Site price vs House price

seanie27

My mother is selling her house and has been approached by a developer who says he will buy it at the asking price subject to planning permission being granted. She is happy enough with this as she isn't in a panic to sell and wasn't inundated with offers before this. However the house next door is also for sale and they have been approached by the same developer to sell subject to planning permission for their asking price which is €40,000 more. The house next door is considerably bigger and as a residential property would be worth more but what I'd like to know is if, as a site, my mother's house is worth as much as the house next door as the gardens are the same size. The developer intends to demolish both houses if planning permission is granted. The houses are on the main street of a busy urban area and are zoned for commercial use.

alastair

Your Ma can ask any price she likes for the property, and vary that price from buyer to buyer, if she so desires. Given that you know the developer is prepared to offer more for next door, it's useful leverage for your Ma in negotiating upwards with this prospective buyer - who clearly doesn't care what the quality of the existing house is like.

Chemical Byrne

She might be able to blag more off him and he might give it depending on how bad he wants it. On the other hand if he knows, and I'm sure he does, that she's not getting much interest then he would have no reason to pay any more. Its all down to horse trading at the end of the day. Since he's offering the asking price and offering more for next door, then she might have some leeway to negotiate upwards. But if he knows she's stuck, why would he negotiate?

The ins and outs of the house itself are pretty much irrelevant to the value of the site if its a development site with not much interest from residential buyers. Assuming its for redevelopment the only way the house could affect the value of the site is if it involved a difficult demolition, ie - deep foundations, asbestos, contamination etc.

Taboola

Could he be factoring having to demolish your mothers house into his offering price?

Edit: read that wrong.

Maybe he's offering her more because she would want more considering her house is bigger?

Chemical Byrne

^ Sure doesn't he have to demolish the house next door too? And it's bigger at that!

seamus

The size of the house next door is somewhat irrelevant since it's going to be demolished anyway. If it was a sale to someone who planned on living in it, then it would matter, but since it's for development really only the size of the site matters. But the developer knows that a residential vendor puts the bulk of the value in the house rather than the site, so has to offer more to secure it.

Your mother can look at this the opposite way - her neighbour is getting shafted because they could get more on the open market for their property, but they've accepted a lower offer for the sake of an easy life.

As alastair says, knowing what's been offered next door gives her leverage to go back and push for more. Without knowing the developer's plans, he may not need both sites at the same time, and so could demolish the house next door and make her life hell in the hope that she'll sell up at a lower price.

It's for this kind of thing that we really need professional negotiators in Ireland.

Greaney

My advice would be, 'don't try and be too clever'. I gave this advice to my mum and it worked for her.

Your Mum put a price on her house, the developer's okay with that, what he does with it afterwards is his business. If your neighbors house is bigger and more expensive, then the builder, in offering them their asking price is compensating them accordingly, no?

ted1

If both houses are to be sold for the sites, I'd advertise the site incorporating both properties. There's more than one developer out there .

How much land would it encompass?

seanie27

Thanks so much for all the responses.Just a few more details: both house are attached to each other (Semi-Ds) both house sit on 0.26 acres. I've suggested my Ma ask for another 10,000 and we'll see what happens. Both house are being represented by the same estate agent.