Initial offering & too much info --what would you do?
I've posted once or twice about our plans to build in a ski resort area with when we retire. With a couple of exceptions, the mountain base area we prefer is built out, with a few in-fill lots. One exception was a hold-out cattle ranch that finally sold out to a developer in early 2007. The developer developed a nice neotraditional subdivision on the land which was completed in 2008. It has some lovely creekside lots in a superb location. Only 11 lots sold on 2008, then no sales until the developer cut the prices in half in 2010 which brought 4 sales, about 40% of original list prices. Fast forward through a failed developer bankruptcy, followed by foreclosure. The investor that bought the loan at a steep discount and then bid it in at foreclosure in December is now the owner. The lots have been off the MLS since the foreclosure.
The last few months have seen some pre-announcement teasers, but this week the listing agent send out a price list and an announcement that offers in by May 13 (next Monday!) will be considered in the offering. The announcement states that the seller "intends to sell 5-10 lots in the initial offering and then will reevaluate pricing." Other realtors have blogged that the investor plans to sell 5-10 lots at the advertised pricing and then will raise prices 5%.
The new prices are for lots ranging from single family lots between 140-260; creekside duplex lots between 345-450; and "estate" creekside lots of approx 1+ acre at 450-550. We are interested in a few mid-range creekside duplex lots.
Currently, before these lots go on MLS, there are 39 active listings for land in the mountain base area of town. When these lots go live, the inventory
will more than double. There are few sold comps. Since the 1st of 2012 there have been only 7 sales closed in the area. Even with no comps, I would guess that the smaller sf lots are probably priced well because prices like that haven't been seen in for while in this market. So although there are no comps, the reason is that nothing like those lots has been available. There are a few current listings and one pending sale comparable to the larger single family lots, and based on these and the fact that these are a bit nicer (IMO), I would speculate that these are priced pretty well. If I were buying a sf lot there is at least one of the lots that I would offer full price. But that won't work for us. IMO two of the estate lots are overpriced, while the most expensive two are high, but those are so unique and secluded but
close to everything, they may well justify the prices and there have been a couple of sold comps that would support the price although there are a couple that are lower.
Duplex lots are more problematic. There have been some in-fill duplex lots on the market some for years between 325 and 600 (significantly larger and a view lot). Most others are priced bet. 350-495 and are well located. All have been on very market a very long time, in some cases 3-4 years. There has been one duplex comp -- a nice golf-course property at the mountain base that went on the market one day, we looked at it the next, and by the time we called our realtor that night it was already under contract. It sold for 400,000 in April of last year. All this is to say, I think the duplex lots are priced slightly high for fast sales and the seller is going to have a hard time selling the duplex lots without a lengthy holding period. Just a side note, prior to the crash high-end duplexes were the spec builders dream in this area. More than 65% if the homes in this area second homes.
I'm not comfortable with the duplex pricing until the market tells me otherwise. I am prepared to make an offer, at about 70%-75% of list. It will be a cash offer and we could close as soon as title work is complete.
What would you do? Is making the offer even worth the effort? My thought that what is the harm, and just like the seller is testing the market with this sales strategy, I can test them with a lower offer? I am prepared to go higher depending upon how the sales shake out. But given lack of comps and recent market conditions, I am not comfortable with going much higher now and we're in no hurry.
Assume that I have all legal issues covered and have done my due
diligence on the hoa, covenants, budgets, design guidelines, etc.
This post was edited by mojomom on Fri, May 10, 13 at 9:12