Subdividing land into residential lots holds the potential to unlock new possibilities for sellers and buyers. Suppose you have a buyer looking to subdivide or already have a seller with a large parcel of land for sale or even a home lot that has “extra” land area. In that case, you may consider whether subdividing can help your client maximize their profits. This blog will delve into the benefits and risks of subdividing land, providing a roadmap to navigate this transformative journey.
Benefits to Subdividing
Increasing Land Value
Depending on the situation and the local market conditions, you can increase the total value of a parcel of land by subdividing it into smaller lots that are then sold to one or more buyers. Through subdivision, the parts can be more valuable than the whole.
Providing the Seller Flexibility to Keep Their Home While Obtaining Income from Selling Their Extra Land
You may have a client who wants to liquidate some of their real estate without selling their homestead or vacation home. This client may be able to cash in on a portion of vacant land and stay put on the rest. Holding onto some of their land can give that property time to increase in value as the surrounding subdivided land develops.
Boosting the Marketability of the Land
Sellers may more readily find buyers for smaller subdivided parcels more affordable than one larger piece of land. Additionally, completing the lot subdivision up front saves the buyer the time, effort, and risk of doing it themselves, increasing the salability – and often the value – of the overall property.
Risks to Subdividing
Subdividing land incurs various costs, such as surveying, engineering, legal fees, and infrastructure installation. Developing infrastructure can be costly, and unexpected expenses may arise during construction. There are different degrees of difficulty when subdividing land, and, to put it simply, these can align with the project’s size – the bigger the project in acreage and number of lots, the greater the complexity. With more complexity comes more costs. However, suppose you are dealing with a single lot being subdivided into two or three residential lots. In that case, you may be able to handle this by working with a few real estate professionals who will help you in the process.
Sometimes, covenants, conditions, and restrictions (CCRs) forbid subdividing the land. Additionally, local zoning subdivision and development laws dictate the layout and size limitations for subdividing lots. Each county, city, or other authority will have its regulations that describe important items like current zoning requirements, minimum lot widths, setbacks (front, rear, and side), buffers, building heights, required open space, and other significant details that affect the size and layout of your lots. You must also confirm that your planned lots will be properly serviced.
As a seasoned real estate agent, your ability to identify and capitalize on emerging trends is your greatest asset. Land subdivision represents a golden opportunity to expand your horizons, offer unique solutions to clients, and elevate your professional standing. To determine if you or your client have a viable property for subdivision, contact your trusted land use attorney.