Selling out to a developer?

[Wayne02]

Well, it has finally happened, got a letter from a major developer who is interested in buying our place to put in a housing development. Not surprised I guess, as these developments have been replacing the rural properties all around us at an alarming rate over the last 4 years.

The letter goes in part like this:

"Phoenix development is very active in your area, having recently completed a 197 lot development and a 77 lot development. We are assembling property for an upcoming development located at x. Some neighbors have agreed to sell and we are preparing offers at this time. There will be many changes to the area surrounding your property as there are plans to add to the sewer line, adding road capacity and increased density.

I would like to talk to you as soon as possible if you would consider reviewing an offer to determine if you are interested in participating in this assemblage of property. Please call me at x at your earliest convenience."


Sigh... naturally I just sunk 8K into a new septic system and 8K into a new roof, just finished building a really nice deck off the back of the house etc.

I'm wondering about getting a real-estate lawyer to possibly help with this type of negotiation should we decide to sell? Anybody have experience with this type of situation?

Thanks
Wayne

[bob clark]

get organised talk to your neighbors. big money goes where the least resistance is make it to costly for them . that is if you dont want to move. If you do , get all you can and make the best of it.

[homebirtha]

Yuck! That's a shame. I agree with the post above. Talk to your neighbors and see if they really are interested in selling. I would ask this developer too, exactly who has agreed to sell to him. I think they use that to get folks interested. Especially considering how heavily the letter emphasized how much things the area would be changing, higher density, etc. Seems like a way to convince you to sell, whether it's true or not.

[MELOC]

my hometown is currently in the final stages of this sort of development. the last large parcels are currently being developed. the major store chains have moved in, etc. it is really a shame to see it go.

so many things change, some for the better, but most for the worse in my humble opinion. our municipality has been targeting areas for sewer expansion to include the newer develpement and neglecting the older neighborhoods. roads near the building sites are in the best shape ever to entice new buyers. the plans for a new (fill in the #of x's) $xx million new school is planned. homes start in the upper $490,000's in one neighborhood.

many of the farmer's heirs have decided to sell out. when one went they all went. when they stood together it was delayed. in the end money talks.

i can only ask myself what they intend to do with all of the money? buy a home in the country and retire? they had the home in the country so i really cannot understand. someday the grandchildren of those who sold out will look around for a nice spot to homestead and wonder why their ancestors sold out. having a parcel of land in this day and age is a blessing and should be treated as such. many of us have lost site of the "good steward" aspect of life.

as one who is blessed with the charge of a small few acres, i am proud to be a good steward and let the land alone as best i can. i cannot imagine houses being where my trees used to be. just kill me if it happens.

i suppose it is a person choice. if you need the money that bad take it and do not look back. you have a great power in your hands as do all of your neighbors. at the very least coordinate with your neighbors to minimize the impact of development by creating little homesteads instead of 1/4 acre lots. the developers will not like the idea at all. in time if you all stick together you will get it your way. property value will not drop unless the country has major problems. your chance will always be there and it will only get better.

you could actually work with your neighbors to develope it yourselves if they feel they must sell.

[agmantoo]

If you elect to sell
Set a time frame as to when the closing will occur. If the zoning is changed make certain the transaction cannot reverse and insist the closing happens at that time. Learn what the phrase "time is of the essence" means in legal jargon.
Do not permit a situation as to where an extension to the closing can occur without substantial non refundable money received
Get a non refundable deposit up front, define the length of the engineering time.
Get all engineering reports and findings forfeited to you if the project does not go through. These have value for the future.
Talk to an attorney and a CPA up front.
Ask for more money than you will settle for, the buyer will find reasons to compromise.
Sell your deed not the surveyed acreage, the buyer will cut out all right of ways and utility access and attempt to shrink the acreage.
Ask yourself, can I buy more acreage and better housing with the income from the sell? If you cannot better your situation, what you own may be a better investment.
Realize that you are a "babe in the woods" when it comes to this transaction. You are doing this once, the buyer has all of the experience and knows all the tricks. They will do unscrupulous acts you have never considered.
Do not commit to others of your buying something based on a specific closing date, closing dates by developers are a moving target. You can find yourself scouring around trying to meet a deadline on your future purchase and with insufficient funds to close.
Like a cow chain, I have been dragged through the manure with the above situations until I learned better.

[donsgal]

Originally Posted by MELOC

i can only ask myself what they intend to do with all of the money? buy a home in the country and retire? they had the home in the country so i really cannot understand. someday the grandchildren of those who sold out will look around for a nice spot to homestead and wonder why their ancestors sold out. having a parcel of land in this day and age is a blessing and should be treated as such. many of us have lost site of the "good steward" aspect of life.

as one who is blessed with the charge of a small few acres, i am proud to be a good steward and let the land alone as best i can. i cannot imagine houses being where my trees used to be. just kill me if it happens.

All the money in the world could not replace the feeling I get when I am taking a walk around my land with the cold wind blowing and not a sound to be heard except the wind in the trees. A couple of buzzards circling in the distance looking for a roost as the sun drops low in the sky. A deep breath of clean air and blessed, blessed silence.

I would rather eat catfood for the rest of my life than sell one inch of my homestead. It's home and it's mine.

donsgal

[Bresias]

Maybe I watched too much TV, but I would be afraid of saying "No way!" Not that I wouldn't tell them where to go (if you don't want to sell), but I guess I'm thinking of nasty possible retribution on the part of the development company.

How close to you will all these new houses be? What KIND of homes will they be, lower cost or mansions? Will you be surrounded by this development? If you don't sell, will they want easements? What will this do to your well/water supply? Good god, I am probably out of control, but what is happening to you is sort of a nightmare, to me.

On the other hand, if you do want to sell, get as much as you can and come to Idaho, we're only next door. I grew up in the Puyallup valley, so western WA is special to me, just hate how it is growing into the new northern California.

[skruzich]

If you don't wish to sell, heres what you can do to make the land less desirable for a developer. Have a covenant entered on the deed that the land cannot be subdivided into less than 5 acre parcles!

[harley]

Besides a covenant about 5 acre lots. Another popular idea I have seen is to designate an area as green land. i.e. park, trails walking area. Not sure what your land is like. But even worse than only being able to split it into chunks is having most of it untouchable, other than to build walking trails, places for kids to play, maybe a HUGE community garden. And putting the covenants in, im probably wrong, but they dont come into effect until you sell. Your land would be grandfather claused until it changed hands. Dont know much about the legal side but it may be worth looking into. Find out what your neighbors are doing. If they really are selling, look at how everything is going to impact you and your way of life. If there are going to be lots of kids running around or dogs running loose and lots of traffic and noise, then if you have critters and such, you might be very unhappy. So if you decide your quality of life would be less, take them to the cleaners. Get assessments/appraisals from YOUR OWN sources. NOT the developers. If they offer you X dollars, especially without asking for permission to do an appraisal, triple their offer. Show them you are willing but are not gonna be walked over. I know i ddidnt make much sense, but dont let ANYBODY try to influence you. Remember YOU own the land so YOU"RE the one in control until you let your guard down.
Good luck and think about whats gonna make you happy more than anything, your way of life and sanity is worth more than anything.

[Paula]

I don't know how many acres you have, but look up the Grassland Reserve program the NRCS has. They pay you to keep your land in pasture. There are several different term lengths you can choose. For the agreed upon term the land cannot be divided. You can also put the land permanantly into the program and they pay you a large percentage of what the land is worth. Sorry I don't remember more details - it's been several months since we looked into it.

[BeckyW]

Wayne, if the city/county is looking to have your area developed, putting covenants on your deed will not stop anything. Planning commissions will simply over-ride them. It's done all the time. Frankly, don't waste your money filing.

Couple of thoughts on large developers - 1) they are not all created equal. Really big developers have timetables that astound smaller developers. Your property may be on their 2 yr, 5-yr or throw-the-deed-in-the-safety-deposit-box-until-development-comes-within-1-mile-of-the-property timeline. All depends on how cash-heavy these guys are. 2) Speed of the development is in direct proportion to how fast the planning commission wants to see expansion out your direction. And the clout the developer carries w/the planning commission.

Have you ever looked at the county master plan for your area? What is their long-range plan? It may not be plastered on the wall of the planning office however I GUARANTEE you in western Washington, it's there.

You can bet money that all your neighbors got the same letter. These guys are fishing for a future project. And lucky you, western Washington, like most of California, never loses money (for the most part). Sounds like it's only a matter of time, my friend.

The litmus test is how far are NEW subdivisions from your place now? If you were in a plane and looked down, would you see your farm in the growth path? If the answer is yes, you'll be getting letters fairly often from now on. If you say, no, the path is the opposite direction, then this is probably a more distant project for them. If that's the case, I'd advise decline the offer. When the path is coming your direction, you'll be offered a much sweeter deal than present.

We all are saddened by prime farmland disappearing. If it were me and this is the first letter I'd gotten, I'd sit tight, enjoy my farm until the time came when so much cash was dangled in front of me that I'd be crazy not to sell and go buy a new farm further out.

[Wayne02]

Thanks for the replies, please keep them coming. It helps me to sort this thing out a bit.

We have been here for 20 years now and have built up some equity in the place. Unless the offer was ridiculously low we would get some profit out of the deal. Whether it would be enough to re-establish ourselves is of course the question.

We have some acreage in another, more rural county here in WA. We have been loosely planning on building a house on this property. We purchased it recently as it borders my wifes parents farm and we would eventually like to get to a more rural area. However, it is completely undeveloped and would of course need much work before it is ready.

The general thought is we would stay in this house until my son is out of high-school in 3-4 more years. Work on the rural property and figure out employment/ income issues in that county.

So, do we want to move? No, not now at least. We purchased this house originally because of the school district, and it has worked out well. In addition my wife has a good paying job that she really likes, with a 7 minute commute. Even though we have developments all around us, our little piece of the pie is relatively secluded. But that is all going to change apparently.

I'm printing the land plots off the internet right now and will speak with two of the neighbors about their thoughts. The letter actually gave a description of the location of this new development. There is one guy who owns a great deal of the land in the targeted area. He owns a large horse stable and 7-8 residential rentals in the area. Looking at the map, I don't see how they could make this new development work without his land. My guess is they got him to agree to sell, and are now working on us little guys.

We live in an unincorporated part of the city/county, but there have been zoning discussions going on for months now. The county wants to make changes to the zoning and take us from "rural" to "suburban", and put us into some sort of "growth management area".

The other subdivisions this outfit has put in down the road have houses in the 450K range at the low end. Ours is valued by the county at 220K, but if you could find a place like ours it sells for closer to 280K. The county eval has always been far lower than the actual market value around here for houses. Median price for the county has risen something like 28% this year, and is now at 330K I believe.

These subdivisions all pretty much have the same style of house. Two story, two-three car garage, postage stamp lot, crammed together. The other development these guys did down the road was 9 acres, which they bought for 2.1 million and crammed 60 lots on it.

It is of course hard to tell, but it looks like our place would be on the perimeter of the development, with the edge of the development running along the other side of my private road (unless we sell to them of course). Probably means the 2nd. story backside of the perimeter houses would be looking right down into my front yard, and the front of my shop. Guess I'd have to stop running around naked in the shop.

I wonder if they would make me hook up to sewer when they bring it down the main road? When the septic guys were here they quoted me 50K to just get a sewer line down my private road from the main road.

So many questions...

Wayne

[ThreeJane]

Sorta off-topic, but whenever I think about this happening where I live, I get really panicky and stressed out.

Hope it works out well for you.

[MELOC]

in pennsylvania i think there is a distance from the line consideration. if you are too far away you may not have to hook up. no idea what washington state is like.

if you or others do not wish this to happen, you have to fight it hard now. do not let the rezoning happen. once it starts, it will not ever stop.

several folk in my area tried to stop such development 15-20 years ago. first this farm went and then that wetland. the efforts had like 80% support among the people to stop or slow the growth but money speaks very loud. the township supervisors allowed pretty much anything to be built in most areas. in one area the building was restricted to 5 acres lots, right across from my home thankfully. i fully expect that to change if/when the sewer makes it here. wetlands or not it will be a developement too. during the next 15 to 20 the population has doubled. no one here enjoys the way of life that once was. what used to be many little homesteads of sorts, simple country living, is now all sprawl. just realize there is no way back.

i am not sure of the legal aspects of restricting growth. it seems municipalities take the position and use the excuse that they will be sued if permits and rezoning is denied. i always thought that if the majority of the people of a municipality wanted something, like less growth, then ordinances would pass and it would be as such. and yet i see towns say growth is coming and it cannot be stopped...why not...just say no.

[MaryNY]

First get a lawyer - preferably one who is very experienced in large real estate deals (like developments) but who hates developers!

Do not let the developer buy the land with you holding the mortgage and them paying you piecemeal by the lot at the time of closing of each lot after the houses are built -- what if they go out of business, or the whole subdivision burns down while under development (or there is a hurricane or a tornado) -- that would just delay your getting payment. If you should for some reason do such a thing though, be sure the papers state something like if the developer even so much as types the word "bankruptcy" on his computer, the land reverts back to you - period.

Also ask the highest price you can dream up that is even half way reasonable -- then take less. They will think they got a bargain, and you will get enough to make moving worthwhile. Oh, and be sure to arrange that you won't have to move until spring -- or better weather -- in your area. If there are any other "perks" you can think of (like they pay your moving expenses?) - get them included in at least your first counteroffer. Ask for the moon, the stars, the sun and a planet or two, and settle for the moon and one of the stars. Good luck.

MaryNY

[Kenneth in NC]

wayne02 A friend of mine just went through this and did very well. It's a matter of you knowing your property's true worth. Is it a "Key" piece in the developers plan?

When Jim sold he stipulated that upon reaching an agreement on price that closing would take place 10 days later and he was to be paid in full by Cashier check. The developer was happy to do this. No mess no fuss.

My best advice is "Do not think about what YOU paid for it" factor in today's worth and add a premium as you were not advertising it for sale. IF the developer is going to push down all structures on your place see if you can salvage for FREE the buildings and stuff. Jim got both of his 16x16 buildings moved because the developer didn't want them.

Kenneth in NC

[Spotted Crow]

Time is of the essence usually means as fast as you'll sell out or as fast as they can cheat you out of your land...
We had tons of woodlands in my general area. They've put up $500K+ mansions all over. People are losing these places at an astounding rate. I'd get together with the neighbours and figure out what the heck the developer is trying to do.
They're building on wetlands right now the next town over and now have to figure out how to replace them...Jeeze don't build on them in the first place??
dollar to donuts, they'll be slapping up expensive houses, not low to middle income, but catering to the yuppies. It's really sad...When Joni Mitchell wrote, Pave Paradise, put up a parking lot, I never thought I'd see it...

[Mike in Ohio]

Interesting advice so far. Here's my 2 cents:

1) Do not hire a lawyer who has an ax to grind one way or the other. This is about a potential business deal and it's impacts (whether it goes through or not) on you and your family. If you do need to hire a lawyer, find one that is specialized in real estate law as well as tax planning to address the financial consequences of how the deal is structured. Remember, if this is your primary residence and you meet the requirements you can make a profit of $500,000 (that's because you are married - single would be $250k) without paying income tax on it (I can't speak to state and local taxes, consult a lawyer or accountant).

2) Think about what you want/need and how the various alternatives meet those wants/needs. It does you no good to keep your place if all around you gets developed and you are ultimately unhappy living there.

3) Take the time to learn what property in the area is selling for. You might be surprised. If you do decide to sell then you want to make a deal which is most favorable to yourself.

4) I (personally) would respond to the letter by calling them and indicating that you are always willing to receive an offer but are not indicating a desire to sell by receiving said offer. See what they have to say. Do not say anything more.

As usual, just my 2 cents.

Mike

[TNHermit]

Better walk cautious. Find out how much its going to cost you where you want to go. Watch out for "eminent domain" There taking a whole town away in Conneticut and Florida.Just across the intercoastal waterway. 6000 people. Just to build a yacht club. And your good old goverment says its just fine.

[Wayne02]

Originally Posted by ThreeJane

Sorta off-topic, but whenever I think about this happening where I live, I get really panicky and stressed out.

Hope it works out well for you.

Heh, think I'm stressed? Yep, you are right on that one. But that is initial stress that comes from lack of information and data. Knowledge is power in these type of deals, so I'm doing my homework as much as possible. That way we can make a decision from a position of knowledge.

I just wish I was not so tied to this old house and the area. 42 years in the same place will do that to you I guess. My father would always tell me when I was young to, "never get attached to a piece of property, it's just a place to hang your hat at night". Probably why he made more money in real-estate than I have.