Understanding Our Process
What’s the highest and best use for your property?
Before we can determine this, we must consider many factors and how they might impact the land’s value and use.
Acquire a survey of the property (or at least an Assessor’s map), and overlay the topography maps onto the survey.
Investigate what utilities are available and determine what is allowed under the town’s current zoning regulations.
Once we’ve determined what is allowed, we come up with a few layouts for the parcel of land. Sometimes we will also develop a plan for a parcel to show a landowner what “might be” allowed through special zoning permits.
When we are satisfied that we’ve established the most viable alternatives for a parcel of land, we begin applying the economics and make an assessment about the likelihood of the alternatives being approved. Generally, we require that a property be under contract before we will proceed with preliminary meetings with town officials to discuss the plan and its possible alternatives.
What it means to you.
Financial analysis is applied to the conceptual layouts based on the current market conditions in the town where the subject parcel of land is located.
Our real estate expertise is critical to this financial analysis because we know and understand the current market conditions and how to best determine:
- What size and style house would be most appropriate for the area or parcel of land?
- Whether the market in this location could absorb the size and style of house?
- What the maximum price range a house of this size and style could bring in the marketplace?
Once we have established the size and style of house to be built that would maximize the value of the parcel of land, we create an estimate of what it would cost to construct the house.
We have worked with builders and developers for over thirty years, so we understand how important it is to know our customer and build accordingly. At this stage we must take into consideration the finishes necessary to make the property attractive to the market. For instance which added features or amenities should be included? We carefully weigh the cost / benefit for the materials we choose for such things as countertops, flooring, and exterior. There’s a great deal to consider when choosing between Formica and Granite countertops or hardwood flooring vs. carpet or tile, because all of these factors contribute to the overall marketability and salability of the house and/or project.
Determine whether or not septic needs to be factored into the equation and assess what it might cost.
Evaluate the soil conditions.
Factor in the profit margin that a builder would expect to get for a house. This would depend upon the overall market and the time they have to hold on to the property or the absorption. The competition in the market area must also be taken into consideration.
Estimate the cost associated with building a road and factor in any unusual topographical challenges.
Estimate legal & engineering fees and factor in a profit margin for the land developer based on the current market conditions and competition.
All of these factors contribute to the Finished Lot Value, or what a builder would pay for the lots in bulk, for an approved and improved subdivision. (Improved refers to a subdivision where the road and utilities are in.)
Raw Lot Value – What a builder would pay for a completely unimproved “raw” piece of property. Typically offers for raw land are contingent upon a set number of lots or yield being approved.