I’m debating developing/partially developing lot to make it more attractive to prospective buyers, however, I’m wondering if it’s worth the investment and what kind of ROI I can expect.
For some context, I’m getting ready to list one of my properties (I list on the MLS with an agent). There is a similar lot for sale very close to mine, almost identical actually, but they have septic installed. I called around and got quotes for around $8-12k to install septic.
If I spend $10k to add septic, what kind of return can I expect? Will that increase the value of my property by at least $10k? I’ve read online that most folks so no because septic can sit around for a while and is typically installed in a “per bedroom” design and not all buyers will want the same septic design.
And if I don’t, and assuming everything else is equal, is it fair to price my lot of $10k less than other lot that has septic installed?
@suitedconnector septic install will take around 6-8 weeks. Average days on market is around 150.
Yeah, I’m definitely using sold listings as well. I’m asking about the property that’s actively listed because it’s almost identical to my property and true comparable listings are difficult to come across due to the lack of supply in the area.
Also, my property is in a HOA with access to many amenities that others won’t have access to. The listed property is almost identical and within the HOA as well so I plan on pricing pretty heavily on outcome of the currently listed property.
@dvucak How long has the other lot been on the market? For me I think this decision depend upon would on what your yield would be for non-improved vs yield on improvement. Next would be “is there a huge difference in time to sell for either case?”
@dvucak I have pretty limited experience here, but I can share my thoughts. I would say that for the most part, adding septic will not increase the value of the property by its cost ($10k in this case). There are a lot of factors involved in a septic design, including distance from the building/house, distance from property lines, distance from well, the size of septic based on bedroom count, etc. As you mention, the future owner may want the liberties to design their own septic system based on their use of the property. In fact, someone might prefer to buy your discounted property without septic, to simply put a shed up and store equipment, toys, etc. (depending on zoning requirements of course).
There are a lot of things I don’t know about your property, but based on what you’ve mentioned, I would probably list it as-is for slightly less than the competing septic-included properties and see what your prospective buyers say. If people show lack of interest because it doesn’t have septic, then negotiate down from there to allow them room to fund their own system. This is just my 2-cents, hope it helps.
Hi @tylerd thanks for the input, I do appreciate it! That’s basically my thought too.
Here is what I ended up doing:
Find average price per acre of sold comps (most are not in the HOA)
Determine price per acre of the property that’s very similar to mine and is in the HOA
Take the average price per acre between bullet points 1 and 2 above and use that figure to price my property.
Subtract $12k for septic install.
Taking that approach, my property is listed ~$10k less than the similar comp in the HOA that’s currently listed. I would prefer to be a little close to $15-20k difference to appeal to more buyers, however, I figured I might as well give it a shot given the current market situation.