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Received an offer for my block of land subject to power connection costs

Discussion in 'The Buying & Selling Process' started by warek, 29th Apr, 2016.

  1. warek

    warek Member

    Joined:
    3rd Apr, 2016
    Posts:
    11
    Location:
    melbourne
    Hi there

    We are novices when it comes to buying and selling. We have a 1 acre vacant block of land for sale in country Victoria, near Wilsons Promontory. It is 20 km from Foster. It has a planning permit to build and is priced lower than most other blocks. (which are slow to selling and some have been on the market for 2 years). More desirable blocks closer to a major town like Foster are selling steadily.

    The other blocks for sale around the local area are larger at 2-5 acres and are less popular because of the extra maintenance.

    This block does not have any power connected, but it is available across the road.

    It has been on the market for less than a month and the market is considered low demand.

    The agent advised a price range of 110000-125000, and suggested I get quotes for power connection, and a VicRoads approved culvert and crushed rock driveway. The nature strip is 30 metres wide, so a driveway is a significant cost. I was planning to put it up for sale in the Spring and get quotes as suggested, but the agent suggested we give it a try before the winter without the quotes and see what happens.

    We have just had a verbal offer of 110000 from serious local buyers who have looked at a lot of blocks in the local area. They are getting an estimated price from SP Ausnet of the power connection and their offer of 110000 is based on a figure in their head that power might cost up to 20000.

    One option is to wait 4-6 weeks until a power quote is available then negotiate, Another option, the agent suggested we could have a formal contract, perhaps settle on 120000 and they have a clause to cancel if power quote higher than 20000. We would be very interested in an offer of 120000 with a clause to cancel if power costs exceed 20000. It sounds like they are prepared to spend 130000+.

    I am not in a hurry to sell, but the holding costs, with loan interest, council rates and traveling for lawn mowing are about 90 a week. You can't predict the future, but in a low demand market it may be many months before I get another offer.

    We told the agent we would think about it and call him back early next week.

    Any suggestion as to what is the best way to proceed would be appreciated?

    Have a good day

    Warek
     
  2. Agent99

    Agent99 Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    196
    Location:
    Adelaide
    Would you be happy with $110k ?? its always great if you can get the best possible price from a buyer who has their heart set on your property however you do run the risk of losing them if you wait too long as they will start questioning their decision.
    If your happy with $110k take it without any clauses, 10% deposit and 30 day settlement.
     
  3. SmashedEconomy

    SmashedEconomy Active Member

    Joined:
    26th Feb, 2016
    Posts:
    42
    Location:
    Brisbane
    Presence of poles and wires does not mean you will automatically be given access to the grid if unconnected.

    Often the transformer capacity has to be upgraded when capacity has been exceeded and in some states this can cost K15 - K$50K .

    The buyer has made a valid request. Only a fool would sign a price on a rural block not subject to grid connection clause.
     
  4. warek

    warek Member

    Joined:
    3rd Apr, 2016
    Posts:
    11
    Location:
    melbourne
    Very true, we have a sale subject to a power connection quote of less than 8000. We will know in 4-6 weeks

    Have a good day
     
  5. ellejay

    ellejay Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,087
    Location:
    Kimberley and NZ
    I don't know your area but you said blocks can take a long time to sell. A local has made an offer at the lower range of your asking price. You could try to push them higher but, if you lose them how much money will you lose by holding potentially for over a year? Let the agent know what you're looking for and you can negotiate. Depends on how much a timely, serious offer is worth to you and the risk that the buyer may lose interest, plus holding costs vs hanging out for more money.
     
  6. Peter L

    Peter L Active Member

    Joined:
    29th Jul, 2015
    Posts:
    34
    Location:
    Melbourne
    How far away are you to the nearest power source? I have a property in Woodend north which isn't connected and the nearest power source was 300m away. We were quoted at ~$110 per meter (~$33k in total). Hope this helps
     
  7. warek

    warek Member

    Joined:
    3rd Apr, 2016
    Posts:
    11
    Location:
    melbourne
    Power estimate came in today, requires transformer to be added to power pole, 50 metres away, but on other side of road. cost to drill under road, add transformer and put single phase power to pit on our boundary is between 28000 and 32000. Major setback.

    However there is a neighbour, who built a new house about 5 years ago, with a power pit on our site of the road and it is 150 metres away. We are exploring whether it is possible to tap into his supply pit


    Cheers

    warek
     
    S.T likes this.
  8. GreenMedallion

    GreenMedallion Member

    Joined:
    5th Jul, 2015
    Posts:
    6
    Location:
    NSW
    Thanks for updating.