July 2, 2020
What Should You Consider When Selling To A Developer?
I was recently invited to chat with Mark Novak and Michael Burgio of Novak Properties’ on a Facebook live event.
An area that was of interest to their audience was; when, as a property owner, was the right time to sell to a developer. And what should you consider? By understanding what level of profitability do developers require when buying a property the property owner can be realistic in negotiating price for their property.
The answer is to look at the banks as they loan money to developers which is usually 50% or more of total development costs. Banks require independent valuation of the end development product and the site value to determine if the profitability of a development project is enough to lend money on.
As a general rule a bank requires a valuation to support 20% to 22% profit on cost (cost of land and costs to deliver project) before DA approval; and 18% to 20% profit on cost assuming a DA has been approved.
A property owner can gather this information by obtaining an independent valuation. Having the knowledge of how the bank will look at the project to fund a developer is a great advantage when negotiating price. Assuming a $2 million property sale price a valuation should cost between $2,250 and $3,000 + GST and represents a great investment to get the right outcome.
To find an independent valuer that is accepted by the banks, you can speak with your trusted local real estate, with your bank or call the Australian Property Institute for a list of valuers in your area.
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Watch the episode from Novak and The Unicorn Hunter
EP.196 THE UNICORN HUNTER, TELLS YOU ABOUT BIG DOLLARS IN YOUR PROPERTY L(EARN)MORNING MINUTES 7:45 daily with @Michael Burgio – Novak Properties Mark Novak & David Allen DA Properties Over 100 Real Estate topics covered Join our Podcast for more topicshttps://www.buzzsprout.com/551161
Posted by Novak Properties on Sunday, 14 June 2020