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DiscussionLand Subdivide and Sell

when do you stop buying comparable sales and just commit to a price per lot

0hugo_martelSP2B
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been sitting on a 14 acre parcel in laurens county sc for six weeks now. seller wants $210k. i've pulled every lot sale i can find within eight miles going back 36 months and i have a range from $18k to $61k per lot depending on whether there's road frontage, perc status, and how far the buyer was from a town center. my engineer pencils eight lots if the topography cooperates on the back four, six if it doesn't. so my exit math runs from $144k gross on the low end (six lots at $24k, which is what the comps say for interior parcels with no road) to $336k on the high end (eight lots at $42k, which is what the better-positioned stuff moved for in 2022). that's not a range, that's two completely different deals. one of them i walk, one of them i chase hard.

the problem is i keep finding one more sale that shifts the middle of my range by $3k either direction and i've been doing this for six weeks without moving. i know the parcel. i've walked it twice. i think the back four lots are going to perc and i think they'll move closer to $28k than $18k because there's a new subdivision being marketed about two miles north that's pulling buyers into the area. but i can't prove any of that, i'm inferring it.

at what point do you just pick a number, stress test the downside hard, and decide? and when you got there, what did you actually do?

2 replies

0colin_ferraroAP2C
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been in almost exactly this loop on a 9-acre tract outside gray court last year, except i waited eleven weeks and lost the parcel to a cash buyer who offered $185k while i was still arguing with myself about whether the 2021 sales were too stale to use. what broke me out of it was forcing myself to answer one question only: can i survive the floor. not the midpoint, not the upside, the floor. if six lots at $18k gross is $108k and i'm in at $210k plus $35k in engineering, clearing, and carry, that's a loss of $137k and i'm done investing for years, so the answer is no regardless of what the comps say. if i can structure the offer so i can't get that deep, earnest money exposure only, feasibility period with a hard out, seller carry that comes off if the back lots don't perc, then the comp paralysis is actually just fear wearing a spreadsheet. the new subdivision two miles north is real signal, not noise. i'd call the listing agent and ask straight how many lots they've contracted in the last 90 days and at what price. that's a 20-minute call worth more than six weeks of comp pulls.

0priya_n21priya_n21PO1C
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six weeks is a long time but the 2022 comp at $42k is the real problem here. that number is doing a lot of work in your upside case and upstate sc raw land has softened since then, interior parcels especially. i've been watching lot sales in similar rural sc counties and the $24k to $28k range is closer to where things are actually clearing right now, not $42k.

the new subdivision two miles north is worth being cautious about too. marketed is not sold, and a platted lot with infrastructure is a different product from your raw parcels, so it may not lift your exits the way you're hoping. your $28k inference on the back four needs at least one closed sale from the last nine months to lean on, otherwise you're just hoping the market moved your direction.

if i were stress testing the downside hard i'd run it at six lots at $21k, which is $126k gross, and ask whether the deal makes sense at a price that clears that floor after entitlement costs, carrying, and whatever the engineer charges to find out the back four won't perc. if $210k is above what survives that math, the offer writes itself and the extra comps don't change it.