Selling to developers with your neighbours

there's been quite a few stories in the media about this recently. does anyone have any tips and pitfalls to watch out for? have you personally had success with this approach?

That is, what processes and methods, for example:

· Contact owners, council – what other people or organisations

· Assess potential? Get valuation from who?

· Assess the number of developers willing to buy?

· Ways to prevent people high jacking the processes – say, developers? real estate agents? One of the owners? Council? Neighbours opposing?

· How do you convince people?

· Do you have a contract among owners?

· Who pays the costs? If unsuccessful? If successful?

· Etc etc etc

 

I haven't been through the process yet but have had discussion with my neighbours about selling together. We would gain around 25% extra if sold together.

First step I would see happening is writing up a sales contract with a JV agreement.

All the council stuff would be developers responsibility in their DD.

 

There is a lot of this going on in inner Brisbane,three 800sqm plus block all sold as one lot,the first step is having everyone on the same page knowing what every ones idea of value is..

 

Issues to watch = Options and deferred settlement. There are massive numbers of very unhappy vendors who realise too late that they wont get a cent until the developer sells their completed project. That could be a major financial risk and a hell of a long time to wait while possibly not even having a roof over your head.

A lawyer and a property agent both experienced in this field would be wise from day one. Bypassing a developer savvy RE agent is a foolish move. Its like thinking you can import your own new car to save a few bucks v's the car dealer. The best sites are auctioned or silent tendered because a number of developers all want it.

One pitfall is offering with DA v's no DA.

 

First step is to engage an architect or town planner and determine what is achievable with your block, your block plus your neighbours, your block plus your neighbours plus your neighbour's neighbour, etc.

From there you need to get the architect or town planner to draft up a feasibility study and from there you can start looking at numbers. Also important to engage a RE agent that specialises in these sorts of sales as they will have a network of existing clients.

 

So which is better ?

A DA could be expensive to obtain and also might not fully utilize the potential the site has.

But it does take some risk out for the buyer.

My guess is the DA is only valuable if it pushes the parcel past what can be achieved by code.

 

I know some developers that only buy DA sites, well good DA sites. They like to get in and out asap with some risk reduced buying with approvals in place. Just gotta be sure the DA isn't a dud and also works feasibility wise.