HOW DOES A PROPERTY DEVELOPER CALCULATE YOUR PROPERTY VALUE?
DIFFERENCE BETWEEN PROPERTY MARKET VALUE AND DEVELOPER VALUE?
The most common questions home owners ask themselves tend to go along the lines of: ‘how much is my house worth?’ or ‘what is the market value of my house?’, or even ‘how to increase the value of my property?’
What is market value in a traditional sense?
Determining an accurate market value for any property is dependent on a multitude of circumstances and market conditions. One of the quickest and easiest ways to identify the estimated market value is to look at the recent (within the last 3 months) sale history of similar properties (similar in terms of land size, general condition of the property, no. of bedrooms, bathrooms, garages, etc.) and within close proximity (up to 2km away and within the same suburb).
Seems simple enough, however comparable sales with such specific data is not always readily available and accessible. Again, these are only estimated market valuations based on a variety of factors. It is then also common practice to engage with your local real estate agents who have experience in the area and recent market trends.
Reputable local real estate agents should also bring with their knowledge, a contact list of buyers who have previously shown or are currently showing interest in buying a property in your area.
What is developer value and how is it different to market value?
Similar to traditional market value, determining an accurate developer value is also dependent on a multitude of circumstances, however a different set of factors. Developers base their purchase decision on what can be done to the land and the expected profit they can expect to make using your property as the next site for their development project.
A property developer will run their own feasibility report on any potential development site to determine:
a) What can be built on the land based on the zoning classification of the property? Based on council requirements and restrictions such as:
- How many separate dwellings can fit on this land?
- How tall is the new structure allowed to be?
- Does this particular zone allow for apartment style developments?
b) How quickly can it be achieved? What is the expected time-frame for the project? Considerations include:
- How long will it take to have plans and permits?
- How long will it take to complete construction?
- What settlement date is the seller seeking/ expecting?
c) What outcomes can be expected? Considerations include:
- What additional costs does the developer foresee in the project?
- What would each separate dwelling sell for?
- Is there a demand for this type of dwelling in this particular area?
If the numbers stack up for the developer, they will assess what the development site is worth to them. For many types of properties, a home owner can expect to receive 5-10% above market value for their property, provided the development criteria mentioned above is satisfied.
Why Develop Connect?
Develop Connect is the only platform that exclusively connects home owners with property developers. We educate and represent the home owner to achieve maximum value for their property.
More Money in your Pocket
The reason we are able to achieve more money in your pocket is by seeking 5-10% above market offers. This is provided there is flexibility in development specific conditions such as extended settlement terms, allowing for soil testing, allowing for development applications to commence, and so forth.
No Maintenance or Advertising Costs Involved – seriously!
A large portion of home owners don’t even want to start thinking about selling their property because it puts stress on getting the house ‘sale-ready’. Home owners are pressured to complete some form of maintenance or renovation work in order to maximise the value of the home. Kitchen or bathrooms out of date? Back veranda needs re-coating? Walls starting to crack?… Ande don’t want to fork out of pocket to fix it up? When selling to a developer, they’re not interested in the state of the property. All they are interested in is what can be done to the land.
Unlike traditional agents, Develop Connect does not charge home owners for advertising the property on real estate websites as there is NO public attention for your property. The entire transaction is conducted off-market with no public advertising. This has the added benefit of avoiding having to pay a traditional agent’s marketing cost with the potential of not selling the property – that’s a real pain!
Not Chasing Buyers
There are fewer hassles when selling directly to a property developer because you are no longer chasing buyers. We have thousands of property developers on our database who are actively searching for future development sites all across Melbourne – local agents don’t.
Information will increase your property value
If you’re planning on selling to a developer, having knowledge of what can be done to your property can be a huge advantage when it comes time to sell. By being aware of the development potential of your property, you are in a much better position to negotiate when selling.
Develop Connect conducts a preliminary feasibility for every property it is trying to sell. A more extensive report can be generated for, and purchased by, the vendor – which is their copy to keep and use as reference. For more information regarding your property’s maximum value please complete the form below or call Octavian directly on 0434 032 122.