An illustration showing how land might be developed

Developing Land

In this historic market, buying land can be just as challenging as buying a house, and the competition is just as fierce, since existing housing stocks continue to dwindle, and demand continues to build for new construction. Anyone looking to build on a piece of land for sale has to move quickly.

In Maine, there are many large tracks of land, some of which are being developed into subdivisions. Despite the skyrocketing cost of building, builders are having little trouble selling spec homes and building packages for new homes, a testimony to the strength of buyer demand.

If you have in mind to develop your own land, the process is costly, time-consuming, and fraught with peril for those hoping to go it alone. Most folks in this position will know better and will hire professionals who know what to do. But, it also helps to know the basics, to know what to expect before starting the process with a developer, or selling your land to one.

A large piece of land should be marketed for sale with some preliminary work already done. At a minimum, a full survey clearly showing wetland areas and buildable land gives a prospective developer something solid to work with. A survey can be expensive, but it is a worthy investment, as the sale will likely return a multiple of the cost.

Selling such a parcel is difficult enough, even with a full survey and wetland delineation. But, without it, it dramatically increases buyer risk, and pushes the asking price down commensurately, in addition to reducing salability. If a sale to a developer occurs, the contract usually contains a long period of contingency until the project is fully approved by the town.

The reason for this is simple: the developer must manage his/her risk. The price paid at closing must match the value of the project. If a project fails to be approved as envisioned, then an adjustment in price is warranted. This value is often not fully known until final project approvals come in. The developer having invested $50,000 or more for a large project, will never recover that money if the contract is terminated.

Here’s the sequence: property goes under contract; soils tests are conducted; project design begins, which includes engineering, traffic studies, geologist, drainage, utilities, landscaping, and lighting; property and lots are flagged; application to planning board; board members walk the site; three or four planning board meetings to incorporate changes and corrections; preliminary approval; public hearing; final approval.

You can see that the complexities to be considered are daunting. And, after spending a great deal of unrecoverable money and time, it can all be derailed at a public hearing depending upon how much the project might impact abutters. It is understandable then, that a developer, who is in business to make money, would want to mitigate risk as much as possible, hence the typical six months it takes to obtain final approval. But, in the end, all parties will be satisfied that the highest and best use and value of the land has been achieved.

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