Rezoned - Lot Amalgamation?

Hello, this is my first time posting. I am after advice on the topic of joining with neighbours to sell a 'super lot'. I am in a semi-detached torrens title block that is nominated under a draft plan by the Council to be rezoned for medium density and 3 storey height limit. There are significant changes planned for the suburb, including infrastructure upgrades.

If the Council plan is approved, an updated LEP and DCP are 18 months away, however I have already been approached by a real estate agent who wants to get all neighbours together and sell as 1 block.

I could not find a post that addressed this situation and I would appreciate any advice on whether I should leave it up to the agents, or grt advice from a solicitor and talk to the neighbours seperately.

 

Good stuff!
Can you find it what other "super lot" sales that agent has completed in the past?

And talk to some of the vendors involved in those deals?

 

You might want to consider getting legal advice before signing anything or agreeing to anything.

 

These things are unique to the properties (number, value) in question to a large degree. A good agent could easily put together a number of properties and sell to a developer on a conditional basis ie it would be subject to a satisfactory approval which means the contract is worth nothing, regardless of the deposit paid. I have seen big organisations like CBRE Richard Ellis also do similar things many times. Bottom line is there is no harm in talking to people with a focus on what is your property worth now, and what it may be worth as part of a larger rezoned parcel. Focus on yourself re the above in the first instance, there is no rush at all to sign anything, thats the first thing you need to know

 

Lucky you, there's a lot of that going on at the moment. I've been involved in some strata acquisitions but not torrens title. I have a couple of friends lucky enough to be in one of the Castle Hill 'super lots' who are at the tail end of it all. One all the better for it and the other...not so much

Firstly, do not sign anything with an agent. Definitely have a friendly chat with the neighbours and try to gauge their interest. They have probably been approached the the same if not more agents also.
Be open to talking to the agents and considering what they have to say but be upfront and tell them you have no interest in signing anything.

No need to talk to a solicitor at this stage because you wont be signing anything

 

Talk to a couple of agents, accountants, lawyers and neighbours. Regardless of what happens their will need to be a lot of work by you.

Do not leave it to somebody else to drive.

 

Th

Thanks for the reply. Worth looking into, I dont know if there havent been any in my suburb for quite some time! Great advice

 

Thanks for the reply. Good advice, I will wait to see what happens next and keep this in mind.

 

Thanks John. The agents provided a document with current val and potential sale price/sqm for 'super lot'. I am the smallest lot on the block, but will still be ahead joining with the neighbours I believe.

 

Can you elaborate on why one ended up better and the other not so much? Do you know how long the process took for them to end up with a purchaser?

I like your advice to sit back. My perspective is that an agent will have developer contacts that we as neighbours will not havd, so ultimately we will be better off using an agent. If they run around talking to the residents and getting everyone on board it can only work in our favour.

 

Thanks Ross. Good advice.

 

One ended up signing a few weeks back, happy days, 18 months for the change of zoning to be gazetted and further 18 month option. Not sure what the option fee was probably 1-2%. Exercise price was almost 3 times what the property was worth.

Second mate, a highfalutin CBD solicitor (but top bloke) negotiated the deal and got 16 neighbours together, spent countless hours putting the deal together and then just as the deal was about to be signed his elderly neighbour got greedy and said she wanted more so the developer just bought the adjoining 12 properties with the 4 on the end missed out...including my mate who put the whole deal together.

The developers will end up coming directly to you....also if the agent has a lot of the other owners on board they need you to complete the deal. Be the last one the need and you'll get a higher price just dont end up getting too greedy otherwise you'll miss out.

Just like this guy, Woolworths wanted his site for their new development and offered him a fortune but he got greedy so they built around him. Now it's worth even less than it was originally.
6 - 8 Falcon Street, Crows Nest, NSW 2065 - Retail for Sale #502135914 - realcommercial.com.au

Or like this one where they cut the semi in half to develop

http://static.domain.com.au/domainblog/uploads/2016/10/24083411/2_gs9er6.jpg

 

Wow great result for mate no.1, awful for mate no.2! Good to know! Just to confirm, the option is a downpayment based on obtaining approval/rezoning?

Yes this is important. I definately do not want to end up like this or your mate no.2! My understanding is that the sale price is based on a rate/sqm, rather than individual lot purchase. As initially stated my lot is reasonable small and a semi, so I need to sell with the neighbour. The agents current val is 80% increase on purchase price (bought 3.5 years ago) and estimating a 130-190% increase on purchase price for selling as amalgamation.

 

Not quite. An option is a contract that allows the buyer the exclusive right to purchase the property at a particular price at any time during the option period. Once a buyer has an option to buy a property, the seller cannot sell the property to anyone else. In return the buyer will pay an option fee to the seller. The buyer can either exercise the option and purchase the property or walk away from the property and let the option expire. They can (and sometimes do) sell the option to a third party. Option fees are wide ranging but the ones I usually deal with are about 1%-2% per year of the strike price.

Again not quite, The value of the property will be in how many units can be built on the block. In the area I work in the unit price is roughly $500,000 per unit.

 

Good luck with it all.
Only advice I can offer is don't listen to anything a generic real estate agent tells you regarding price/sqm. None of them have a clue. Do your own research.
I'm in the same boat.

 

Interesting and timely thread. my neighbour behind our property back fence) just sold. zoned R3. there's a property on our left and right. we are all zoned R3. right across the streets are apartments and shops. an agent came knocking on our door yesterday but I wasn't home. she left a note with my mother basically saying a developer wants to discuss sale with me. I'm flattered.

Some neighbours on our street are quite cluey and waiting to have our side of street rezoned R4 (high density). how would one find out this sort of information? from council or LEP? thanks in advance.

 

Pixon it sounds like you are in a good position to sit back and have people approach you. Good advice to be getting in towards the end perhaps, but that might also depend on where your property is in relation to the actual site. If its in the middle great, if it's in the end, not great.The end of the day it will be contracted based on an expected outcome in terms of unit volume and maybe even sufficient pre-sales. Don't get too greedy, have seen many of these things fall over due to a couple of owners in key positions doing that. Consider also taking a penthouse or something, you may do even better!

 

As someone who was burned very badly before by the door knockers before a major zoning change, I have a few tips to warn you and best prepare you to maximise your profits:


- Neighbours are your #1 priority, not any developer, no matter what they promise. This is because you will get the best deals by working together with your neighbours, rather than working together with the developer. If you have a neighbour who is not keen on selling, talk them through and learn about why/ what would change their mind. Do not side with the developer, as they profit more when you and your neighbours are fragmented. You make the most money when you band with neighbours, as this is more "sure" and developers must compete with higher bids.

- Unless you urgently need money, do NOT agree to call option contracts as these are almost always heavily written in favour of the purchaser and not the vendor. A call option contract is basically cheap financing for the developer to squeeze out every cent from you. For example I got burned with a call option contract that made me a financial sitting duck for 2 years while I watched the Sydney market explode.. We could not pull equity on properties with a caveat and had wasted an unencumbered properties purchasing power. Missed out on good deals...

- If a developer is insisting on a call option contract, carefully review it with your solicitor. Feel free to request added or changed clauses to give you more power in the contract, you don't want them to call 100% of the shots unless there's serious upside.



There's obviously a lot more to it, and I am happy to go through them with you if you'd like a phone chat, happy to tell my story, because it really really sucks to miss out on hundreds of thousands (in my case low 7 figure losses ) of potential because you committed to something you didn't need to..

 

Great advice Chabs.

 

Thank you Chabs, I will send you a pm as I would love to have a chat. Your advise is excellent. I am in am interesting position as I love my place, great spot in syd, close to the beach and did not buy with the intention to sell, yet understand if rezoning happens we will be better off selling. I definitely need to understand how my neighbors are thinking in the first instance....