Why go it alone—Selling your property jointly with neighbours
If you live in an area that may be rezoned to permit higher density, then it is time to think about how you can achieve the highest possible price if you are being approached by developers to sell your property. Even without rezoning you can achieve a far higher property price above what it is worth if a strategy is adopted where neighbours market and sell their properties jointly. For example, in 2015, a number of neighbours in St Leonards sold their homes this way and with average values of $2m, each received $7.3m. In 2017, a group of 8 neighbours in Castle Hill sold their properties jointly to a developer for a combined value of around $40 million. Their land had been rezoned to high density residential, allowing a height of 40 metres.
We suggest the following strategy:
1. Seek out and speak to your immediate neighbours to see if they have been approached by a developer or developers and, if they have, then ask them if they would like to join you in a common marketing plan to the developer or developers operating in your area; and
2. The more neighbours that you can put together will allow a larger area to be offered to a developer to maximise the economies of scale for the developer and achieve the highest possible price per square meter for your land and the land of your neighbours.
3. Call Aitken Lawyers to provide you with a joint selling agreement for you and your neighbours to sign and let out expert team assist you in putting together a marketing strategy so that the best possible value can be obtained on a joint sale of the properties.
A joint selling agreement will bind the parties and compel them to market and sell their properties jointly. It will provide for interdependent sale contracts for the sale of each property to be put together, all signed up together and all completed together. The sale contracts are often either attached to a Call Option Deed or a Put and Call Option Deed for which an option fee is paid by the developer and this then allows the developer time in which to obtain the necessary approvals from council for the proposed development on the lands. We can negotiate this for you and you can keep the option fee even if the sale does not proceed.
4. Do your homework on your area to ascertain what prices are being offered by developers, so that negotiations can be entered into with a number of developers to maximise the price you can achieve for your land when it is combined with your neighbours’. Aitken Lawyers can also assist you with this and engage an agent to advise you.
See the attached article from the Australian Business Review “Homeowners combine properties for a $66 million sale to a developer” and the article from Domain, Castle Hill developers swoop, locals now multimillionaires after $40m megalot sale
Aitken Lawyers will be conducting free seminars on this issue in 2017. Please contact us to record your interest and we can come to you if you believe you and your neighbours could benefit from our expertise in this field.
Dilek Duru | Senior Associate
Tel: +61 2 8987 0000 |
Julian Peters |Special Counsel and Notary Public
Tel: +61 2 8987 0000 |