Auction off property with lodged DA Plans or not?

Hi fellow PCers, happy new year and hope everyone is doing well.

I had purchased a property last year in sydney inner west. My initial plan was to do some light reno work and live in it or sell it off. Although after I got possession the property had severe structural issues which would require it to be knocked down and rebuilt. Below are my options.

Option 1
Auction off with current architect plans for three level house but not lodge DA. - This will not require additional $$ capital outlay.

Option 2
Auction off with lodged DA for a three level house. - Will require additional $$ capital outlay making the property more marketable to builders.

Since the property is in a flood zone any new construction will require a three level construction as below which significantly increase the construction costs.

• Ground level: Garage + Rumpus
• First level: Living, dining, kitchen, laundry, guest bedroom and guest bathroom
• Second level: 3 Bedrooms, 2 bathrooms (master has an ensuite) and study nook

I am leaning towards Option 2 as I am not wanting to go through with the construction. Any input is greatly appreciated.

 

What about all the other relevant factors? Why would you want it to be more marketable to builders of all buyers?

 

If you were going to lodge the DA then would you not wait till the DA was approved? Having the plans drawn up without an approved DA will likely mean very little. I have bought several properties with DA approval as I like knowing I can build right away as a developer.

 

Quick tart up with architect concepts is another option. Make it look like a silk purse.

As per @Mel Morgan a set of unapproved plans adds nothing.

 

Thanks for your replies @thatbum , @Mel Morgan and @Scott No Mates I agree I am leaning more towards Option 2 as well.

@thatbum since the property is currently in uninhabitable condition I think it would be tough for regular buyers to sort finances and it doesn't seem like a project to be undertaken by a retail buyer.

 

Is it definitely uninhabitable? Are you sure you're not cutting out a 'renovator' buyer? Often there's more of those than builders.

 

Yes, I am speaking from my perspective as an average retail buyer who is ok with light reno work but doesn't want to get involved in a KDR. Anyone can show up at the auction and bid on it, I am thinking of the most probable buyers that would be interested in it.

 

You run the risk of getting the wrong product for the site ie spending $$ but not adding any value.

 

I'm not sure option 2 adds any value. It might for a development where it saves someone time but for a single house it doesn't save as much time and if the design isn't spot on for what the new buyers want then they will need to ammend and there is no real time/cost savings for the new buyer.

If the house is truly uninhabitable then it might be an option to demolish and sell as vacant land if that is more marketable but even a house in poor condition might be appeal to someone who wants to renovate and can handle structural issues but you will need to be clear that it is being sold in 'as is' condition.

 

Do you have any pics of the inhabitable abode?

 

I know the Inner West quite well, depending on where it is, I could recommend agents for you to chat to who might be able to shed more light on your buyer demographic. Don't assume that its uninhabitable and will definitely be knocked down by the buyer. Also don't assume it will definitely go to auction, over the years I have sold 7 properties in the inner west and only 1 was actually sold at auction.

 

Thanks @Scott No Mates I think that is one of my concerns my lodged plans may not necessarily be what the potential buyer is looking for, which would again require an amendment as advised by @Westminster

 

@imu1983 Intersted in what you've decided with this + what the structural issues you had with the double brick was. Getting pretty close to offering on a 1920s art deco double brick house that seems like it's in great nick, waiting on B&P though. Wondering what you wish you'd done differently if anything!