Take a builder's bulk offer on five lots, or retail them over two years

I retailed a four lot split off 30 acres and it took 26 months, 14 of which were the last lot alone. What I spent on carry, mowing, one price reduction and a second round of photography came to about 11 percent of that final lot's price, so I roughly matched a bulk discount on the tail and beat it badly on the first three.

The part your model probably understates is that lot one and lot two sell themselves and lots four and five sell to whoever is left. If your cash has a job waiting in month three, the builder is paying you to skip the wait. If it doesn't, waiting is close to free at $3,100 a year.

Run the numbers as an annualized figure since that is the only way the two are comparable. Bulk: $405k less commission if one is owed, call it net $390k on a $214k basis, closing in about four months from today. Retail: $500k gross, less 6 percent selling cost, less $6k of carry, so net around $464k, with the last dollar arriving at month 24 and the median dollar somewhere around month 12. On those inputs, retail wins on total dollars by roughly $74k, and bulk wins on annualized return only if the $390k can actually be put into something that clears mid teens for the following 20 months. That is the assumption doing all the work. Assuming a next deal exists and then spending nine months not finding it is a common way that assumption fails.

Before the exit question, two things are worth confirming. Does the county require a recorded maintenance agreement or shared driveway document for the new lots, and if so who is obligated while the seller still owns the unsold ones? And does the assessor reassess on plat recording in that state, because in some counties several taxable lots priced as building sites is a very different bill than one parcel carrying an agricultural or timber classification. That reassessment can move the per-lot number meaningfully, and it often lands during exactly the months a retail plan needs to be cheap.

Every lot split ends with one lot nobody wants. That leftover lot is the whole argument for taking the bulk offer instead of retailing five separately.

In the counties worth watching, there is rarely a builder who would make that offer, so the choice often doesn't exist. Retail one at a time to owner-users, and 22 months to clear five lots would be considered quick. Worth remembering that a standing bulk bid is itself a market feature, and it's telling you this submarket has active builder demand. That demand is also what retail buyers are competing with.

Is he offering to buy or offering an option? I looked at a bulk deal last year where the paper was a rolling option, one lot every 120 days at a fixed price, with the seller holding the taxes on the rest. That is not the same thing as a cash closing on five lots and the discount was priced as if it were. Ask whether he wants deed restrictions or a right of first refusal on anything you buy nearby too.

On the hybrid option, watch the anchoring. If you sell two at $81k in a state that records prices, that number is public and the appraiser working your retail buyer's loan may well pull it. You'd be setting your own comp 19 percent low and then arguing with it for two years. In the dozen or so states that don't publish sale prices, the risk is smaller, and marlow says his is one of them, so the hybrid is less dangerous for him than it would be for me.

The builder priced five lots as inventory he has to sell houses off, which means his number has his profit and his carry baked in. Retail asking prices have neither. So the 19 percent isn't really a discount to value, it's the difference between two different jobs, and the question is whether the seller wants to do the second job for 20 months. One mechanical thing. Check whether the approval carries any completion or improvement obligation that stays with the subdivider after lots convey, drainage work, monumentation, road patching where the driveways cut in. Some counties hold a bond or letter of credit until that's signed off, and the release timing varies by county and state. Bulk selling while still owing the county something hands away leverage over the lots while keeping the obligation. Finish the punch list first, then decide. Also worth asking the builder which two lots he thinks are weakest. His answer is free market research either way.

My question is smaller than everyone else's here. When you say 19 percent under retail, is that under what you'd ask, or under what similar lots actually closed for? Since your state doesn't publish prices, the $500k is an asking-price estimate, and the builder's $405k is a real cash number. Comparing a firm number to a hoped-for number always flatters the hope.