It seems as though if they want you to come for a meeting they are seriously considering offering you what you want. I would bring a real estate agent with you, I’m sure you can find one that would love to get in on the commission and they could not only show the developer you’re serious but also can make sure you get what you want and no less. OR if you’re not 100% ready to accept the $500k then just tell them no.

I do not and have not been able to find out an accurate appraisal for this neighborhood or land

Contact an appropriate appraiser who works with developable land.

You would likely get the best terms if all the seven property owners could work together. But, knowing people, that may be impossible. Still worth a try. The homeowners on an entire street here in Toronto supported a developer at the Committee of Adjustment for re-zoning, got it and sold all their homes for a condo complex.

My sibling and I were offered a buyout of our share of a Honolulu shopping centre that was likely to be redeveloped. Based on our appraiser's conclusion, the sibling suggested x. I added a couple of hundred thousand and the buyer accepted it immediately. Too easy. :(

Assuming you are in the U.S., just go and don't sign anything until your attorney looks over it.

They may want to play some kind of game and they may not. You will not know until you go and listen. Just reject any offer that expires before you can get your attorney to look over it. Sometimes people will try to pressure you into signing on the spot, simply refuse... any legitimate deal will stay together long enough for you to seek professional advice.

I have seen developers do options and contingencies before. In an option they will pay you today for the right to buy your house for a set amount for a certain number of years. For example, a developer might give you $50,000 today and say that at any point in the next five years he can pay an additional $450,000 for the property.

In a contingency he will only complete your deal if other homeowners are also willing to sell. The idea being that you will help advocate for your neighbors to sell also.

Both of the above a legitimate deals that they may want to present.

You have a reasonable case, regardless of the appraisal, you can't replace your property with a suitable alternative and are not willing to sell unless you can.

Do what worthy said.  I fear your counter offer may be too low, particularly if the land can be used to develop an apartment complex.  All 7 owners working together to negotiate with a professional appraisal would be best.

Thank you all for these very helpful and thoughtful responses. I will be taking them all into consideration immediately and researching lawyers and appraisors and real estate agents. If my counter offer is too low, is it crazy to change my mind and ask for even more? Can you even do that? Total novice here. Also was very worried I would be laughed at for asking 200,000 above their offer but now I feel like it wasn’t so silly.

I would recommend you state that you would like to hold off on meeting until you have more time to make an informed decision.  Getting more information may make you realize your counter was too low,  or perhaps too high.  In fairness to everyone, you need more data and an appraisal to make a decision.  Keep in mind that even if the appraisal came in at 500k, it does not mean that you can only ask for 500k. Depending on how badly they want it and what value they can get out of it long-term in terms of having that land, they may be willing to pay more. And ultimately you have all the power because it's up to you whether you want to sell or not. You could come up with an unreasonable number and they could walk. But it's your house and you can do what you like.

Don't worry about countering too high. Too low, they'll be happy to take it! And, of course, have your trusted legal advisor look at anything. And as noted by bry911, the offer may have further terms that need discussing.

Certainly though, contact the owners of other target properties. An acquaintance of mine packaged his property with a neighbour (two corner properties) and the developer split them into three building lots.

But don't be surprised if one of them turns out to be an architectural holdout.

(Unfortunately, our family lost several prime Honolulu properties to the one developer that brooks no interference: eminent domain.)

Don't go to any meeting by yourself. You're dealing with pros who want your land and really don't care about you. They'll take advantage of you in ways you never even dreamed of.

I wouldn't spend money getting prepared for a meeting about an offer that was only 60% of the minimum you will accept. The last thing you want to do is spend money researching whether or not an offer that you don't even have is a good offer.

I would take the meeting and if they are willing to meet the $500,000 then let them know that looks like a good offer and you will get back to them. Then go spend some money to evaluate their offer. If it turns out that $500,000 is good, then that works. If it turns out that a fair offer is a bit more, then see if you can get a bit more at that point.

ETA: Real estate contracts are not enforceable until the deal is in writing and signed. It isn't that hard to go to a meeting and not sign anything. If you want to be certain, don't agree to anything in email either. Right now you have no skin in this offer... it is just a meeting.

Demand way more than $500k, and tell them straight out not to waste your time.

Man, you guys are good. With advice like this who needs a lawyer? Lol. I just relooked at all the offer and it has a page two asking us to sign a 13 month contract promising to sell to them only with the condition that they obtain planning permission from all the other neighbor parcels. Is planning permission the same as outright purchasing the plots? Does this mean we only get paid if they all sell? I will definitely need a professional to accompany me if these are the details at the meetings offer.

Does this mean we only get paid if they all sell?

Sounds like it. It's not unreasonable. The developer doesn't want to have bought properties that are useless for the end it has in mind. But to find seven contiguous homeowners who want to rule out moving in the coming 13 mos. sounds a long shot. (Maybe because I move a lot!)

Planning permission is a separate issue from all property owners willingness to sell. The contract they are requesting would prevent you from selling the property during those 13 months and may also have other limitations on other things you can do with the property. At a minimum that contract should include a non refundable fee (paid to you) for your willingness to hold the property for those 13 months.

Cash on the barrel head, no conditions, or eff off.

As I said in my situation sell the developer an option to purchase. I would also include the appreciation of the property accrued while you still owned it. For example if the value increased 5% in the time you still owned it the negotiated price should also increase 5%.

I also wouldn't broadcast your contract details to the other 7, It's between you and the developer. Buying an option from just one seller could be acceptable by the developer but maybe not 8 as being to expensive.

The market may change in 13 months and the developer may decide to back out or even go out of business. You could sue but costly but a judgement doesn't mean he will pay so get something up front to compensate for inconvenience or stress you will have, and I'm pretty sure the stress level will be high until it's sold. Should you pack up, hold off on maintenance, improvements, start looking for a house and when, It goes on.

Here is my 2 cents... No one who has any business in this meeting is going to charge you less than a grand for taking a half day off to go to a meeting with you. That person isn't going to advise you during that meeting in front of the party making the offer. Once the meeting is over and the contracts start moving back and forth that advisor is probably going to recommend that you attempt to move to some sort of option rather than a contingency.

That is likely the best you can get out of this. This limits the developer's risk because he is only risking the amount he is paying to hold your property for some time, but it also increases the amount he is willing to pay if the deal works. The greater the risk of this deal not getting done, the less the developer is going to want to pay if he is paying cash for the home.

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As someone who has done a few development deals, including a few multi-family developments, here is my take...

A pool of money looking for a suitable return is different than a property a business needs. It seems like you have a house that could be developed into a multi-family unit, which is not the same thing as having the last undeveloped lot in the business district of a metropolitan area, or having the only suitable property for the new WalMart.

Again, having done a few of these, I wouldn't even consider paying a cash premium on a property with this many contingencies (assuming that some of the other properties are needed for the development). That is a great way for a developer to end up in bankruptcy. I might be willing to pay for an option while I try to work the deal.

The comments remind me of stories people have told me when about to buy a car. Thinking that as amateur negotiators they can walk into a car dealership (whose business it is to negotiate prices every day of the week) and bamboozle them into selling a car at a price lower than they want to sell it for.

You have a home you may sell. One. Busy developers have many project opportunities they explore and try to put together. Many don't work out. Location, prices and projections, market possibilities are among the things they deal with. If the purchase price for these parcels is too high, that alone can get them to move on.

Don't fool yourself into thinking you can know or understand what the developer knows and has in mind because of its prior site investigations, specific project objectives and parameters. Stay on your side of the fence - you're a potential seller, nothing more.

If I were in your shoes, I would talk to other neighbors. If all would sell for a reasonable (not pie in the sky) prices, I would then meet with the developer together. With a lawyer along. If you learn some are not interested, then spending any time on your own with the expectation of a dreamy outcome may not be warranted.

I happen to agree with Elmer this time. The OP likely hasn't hit the lottery. There is not enough information to give meaningful advice, but given the numbers we were provided, this is probably not park avenue.

I doubt the OP and the developer are even over the same barrel. Likely the OP's property only has a premium for a developer, but the OP's property is probably not the only piece of property suitable for development.

No one is going to spend money creating even a preliminary development plan for a shot in the dark offer. The only time you are going to produce a development plan before acquiring the rights to develop is if you are angling toward an Eminent domain action from the city. In which case this property would likely need to be developed with some kind of mixed use.

This is exactly why option contracts are so popular for property developers. It allows them to acquire the right to develop the land for a reasonably small amount of money and then create the development plan, thereby checking profitability, before buying.

@Bento Box - In my opinion your best option is to appear open to a reasonable deal at this point. Don't walk in there like you won the lottery and don't start demanding premiums, or preparing for negotiations. I think your best bet in this meeting is to get them interested in getting the deal done rather than ironing out the details of the deal. Let them know that you can't accept anything before your attorney looks it over, but you want this deal to work. You can start negotiating for more after they get a little bit invested into the deal.

Good luck

Good advice here...one more thing while you are adding up your profit: capital gains. You have to live in a primary residence for two years. If you sell before that time, you will pay taxes on the difference between the $145,000.00 and the $500,000.00 sale price. There is also a tax on profit based on your marital status...single or a couple.

If it works that you decide to sell, get thyself to an account.

My advice is always to try to pay more tax this year than you paid last year. More importantly, that's been my consistent advice to my now adult kids.

The tax rate is never 100%. If you pay increasingly more each year, that means you have increasingly more left in your pocket.

Taxes obligations should always be minimized as the law permits but profit making activities should never be curtailed or avoided simply because an increased tax obligation is a consequence.

I agree with the comments to talk to your neighbors. Where are you going - once and if you sell?

"We and 7 other homes make up the last strip of a neighborhood in the middle of town we frequently get letters from property developers in our mailbox"

Remember what they say, location, location, location. So shoot for the moon!

It costs nothing to listen. If your property has any development value, get used to listening. You will be approached multiple times.

Bundling your property with the adjacent properties will most likely produce the highest and best valuation. It will also take a zoning change in order to achieve zoning that will allow development of the highest and best value.

Step one. Speak with your neighbors and see if any of them have been approached by this individual or entity. Don't talk numbers with your neighbors. If the answer is yes, you may have a serious developer.

If you have a serious developer or realtor representing a developer, it costs nothing to listen. If it is remotely interesting, you can consider the offer later. Get it in writing. At the end of the meeting, tell them that you will take it under advisement. Walk out. Sign nothing.

At this point, it's time to find a real estate attorney to represent your interests. They can help you with assessing any offers and hiring an appraiser that can advise you about valuation.

The thing about finding a real estate attorney is if this parcel of seven properties has any value as an assemblage of properties, you will be approached again by other developers. It's good to have that attorney on speed dial when this happens.

As a retired appraiser, my advice is to take your time and find a good real estate attorney for use in the future. The developer is the party taking the financial risk. Don't expect to get any more than the fair valuation of your property. Any more than that probably means the developer's check will bounce.

update for anyone interested: we had the meeting and decided to follow advice and just go and listen. They had another offer ready at 480,000 (their previous offer was 300,000) I said 500,000 was our minimum. they said they could make the effort to reach that. I really was not expecting them to jump So quickly to the higher offer. So the next step is to get a land appraiser and lawyer is that what you all would do? Do you all think that means they can go even higher since they accepted so quickly? It is definitely a contingency as they want to obtain planning permission for all plots and told us they already have 3 secured and the rest in talks.

Also we do not know any of our neighbors and although I agree with you all that it would be ideal to have them on board I am weary to involve them or knock on their door lest they think I am meddling. Not sure how open they would be

With a contingency sale there is no risk to the buyer, the seller accepts all the risk of deal not happening. Moreover, the buyer can always tank the deal. They can submit a preposterous plan that they know will not get approved or simply decline to purchase one last piece of property for even reasonable amounts. Developers may not even bother with a profitability analysis prior to negotiating contingency deals as they have so little skin in the game. Given that there is so little risk to buyers, they will typically offer more on contingency deals.

The problem being, you are about to go spend money investigating a deal that is largely written in disappearing ink. How much you spend is really up to you, if you are just getting an appraisal they are fairly reasonable, but it is still money at a significant risk until they have the other offers.

Alternatively, you could try a letter of intent or memorandum of understanding that states your intention to sell your home to the developer once they have obtained commitment from the other owners for an amount subject to review after consultation with counsel at that time.

You might also attempt to get some guaranteed money with an option contract. Since they are going to pay you some money (usually 5% to 20%) whether or not the deal goes through you get some guaranteed monies, however, they will likely want a better deal with an option contract. So instead of going for higher amounts you could try to nail down a guaranteed $30,000 on a 2 year option for an additional $450,000. You still have some inflation risk there, as who knows what will happen in two years, but a bird in the hand is often better than two in the bush.

At any rate, I am happy to give you general input on these deals but any specific guidance should really come from someone local who is familiar with your real estate market. This deal is just too dependent on local conditions for us to really know how you should proceed.

Good luck

I am weary to involve them or knock on their door lest they think I am meddling. Not sure how open they would be.

I wouldn't try to be a detective or anything, but I think it is OK to note that you are thinking about selling your property and ask if they are. Just state you really don't want to know anything about their deal and aren't there to talk them into selling, but didn't want to waste your time and money if you were the only one.

Thanks your general input has been very informative and helpful! Take care

"I am weary to involve them or knock on their door lest they think I am meddling. Not sure how open they would be."

And you should be, they are strangers who will continue to be strangers. Maybe not meddling but you could open a can of worms, and tempers will flare at some point I guarantee you. Organizing as a group and there will always be a dominate alpha male who will declare himself the leader, but can he negotiate with a little intelligence?

Don't bring a group of emotional people into your deal, or jeopardize the 3 deals already made injecting human emotion into the mix. My lots bigger so I should get the most, My house is nicer so I should, who elected you boss, I want a million......on and on. Did any come knock on your door? Greed will kill the deal for all dragging in the other 7. First question everyone will ask, how much were you offered? Don't go there.

kevin9408 put into words that I could not...keep your cards close, for now.

You need non-contingent on you, all cash offer expiring let's say 60 days. With XX days for you to move out. If they want to priced out the land or see planning permission are - they should go ahead. For commercial builder $20k is nothing. (One month of interest). Don't waste a lot of your money pursuing it. Because they could walk away. It sounds like they are ready to move with their project.

They are not going to be happy with you wabling. I would have NO issues knocking on your neighbors doors and asking. Do not disclose full your own arrangement with them. But if you discover they their offer significantly better than yours... You can use it to negotiate.

This thread is the Houzz version of: Tell me you don't know anything about commercial real estate transactions, without saying you don't know anything about commercial real estate transactions.

This isn't a game of Monopoly.

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No developer is going to give the OP an all cash offer when they need seven properties and zoning board approval.

Most of these deals never make it to the end. I make a few of these types of offers each year and maybe get one every three to five years. The number one reason that they fall through is some owner thinking their lump of coal is suddenly a diamond just because I offered them a premium. Those are the guys that call me six months later to see if I am still interested... I never am.

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No one here is asking the necessary questions to give meaningful advice, which is a sign about how the OP should weight it.

• Is this offer from the owner of several other complexes on the street, or is this some underfunded yahoo putting together a deal with a couple of dozen variables?
• Is the offer even from a MFU (multi-family unit) developer? These deals often get put together by commercial realtors who secure the land and zoning then sell it to actual developers.
• What is the approximate value of the property to another home owner?
• Is the home value increasing or decreasing because of the MFU's in the area?
• What is the separable value of the land versus the home?
• How many units are in the current developments and how many units can they expect in the new development?
• What is the MFU cap rate in your area?
• What is the approximate annual rental income on the existing complexes?

These are just a few of the questions that someone who really knows what they are doing is going to figure out before they give you advice on negotiating. If you don't know the answer to these questions, you are just playing Monopoly with someone else's money.

Bry911, it is a game but similar to chess and needs skill to win, not monopoly based mostly of chance. Bento is playing it well so far, but the other 3 who signed already have lost deciding to roll the dice and leave it to chance. It needs to be played using calculation, tactics, evaluation and stagey but doesn't require a crash course in commercial real estate.

It is not a game like chess... seriously.

It is a DSIS problem. Bento, isn't playing anything, Bento is attempting to maximize their benefit while minimizing the risk. It is a standard optimization problem. It can't be done without information.

Yes, do an optimization analysis. A regression analysis too. Maybe set up a game theory view of possibilities to model your strategic options

(Response to unhelpful comment)