Learning From Others
Wetland Surprise
When the Millers decided to join their neighbors and sell to a builder/developer, they were skeptical when the builder offered them less for their home than for their neighbors’ properties and told them it was because one-third of the lot was unbuildable wetlands. They didn’t have any wetlands when they bought the property, but when they purchased it, the access road was gravel. A few years prior to their attempt to sell, the road was paved, but no sidewalks or gutters were put in. The Millers’ property was located at the bottom of the hill, and runoff from the paved road ran into the lower corner of their lot. After several years, it became saturated, and wetland plants took root. While that corner of the property was beautiful, it wasn’t buildable, and the Millers lost some of the value of their large parcel.
Takeaway – pay attention to drainage on your property. Whether it is the uphill neighbor’s pond draining onto your lot or runoff of some other kind, if left unremedied, it can become a financial loss.
The Developer Made a Mistake That Financially Benefited the Neighbor
A publicly traded building company overlooked an existing easement that benefited the adjacent parcel. They spent over a year and a half designing and submitting for a permit for a subdivision. By the time they realized the easement was still in existence, they were well down the road to having their plat approved. They knew they would be in a pinch if they couldn’t buy the easement because it would cost them two lots plus the time, expense, and carry costs of redesigning the plat. They figured the easement was inconsequential to the neighbor who wasn’t using it, so their initial offer for the easement was low. Some simple research revealed that while the easement was of little value to the owner of the easement, it was worth quite a bit to the developer. They would end up paying the neighbor five times their initial offer for the removal of the easement. If they had purchased the easement upfront prior to the plat being designed and the permits being submitted, the neighbor would not have been able to research their plans, and they would have purchased the easement for a lot less.
Takeaway – ask for help and do some research when a builder or developer asks to buy a portion of your property or buy you out of an easement.
Sewer is How Much?!
When one of the builders I worked with had a leftover half-acre parcel that was primarily wetland with one standing home on a septic system, we determined that even though we could subdivide the property into one large lot with wetlands and one small lot next to the existing house, but only if we hooked the property up to sewer. However, the sewer connection cost for the City of Issaquah at the time included a cost per foot of street frontage fee. Just hooking the property to the existing sewer line was approximately $150,000 due to the extensive street frontage of the half property. This is an extraordinarily high amount. Due to the loss of value that having the existing house positioned directly next to a second house would create for the existing house, it turned out that the highest and best use was to sell the half acre with the house on it to a buyer who valued privacy.
Takeaway – A property that is narrower than it is deep can sometimes be more valuable than a property that is wider in the front and shallower, even if both properties are identical in every other aspect, including size, features, and location. The hidden cost of sewer hookups can directly impact how much the property can sell for.
House With 3-Car Shop on a Subdividable Acre
When a developer purchased the property around the Joneses and developed it, the Joneses weren’t ready to move. They loved their home, Kopi Pond, and a large, detached, 3-car shop with RV-height doors. When the Joneses decided to retire and sell, they asked me to tell them how much their developable land would sell for. On paper, it appeared that a developer would be able to get six lots out of it. Except, the Joneses lived on an arterial street. The sidewalks and landscaping that the county would require for the property to be developed ate up enough space that only four lots were actually feasible. At the time, those four raw lots would have been worth $200,000 each, minus the cost of demolishing the existing house and shop. The less than $800,000 that the property was worth if developed was less than the $950,000 it would sell for as a large parcel with a detached shop. In the end, even though the property could be developed, its highest and best use was as a single parcel.
Takeaway – Sometimes, your property might be worth more as it is, even if it is legally developable.