Priced a lot split into the offer, then the hearing calendar outran the clock

Twelve acres with a tired 1960s ranch on it, notice of default recorded, first mortgage payoff 214k. As-is the whole thing is maybe 235k in that market, so on as-is numbers it's a thin nothing and I'd have walked.

What made me look was the shape of the parcel. Zoned in a district with a two acre minimum, so on paper the back acreage carves into four buildable lots and comparable finished lots in that township were trading around 92k. I offered 240k, which gave the owner about 20k after his arrears and costs, and I underwrote the split at a conservative two lots inside 12 months.

The ordinance had a road frontage requirement I read too fast. Two hundred feet per new lot on a county road. The parcel has 140 feet of frontage total. Everything behind it is landlocked without either a variance or a private road easement across the neighbor's field. So the split needs a variance, the board of zoning appeals meets monthly, the county's own guidance said 60 to 90 days from a complete application to a decision, and the auction was 51 days out. My surveyor also told me the application wouldn't be considered complete without a preliminary plat he couldn't turn in under three weeks.

I walked. Out 3,200 for the survey work and a plat consultation, plus a title search I'd already ordered. The owner's house sold at the sale for 219k, which tells you the auction crowd was reading it as a house and not as four lots, so the value I thought I saw may well be real. I just couldn't reach it inside a fixed date.

What I'd do differently, plainly. I underwrite pre-foreclosures at as-is value only. Entitlement upside is a free option I get if it happens, never a number in the offer. And I check frontage, access and minimum lot width against the actual ordinance text before I pay a surveyor a dollar, because those three lines killed this in the ten minutes it should have taken on day one. Subdivision standards and appeal timelines are set locally and vary by county and state, so nobody's rule of thumb from another market would have saved me here.

Answer

4renee_dubois Get yours

The auction date is the only date in this business that nobody will move for you, and any value that needs a public body to vote can't be underwritten inside it. Every unit I've bought has taught me some version of that, usually cheaper than 3,200.

There were two structures that might have survived. One, buy at your as-is walk-away number and treat the split as the option you described, which means your offer was 240 and it should have been closer to 205, and the owner probably says no and the sale happens anyway. Two, get the owner to sign and file the variance application while he still owns it, with you paying the surveyor, so the clock starts running weeks before your closing. That only helps if the hearing lands before the sale date, and whether an owner in default can even do that without lender consent is a question for a local land use attorney, since standing and application requirements differ by county and state.

The 219k sale price is the part I'd sit with. Somebody bought a 235k house for 219 with four lots behind it. Either the split really is harder than the ordinance suggests or the auction buyer got the option for free. If you ever see that frontage problem solved on that road, you'll know which.

Priced a lot split into the offer, then the hearing calendar outran the clock

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