Record the plat before I have a buyer, or wait?

I coordinate survey and plat work for people doing small splits, and I decided I should actually do one myself before I charge anyone for advice about it.

22 acres at $6,500, so $143,000. Rolling, one existing field entrance, town water at the road, no sewer. Three lots of roughly 7 acres. Sold comps on 7 acre pieces with water at the road are $72,000 to $78,000, so call it $220,000 gross at the midpoint.

My quotes so far. Plat and boundary work $12,800. Civil engineering for the stormwater and drainage sheet $9,400 because the county wants it once you create a third lot. A paved apron at the county road, $6,000 to $11,000 depending on whether they make me widen. Preliminary plat application and review fees about $1,900.

So roughly $32,000 of work on top of the land, plus whatever the county adds during review.

My two open items.

First, sequencing. I can take the preliminary plat approval and market the lots as approved-but-not-final, which saves me the engineering spend until I have a signed contract, or I can spend the whole $32,000, record the final plat, and sell three clean recorded parcels. The second version prices higher. It also means I'm out $32,000 with no buyer.

Second, funding. A neighbor has said he wants lot 3 and would do a contract for deed with money down now, which would fund the engineering. He'd be buying a lot that doesn't legally exist yet. I don't know if that's a clever bridge or a mess I'm creating for myself, and it probably comes down to how my state treats a contract on an unplatted division.

Also open: how long a preliminary approval stays alive here. I've read six months in one place and two years in another and I suspect both are true somewhere.

4 replies

1tylerbrooks9PassivePRO5

@juniper the ordinance changes, that's what they're worried about. If they approve a layout under one set of rules and you sit on it for four years, you'd be building to rules nobody uses anymore.

Lantern, the neighbor thing is the part I'd walk away from. You'd be taking his money to pay for approvals that might come back with a condition you don't like, and then you owe him a lot you can't deliver on the terms you described. If he genuinely wants lot 3, take a deposit into escrow with a hard date and a full refund if the plat doesn't record as drawn. Slower and dull, and you don't end up in a dispute with someone whose field touches yours.

4nicole_adeyemiPassivePRO5

Preliminary plat life is set by local ordinance and in some states by statute, and it commonly runs one to three years with extensions available on application. Read your own ordinance and then read the extension section, because that's the part that actually matters to your sequencing.

On marketing preliminary versus final. Retail lot buyers paying $75,000 cash usually want a recorded parcel with a legal description and a tax ID. Builders and the occasional land buyer will take approved-not-final at a discount, and that discount in my experience runs wider than the $32,000 you'd be saving. So the real question isn't preliminary versus final, it's whether you can carry $32,000 for the six to ten months review and recording is likely to take. If you can, record.

One more thing your quote list is missing. Ask the county whether the third lot triggers an improvement guarantee, a bond or letter of credit covering the apron and drainage until they accept the work. That's cash or collateral tied up, and it isn't in your $32,000.

2tashaford30PB2APRO7

On the service side, are you planning to charge a flat coordination fee or a percentage? I've been putting together my first purchase and the thing I'd pay actual money for is someone who has already read my county's ordinance and can tell me on day one whether a three lot split needs engineering. I don't need them to do the survey. I need the phone call before I make the offer.

How are you pricing that call?

Record the plat before I have a buyer, or wait?

4 replies