What is my land worth to a developer?

November 29, 2019 11:28 am Published by what is my land worth

How much is my land worth?

As developers, we are often asked this question by homeowners who wish to sell either their entire plot or a portion of it.

Of course, when you are considering selling your house or land, you need to know how much you can expect to get for it.

As Latin writer, Publilius Syrus states, “Everything is worth what its purchaser will pay for it.” However, this may vary considerably. What an estate agent will tell you is ‘market value’ for your house as a residence may be very different from the amount that a developer is willing to pay for your property or plot.

What a homebuyer will pay for a run-down house that requires significant and costly renovation is very different from what a developer will pay for the same property. This is because the homebuyer is looking for a house to move into right now. The developer, on the other hand, can knock down the old house, build four new flats (for example) and sell them on at a profit.

So if you’re thinking of selling your house or land, it’s worth getting it valued by both an estate agent and a developer before making a decision.

 

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How does a developer value your land?

We will appraise your plot and give you a figure based upon the following criteria.

  1. What can we build on your plot?
    This will depend upon many factors, including the size, shape, slope and location of your plot. Plus the type (apartments or houses) and size of development the local council is likely to grant planning permission for.
  2. How much will it be worth once the development is complete?
    i.e. how much are we likely to be able to sell all the finished units for.
  3. What will this cost to build?
    This will include demolition costs, construction materials and labour, skilled trades and other overheads.
  4. Will we have to secure finance in order to buy your plot?
    If so, we will also need to consider the interest that we will have to pay on the loan.
  5. What is our profit margin?
    This can be calculated by dividing gross profit by revenue. i.e. how much value will we have added? Ultimately, each developer has a minimum profit margin they must adhere to, partly to ensure the projects they take on are worth their own time and effort, and partly to ensure that their lender’s financing criteria are met.

What is my land worth to a developer?

(i.e. what could we pay for your plot) is calculated as follows:

Value of final development
– cost of build and professional fees
– loan interest
– profit margin
= value of plot to developer

 

If you’re thinking of selling your house or land, you might be interested in the following:

  1. Our vendor FAQs
  2. What are the advantages of selling directly to a developer?
  3. Click here to contact us about a development opportunity

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Click here to find out how property development works.