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June 10, 2009
Purchasing a Vacant Lot
I am interested in purchasing a vacant lot to build my 1 family home. I have done my due diligence in terms of researching the allowable FAR, setbacks etc and am now looking into financing.
I was told by a realtor that an individual cannot mortgage a vacant lot; that it must be paid for in cash. Is that so?
Also, I am considering hiring an appraiser to appraise the lot to see if the asking price is reasonable or should I negotiate more, given the state of the current economy. The seller bought at the height of the market and is asking only $20K over his purchase price.
Does anyone have any suggestions on how to determine whether his asking price is reasonable or not? There are not any other vacant lots for sale for comps. Thanks.
Comments
I hope its not the lot on 53rd st and 3rd ave.... :-\
Posted by: guikazoid at June 10, 2009 12:56 PM
nope
Posted by: tlocane at June 10, 2009 1:03 PM
Just wait for Team Bear to find you! You're gonna wish you never posted.
I think you may not be aware of the fact that the Brooklyn real estate market is off about 20% from peak.
So yes I think the consensus will be that you are overpaying.
Posted by: antidope at June 10, 2009 1:13 PM
I haven't made an offer as yet. The lot just came on the market. I suspected 20% down was where the market was .... but it's difficult finding comps for vacant lots.
Appraisers are quoting $800-900 to appraise a lot. That sounds like quite a bit considering they are quoting $200-300 for a 1 family house.
Posted by: tlocane at June 10, 2009 1:19 PM
Vacant lots can be tough...
... has it always been vacant? What was torn down (if it wasn't always vacant)? I ask because you could encounter problems with environmental issues if it use to be a gas station, dry cleaner, or similar business that might not have disposed of potentially hazardous material correctly.
The quotes on appraisals might include soil samples and such to clear it as a truly buildable/inhabitable lot.
As you willing to toss out some more specifics? Lot size, general location, rough price? Let the wise sages of the interwebs appraise it for you ;)
Posted by: christopher at June 10, 2009 2:48 PM
There was a residential home on the property. I have checked with the city and all agencies and there are no environmental issues. All of that was checked after the house was demolished and the lot was cleared of all issues. There are no violations associated with the lot.
The BOD and Dept of City Planning & Zoning already confirmed it is buildable and how large a structure can be built.
It's my understanding the seller bought the land with the intentions of building a larger home on the lot and for whatever reasons, decided against it. From what I have found, the reasons have nothing to do with the lot itself or the area.
The lot is about 20x55 and in a mixed use location ... but primarily on a residential block. As I said, when the seller bought it back in 05, he paid 450K for it. He's now asking 470K.
Posted by: tlocane at June 10, 2009 3:07 PM
You need to do the math. What is the FAR and how much are you paying per buildable foot? Add your construction cost which could be $200 to $500 a foot depending on your taste and experience building a house then compare it to the value of comparable homes. The last time I checked construction loans were hard to come by unless you have mucho equity. If he bought at the peak of the market and is expecting to make a profit............I doubt its worth doing.
Posted by: edifice rex at June 10, 2009 5:28 PM
Oops I see he bought in 05 not the peak so just do the math to see if it makes sense.
Posted by: edifice rex at June 10, 2009 5:31 PM
Good luck to you , you are getting ready to go through the same thing I did . I purchased some lots from the city and now in the process of putting a house up on one of them. Are you sure the lot is 20 x 55 most lots are 18 19 and 20 x 100 the building is 20 x 50 or 55 you can email me @ imcwil1065 if you have any questions I will be glad to help
Posted by: SHAYLA at June 10, 2009 9:55 PM
"I was told by a realtor that an individual cannot mortgage a vacant lot; that it must be paid for in cash. Is that so?"
It is unfortunate and typical that Real Estate brokers talents lie in saying things in a convincing manner rather than things like knowing actual facts.
Posted by: jland at June 11, 2009 10:55 PM
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