Selling Your House With Your Neighbours
I’m sure you’ve driven down E Broadway, Granville St, Oak St, or any number of other streets and have seen a number of houses in a row for sale by the same agent. All of these owners are selling their properties together since a bigger lot is more appealing to Developers, and the benefits to the homeowners are better than normal. This is what’s called a land assembly!
If you are thinking about arranging a land assembly with your neighbours or have had a knock on your door from a Developer, this post will offer some useful information.
What You Need to Know about Land Assemblies
1. Your Value is Higher when you Sell with your Neighbours
A big plot of land is worth more than a small plot of land since the Owner has more options on how to use the space, which is the basis behind Land Assemblies. The more the land offers to the next owner, the more it’s worth when you sell it. If you sell your house individually, the most a Developer can build is a Duplex, whereas if you and two of your neighbours sell together to that same Developer, they can potentially build a townhouse complex, which is more valuable to the Developer, so they’ll pay more money in order to pursue it.
Given the cost of land in the city, it’s not worthwhile for a Developer to purchase a plot of land and hope that the neighbouring units come up for sale at a later time, so if you want to get more money than you could get selling your home individually, you and your neighbours need to gather together!
Though just how much a land assembly is worth depends on the zoning..
2. The Zoning of your Land Makes a Big Difference
Land in Vancouver is zoned for development differently depending on the area and size – some areas are strictly single family houses, while others allow for duplexes, townhouses or small high rises, while large condo development sites are typically restricted to major roads or intersections. What a Developer is allowed to build on the land assembly will have a major impact in what your land is worth: the more money they can make selling the future Development, the more negotiation power you have in the land sale.
This City is desperate for more supply (in the last few years, prices increased significantly in a large part due to decreasing supply) and has been creating something called “Community Plans” to address the changing needs and demographics of neighbourhoods. The City has recently released a new Community Plan for the West End, Grandview-Commercial Drive and Marpole, and land values in those neighbourhoods increased as well. These Community Plans have often allowed for more more development than was previously allowed (trending towards multi unit, “family sized” units), which is what makes these areas especially appealing to Developers.
Knowing exactly what the zoning is for your home depending on the number of neighbours involved is really important in making the most of the opportunity. If you’re interested in finding out what the value of a potential land assembly is, contact Kristi at 778-387-7371 or [email protected] with details.
3. The Process can take a Long Time
From chatting with your neighbours about the possibility, to chatting with Developers about the possibility, to negotiating contracts, due diligence and finally moving out, land assembly deals can take a long time to come to fruition.
It’s an odd process, and one that often takes owners a long time to warm up too, which is understandable if they need to move from their “forever” house! There are a lot of questions, a lot of scenario building, and a lot of waiting for other owners to get on board. Once all owners involved are comfortable with the idea, the assembly can be shopped around to Developers, which can some time as they need to analzye costs and their short and long term goals. Once there is an interested Developer, the negotiations start to get the terms and conditions of the contract agreed too. Once the contract has been accepted, the Developer typically has 30 to 60 days to do their due diligence before officially purchasing the land (they make decide to back away from the deal at this point, send you back to marketing to other Developers). Once the purchase is official, the Completion Date typically doesn’t happen for 6 to 8 months (and potentially a lot longer). Developers can also offer rent backs to Sellers (which is when they allow you to live in the property after the Completion Date) for a certain period of time as well. This gives you an opportunity to look for your next place with your funds ready to go.
As you can see, the process can easily take a year from the initial conversation through to you receiving the funds, but the pay out is worth it since you’re getting more than you would in a regular sale.
Another important point is that you aren’t directly involved in most of the process when you have proper Real Estate representation, so as tedious as the process sounds, you won’t have to put in the effort to get it done! Just make sure you’re working with the right people who have your best interests in mind.
4. You Need Personal, Knowledgeable Representation
Like any Real Estate deal, it’s in your best interest to ensure that you have a knowledgeable agent that has your best interests in mind. Given the high value of the land assembly sale, and the fact that the Developers will have their own Real Estate team working for them, you need to ensure you’re properly represented.
Your agent will ensure all of your neighbours are aware of the opportunities and understanding of the process, explaining the steps involved, contracts required and responsibilities of each party. Once a listing agreement is signed by all neighbours involved, the marketing can begin! Agents with experience in land assembly deals know how to best market the property to Developers, and have the prowess and connections to ensure the transaction is as smooth and successful as possible. Our team has this experience, marketing reach, industry connections, construction knowledge, and energy to see a :and Assembly deal from start to finish.
Remember that if a Developer knocks on your door to make an offer you can refuse, just remember that there’s definitely a better one out there, and one that has your best interests in mind to ensure the contract is not written solely in the Developer’s favour.
Contact Kristi at 778-387-7371 or [email protected] to chat about the possibilities for your lot, and what we can do to help you make the most of the opportunity.
