Home Selling in North Bergen>Question Details

Louis, Home Seller in North Bergen, NJ

Best way to sell a single-family house on a double lot?

Asked by Louis, North Bergen, NJ Fri Nov 27, 2009

I'm selling a small single-family home in North Bergen, NJ, that needs a little TLC (including a roof). But it's on a deep double-width lot. Conceivably somebody could demolish the house, subdivide the lot, and sell them separately or develop them. What's the best way to approach this? Put a few bucks into it and take my chances in what appears to be a worsening local housing market? Or leave it as is and try to find a developer willing to subdivide and develop? Or rent it out for a year or two until the housing market begins to recover?

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Louis,

Here is what you need to think about from a developers mindset.

How much would two new homes go for? Homes that would fit per zoning requirements.
Demo costs for house on there now?
How much would improvements cost?
Carrying Costs and closing costs (including real estate commissions if the developer uses a real estate company)
Cost to build each unit?

Calculate all those things and they will be able to see how much profit is in the project. You think the market is saturated with homes, try taking a look at lots on the market. Here in philadelphia and surrounding market, there are enough land listings to last 5 years in terms of buyers with the current sales stats. talk about saturation.

Here is another option for you. Not saying it is the best option but what about going into a joint venture with a builder. You front the land, they demo, improve it and build. You walk with a preset amount from the sale. Doing it this way will most likely net you much more in the long run as they dont need to finance the purchase of the lot which can be a pain to get from a bank nowadays.


Sean Dawes
Web Reference: http://www.SeanDawes.com
3 votes Thank Flag Link Fri Nov 27, 2009
One more thing to keep in mind. You mentioned a worsening housing market, which is true, especially for one families in NB. Your best chance to get the most amount of money is to sell in the least amount of time. Think of it like a downwards curve, where more time means less price. go to this link on my website for some helpful info. While your there feel free to take a look at my testimonials from past clients as well. Thanks.

my website: http://www.AbbasiTeam.com

Seller resources: http://189172.yourkwagent.com/atj/user/SellerResourceGetAction.do
1 vote Thank Flag Link Wed Jun 29, 2011
Hello Louis, i specialize in selling North Bergen Real Estate, me and my father have been doing so for a combined 35 years. I see this scenario alot in North Bergen and one of my most recent sales was exactly your situation. Drive by 1307 84th street... single family home on a 60X116 lot... the house was a small cape, nothing special, needed updates and probably needed a new roof as well. I believe you need to market to both types of buyers. That is what we did and it resulted in a successful sale where we went under contract in less than 2 weeks. We listed for $270k, and sold for $240k to a cash buyer looking to rent it out and eventually knock it down and build 2, 1 family homes on it. The ideal buyer for something like that would be somebody who wants to live in it and enjoy the space, but more than likely a builder will be attracted to the oversized double lot. The numbers must make sense for a builder, it would run them about 400-500k to knock down a house and build two one family homes. each new home will probably sell for about $350,000 at most, making the total sale $700,000. thats a profit of somewhere around $200,000... So to recap and answer your question briefly, you want top dollar, but you also want somebody who will purchase without asking you to complete all these repairs. An "AS IS" Sale. If you are interested in having me talk to you over the phone about your property in detail, i can try to help make your decision much easier. and i will go over the current market conditions with you here in North Bergen. Call me at 201-281-3855 or email me at Labbasi@kw.com. Thanks.
1 vote Thank Flag Link Wed Jun 29, 2011
You're preaching to the choir, guys. I made all the same arguments, but I got overruled by my two sisters. They seem to think that the roof problems would turn up in a home inspection and any prospective buyers we find would either demand big concessions on price or just walk away. They also wanted to completely renovate the bathroom for god knows how much more but I told them they were out of their minds, it'll be like throwing money away. I think both of them have more of an emotional attachment to the house than I do.
0 votes Thank Flag Link Sat Feb 20, 2010
Louis: Thanks for your prompt reply. As Sean Dawes said, "Why put a roof on it?" Can you get that money back if you can sell? Why would you put a roof on it? Are both of your sisters from the area? I would like to have a look, kindly call me with the address. My office number is (908) 561-5400. I look forward to talking with you. Regards,
0 votes Thank Flag Link Mon Feb 15, 2010
Louis,

Why put a roof on it?

I remember chatting with you. Why not just market it to buyers with a 203k renovation loan? $11,000 isnt just spare change to be putting into a property.

If you want to chat again, just drop me an email at Sean.Dawes@LNF.com and I would be happy to talk.


Sean Dawes
0 votes Thank Flag Link Sun Feb 14, 2010
Frank, we still haven't put the home on the market. My two sisters, who own the home with me, wanted to fix the roof ($11,000) and put it on the market in the spring. They think we have a better chance of finding a buyer than a developer willing to subdivide and build. They may be right. At any rate, that's what we're doing. Thanks for your interest.

Louis
0 votes Thank Flag Link Sun Feb 14, 2010
Louis: The market is the market and the location is the location. Did you subdivide or sell? Regards,
0 votes Thank Flag Link Sun Feb 14, 2010
I suggest having a Realtor perform a "Estimate of Fair Market Value" for the property and analyze the "highest and best use". You may be able to negotiate a fee or make another arrangement for compensation, either way you need to know your options.

Part of the puzzle is how much other inventory is available and what does it cost.
Example - there is a house in my market that sold for $600,000. They took the house down to the footings and left the chimney, and ran out of money. That leaves a lot for $600,000. A developer will look at the end result first...if I build a house on that lot, what will it be worth? Probably, in that neighborhood, $650K for a three or four bedroom house. So the builder subtracts the cost of construction, the fees for financing, insurance, etc. and probably ends up with something under $350K that he would be willing to pay for the land. I am not going to go farther with this, but you get the idea.

In your case you may have some options:
Having a residence on the property might be a plus for a developer. They can rent out the house, use that to offset their carrying costs until they get permits to build what they want to build.

The biggest factor is the market. That's way having a market expert explain to you what the upside potential may be will help you make the best decision.
0 votes Thank Flag Link Sat Nov 28, 2009
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Your situation is most difficult to comment on because of not being able to have a feel for the property, its condition, the location, etc. However, we strongly feel that an experienced local real estate professional's insight might be able to help you to evaluate your options in a better light.

You are on target with your possible choices but need to know what the possible "sale price" could be for each scenario to be able to come to an informed decision.

It sounds like throwing money into a "money pit" would be ill advised........

You are on the right track.....but keep collecting important information.

The Eckler Team
0 votes Thank Flag Link Sat Nov 28, 2009
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