Georgia Land Sold

Development properties come in all shapes and sizes. Some are vacant and others are not. In fact, virtually every property can be developed. To develop a property means to transform it or change it so that it can be used either differently or in additional ways. The change can be a physical one, such as demolishing, modifying or converting the existing structure. Much more frequently the change is something you can’t see. These invisible changes provide additional options in expanding the potential uses (markets) for the property and selling it for a bigger profit.
One typical way of achieving development potential is by obtaining some change in the zoning provisions that relate to the property. This change may or may not involve an actual change of the zoning classification. A change in the zoning classification of a property could have a major impact on the value of the property, but it’s probably the riskiest and most speculative way to develop a property. Potential for development can also exist without rezoning through relief from some provision of the zoning ordinance (such as by a decrease in the side yard requirement or an increase in the maximum height of a structure) by obtaining a variance. A common method of increasing value is to divide the property into two or more parcels. The sum of the parts is usually (but not always) worth more than the whole.
Critical Questions & Issues
Since most properties to some degree or other have development potential, the bottom-line question is not “does the property have development potential” but rather “would development of this property make economic sense.” The suitability of each property for development is unique. Each development scenario has to be evaluated on its own merits because it, too, is unique. If you were thinking about buying a property for subdivision, what would you need to know in order to make your decision?
Zoning
The first thing would be the zoning. By looking at the current zoning ordinance, you would also know what the other zoning restrictions are, such as minimum lot size and width and setback requirements (dimension of front, rear and side yards).
Target Markets
Your goal is to sell the property and not live in it. One of your first questions then is “who can I sell this to?” The zoning and development scenario collectively define the target markets.
Utilities & Yield
You’d want to know if public water and sewer were available not only because costs are different, but also because zoning requirements are often different for public versus on-lot utilities. The property would have to be tested to find out how many locations would be suitable for on-site sewage disposal systems. In addition to utilities, other factors affecting the site yield include slopes, wetlands, and soils.
Resale Value
You would have to determine value, meaning not just what the seller was asking, but also what you could sell the property for.
Costs
You’ll want to know how much it would cost you to put into place the necessary changes to the property. Your development proposal will dictate what has to be done and therefore, the types of expenses. These expenses would likely include legal, engineering and municipal fees. You might not know what these costs are, but you’d have to start somewhere by ball parking your expenses and then fine tuning them as you obtained more information. You’d also need to know how long it would take you to “transform” the property into a commodity that you can turn around and sell and how quickly you’ll be able to sell it. Anything will sell at any price given enough time, but time is money. Even where your goal is to assign your contract to a builder or another investor, you should set a realistic price to keep your selling time frame to a minimum.
The development scenario that you propose must be one that can realistically be achieved and not just some pie in the sky idea. Don’t base your plans, projections and money on the assumption that your proposal is a “slam dunk.Finally, you need to find out what the seller’s price and terms are. Most people tend to ask about price first, but this question should be the last one you consider. You can’t really evaluate the seller’s asking price or terms until you can answer at least some of the other questions here. In other words, price and terms are relative to all of the other issues involved.

Nancy Chadwick is a PA licensed real estate Broker and Instructor specializing in land brokerage and development. Her experiences and land courses provided the foundation for her books Land Buying & Selling and Selling Land: The Owner’s Guide available at http://www.landbuyingandselling.com/.

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