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Selling to a Property developer
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# 1
ringo
Old 17-05-2007, 11:24 AM
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Default Selling to a Property developer

We have been approached by several developers all of whom seen to be willing, subject to planning permission, to pay substantially more than local estate agent valuations for our site. Has anyone else had any experience of this method of selling a house? If so are there any pitfalls we should be aware of?
If we decide to go ahead how do we find a solicitor specialising in this type of property transaction?
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# 2
Raggie
Old 17-05-2007, 11:29 AM
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once your site has planning permision for a development it will be worth more.. IMHO.

to offer you more cash subject to PP is their way of mitigating the risk. After all without it they do not have to continue with the sale.

What you should do is get them to pay the higher figure without PP in place.. and for them to gamble they will get it.

if not why not invest a little time/money.. get PP yourself and sell on at the top amount you can.

any solicitor that undertakes convancing should be able to handle this.
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# 3
lush walrus
Old 17-05-2007, 1:02 PM
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Ringo, the thing with a deal like this is it is set for the developer to gain, rather than you. Planning permission will take in excess of 8 weeks (it will be 8 weeks for the application to be processed, but presumably they will also have to prepare their submission too). If the condition of the sale is that planning permission needs to be granted, then in effect what they are actually saying is that they will pull out if they do not receive planning permission. Which will leave you back at stage one of looking for a purchaser.

If you have been approached by 2 developers, then my guess is your property has great potential. Why not have a go at getting the permission yourself? It may well be worth the risk, as said above it will most certainly increase the value of your property and you still will not have to do a great deal as you can sell the property with the permission rather than develop it yourself (unless that interests you...In which case go for it!).

Personally, if I were you I would try to get the permission yourself and do not accept an offer from a developer, unless they offer the additional price without waiting for planning permission.

If you want any advice about how to go about applying for planning permission, post back on here with details of what you think they are plannig for your property and I can talk you through it and the costs involved.
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# 4
ringo
Old 17-05-2007, 8:58 PM
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Thanks for the replies both of which suggest trying for planning permission ourselves. The developer is "suggesting" they would be applying to put 2 semi's and 1 detached on the site. Any ideas on what the up-front costs of applying for such planning permission are likely to be? Obviously the property developer will bear such costs and take the risk that permission is denied. Also we feel that a property developer is probably more likely to make a successful first application than we are.
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# 5
CB1979
Old 17-05-2007, 9:38 PM
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nah get yourself a decent architect and get them plans drawn up yourself!

imo it costs you £1k for the plans, etc. if it takes 2 months and it gets rejected your place probably would've gone up by at least £1k anyway so no real loss!

seriously you could well be talking in excess of £1m worth of housing!
where abouts are you and what's the value they and the EAs have given you?
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# 6
ringo
Old 18-05-2007, 1:48 PM
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Default Planning fees?

We live in Cobham, Surrey. The EA's top quote was 900,000 whereas the top developer is 1.2M; as I said a significant difference. You have quoted the likely architects fees but aren't there fees for submitting plans to the council?
We were advised that these could amount to 20K or more!
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# 7
Doozergirl
Old 18-05-2007, 2:07 PM
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Who told you that? The developer? :rolleyes: Seriously, it's £135 to make a submission for planning permission where I live. I spent £700 on an architect and that was for full plans, you only need outline permission.

Planning departments often have surgeries where you can just turn up and have a chat. They are very helpful and will advise you on exactly what outline permission is and what sort of build they might approve. Do use an architect to advise you though as it's worth trying to get a bit more through than they suggest .

Seriously, the developer is going to be trying to buy as cheaply as they can. Don't con yourself out of money just because someone said PP is expensive. Get the facts first!!!!!!!
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# 8
ringo
Old 18-05-2007, 8:32 PM
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Default Thanks to all

Grateful thanks to all who replied - I don't know if our local planning office have surgeries but it looks as though the perceived wisdom is that we should contact the planning office and see what the costs are. This site is really amazing, the more I use it the more I am impressed.
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# 9
Rick62
Old 19-05-2007, 12:31 PM
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So if you get planning, site for two semi's and one detached is probably worth about £800k for the site (in Chobham), £200k each for the semis, £400k for the detached and the developers are offering you a £300k premium subject to and conditional on planningl. So for an investment of a couple thousand the developer could make £500k without even building the properties.

Get the planning yourself, it might be a bit more than £1,000 for 3 house plans, but nothing like £20k and well worth the risk for the potential.
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# 10
ringo
Old 21-05-2007, 3:20 PM
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Default Planning permission

Thanks Rick. It's actually Cobham not Chobham but the principle is still the same. We've spoken to one architect, so far, who has quoted 2K - 3K for outline planning permission or about 6K for full planning permission; he says that full pp. would be required to maximise the potential but we are not sure as that may be tying any prospective developer's hands too much?
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# 11
lush walrus
Old 21-05-2007, 3:53 PM
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Go for full planning I would suggest, it may tie the developers hands temporarily, but it will offer them a guarantee that x amount of houses are permitted to be built. They can then chance their arm further should they wish.

Definately you will end up with more than £300k if you receive planning permission.

With regards to the application costs, it will be £265 per additional dwelling (ie per house or flat). £135 is the flat fee for residential extensions.

Planning applications can cost well over £20,000 but only for when the application fee is calculated in accordance with value rather than no of units. With this sort of development, planning keep it simple and offer a per unit fee.

£6k sounds responable for the architects fee, what are they including in this? Submitting the application obviously, but are they proposing to come up with a few options on how the site can be developed? This is really what you should consider, as you need some lateral thinking on the site. Are they going to survey, or will you need to get a survey done (this will probably be about £1000, maybe less).
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# 12
ringo
Old 23-05-2007, 1:05 PM
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Question Realising the added value

Thanks for the reply.
OK, assuming we pay for and get the full planning permission - how do we realise the added value to the site? Presumably the developers, knowing that it would have cost us less than 20K to get the pp., are not going to cough up another 300K for the site?http://img.moneysavingexpert.com/smi...smiley-013.gif
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# 13
CB1979
Old 23-05-2007, 1:10 PM
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there's more than 1 developer

chuck it in an auction with a reserve price you're happy with.
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# 14
lush walrus
Old 24-05-2007, 12:05 PM
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Ringo,

The thing with gaining planning permission is not the actual cost in getting it, but the gain to the person buying it in terms of security in their investment.

Basically, without planning permission the risk sits with the developer who in normal circumstances would be buying the property because they believe it has scope to do x,y and z. They then buy the plot and take the risk that the planners will agree with them and grant permission when they do sort everything and put in an application. The risk comes in because the planners may well turn the application down.

If yuo get the planning permission yourself the risk is taken away as you will be selling the plot with the permission attached. the person who buys the plot will then earn their cut through actually developing it, with some of the cut already gone to you in the growth of the plots worth through the fact it has permission to develop. But, for the developer the risk is gone.

If you get the permission you will be perhaps shutting off the chances of this sort of developer buying the property, but you will be opening it up to a hell of a lot more people who like to build things but without the risk.

If that makes sense.
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# 15
benood
Old 24-05-2007, 12:16 PM
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I had a similar situation a few years ago - developers were crawling all over us. The way we tried to maximise value was after all the developers had looked the place over we asked for their best and final offers - some came back subject to planning others without planning - we chose the best for us at the time - our solicitor ran the whole thing for us. The advantage is you keep your options open and it's a bit of a dutch auction - I wouldn't risk an open auction too much risk of the bidders colluding to keep the price down.
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# 16
ivavoucher
Old 24-05-2007, 1:36 PM
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I am in the middle of an exact same situation.

6 months back all the estate agents all said no benefit to go for planning as it was obvious that panning would be granted for a replacement dwelling.

Now I have gone for full planning the estate agents all say I have done the right thing going for planning before selling.

I got 4 architects round and explained we only wanted planning to sell and they all wanted £15K to design the house of 4 to 5,000 sqr foot and obtain the full planning, none were interested in just plonking a readymade house on our plot which is the service I needed.

On the fifth attempt I finally got an architect to do what we required and it has worked out at £4k plus £3k for tree removal for a 6,300 sqr foot home.

I will never know if we would have sold for less without this planning but by removing all obstacles we hope to attract developers but more importantly the private individual who want a plot in a prime location to build a dream home and does not need to make 20% profit at the end of the build.

The best way how to market and find the individual is my question?
Auction is at the moment our preferred choice.

Best wishes and good luck
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# 17
lulupense
Old 24-05-2007, 7:17 PM
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Avoid developers like the plague, all they want is to beat the price down and they will come up with all sorts of 'issues' until they have you in a place you can't escape, even down to completion day. Do it yourself! I was had for 11K on a tiny victorian terrace last year, stupidly I thought a developer was more likely to go through with the sale, he was but not until he had shaved every last penny off the offer price.

I know everyone will say I should have dropped out but my financial position at the time was so wonky I couldn't. Now I am going to try and take the estate agent to the cleaners because they worked in the buyers favour,not mine! Wishing you luck and a lovely big fat profit whatever you decide to do.
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