built on it. In the boom you would have got more, today that would be a good price.

Why not put the land up for sale via an estate agent? The EA will advise on a reasonable price to put it on the market and then potential interested parties can submit offers accordingly. This will create a transparent where you can accept/reject bids as they come in.

I would be very careful here. If you want to sell you will need an EA but this is the type of one off sale of development land by an inexperienced vendor that would attract every vulture for miles around.

Perhaps your first step should be to get a number of EAs to do a written valuation.

As a final point, if you get offered sufficient money include your home as well. If you stay put you will be living next to a building site.

 

[D12345]

Thanks for the replies, very interesting.

The up front architect costs would be an issue at the moment. Would an architect ever into a contract where their fee would be paid as a % of final sale price? Probably too much up front work and the risk would be too great.

I have considered the option of living next to a building site which would not be ideal. Having just renovated the house the motivation to source another family home would be very low. I suppose I can just sit on it and wait until retirement age and then sell the lot when the kids move on.

The idea of approaching EAs for a written valuation is a good idea.

 

[Leo]

Would an architect ever into a contract where their fee would be paid as a % of final sale price?

That would be unlikely. There would be a huge amount of work in designing a development such as this, why would anyone take that on with no guarantee of getting paid any time soon, or at all if the development never gets off the ground for any reason.