Plottage Value

[PropertyEconomics]

Why would you consider the owner of a key parcel who held out for the highest price that the developer was willing to pay to be "greedy" or to have somehow "raped" the developer? Why should'nt the property owner receive the full value for his property?

Because most of the time that is exactly what happens. You can appraise the property to Market Value and nearly always find the last parcel (holdout) will receive considerably more than the balance of the properties purchased as part of the assemblage.

The property owner does receive full value for the property .. and then some. Its nearly all the way it happens.



Also .. isnt there a relatively recent (last few years) court decision that public entitites cannot use eminent domain for private party developments? I am positive there was a case before the Supreme Court that addressed this issue in the past 5 or so years.

 

[Meandering]

Also .. isnt there a relatively recent (last few years) court decision that public entitites cannot use eminent domain for private party developments? I am positive there was a case before the Supreme Court that addressed this issue in the past 5 or so years.

I believe, it went the other way, the contractor put people out, built a big mall that was supposed to bring jobs and income to the community, that was the basis for the eminent domain case. Last I heard the place was not successful.

Have to see if I can surf it up again.

 

[Hacienda]

sorry.... far beyond my paygrade

 

[timd354]

Define "full value." If by that you mean every last possible red cent you can milk out of someone solely because you have them over a barrel, then, in most cases, yes, I would consider that greedy, and unethical. I take great umbrage at those who would eagerly step on others who are caught between a rock and a hard place because they are in a dominant position. When I can make great money and a tremendous profit, in a short period of time, why should I obsess on making an absolutely obscene profit, at the expense of another?

Do you own an AMC? It sounds as if you do. They operate on the principles you appear to espouse.

Nope, I do not own an AMC...sorry. However, I do not have any problem with anyone maximizing their profit on a piece a property that they own...developers are in business to make as much money as possible on a project, why should land owners who own property that someone else would like to purchase be any different? Trust me, the developer will not pay any more than the property is worth to the developer...why should the land owner accept anything less than what a developer is willing to pay?

 

[timd354]

Because most of the time that is exactly what happens. You can appraise the property to Market Value and nearly always find the last parcel (holdout) will receive considerably more than the balance of the properties purchased as part of the assemblage.

The property owner does receive full value for the property .. and then some. Its nearly all the way it happens.

Some land owners are smarter than others and make a better deal for themselves....so what's the problem with that?

 

[Mark K]

they were able to absolutely rape the developer on that one, because they knew exactly what they had, and were just as greedy as they could be. Good luck!

I wouldn't call it rape...sounds consensual to me. He didn't hold a gun to their heads. They could go around or go somewhere else.

When the development was complete, I'm betting the developer made a very comfortable profit, maybe a little less than they'd hoped for, but still enough to contnue with the project.

I appraised a one acre parcel for a landowner where the benevolent developer had offered $100K (approx. residential value); he needed access to a side road for ingress/egress. In the end (after much squealing), the developer paid $600K for that acre. That's about the same price as the developer was charging for a developed outlot acre in front of the strip mall.

I know a developer that paid $75K for an acre of farmground (MV = $5K +/-) so he could run a drainage pipe to a creek. Rape? Without it his subdivision was DOA. He still made a boatload of $$ on that sub.

I don't think there is a standard or common % premium for plottage or assemblage sites. Its more of a negotiated price with little correlation to MV.