Hello! Completely inexperienced and probably out of my depth!

[Ellkell]

Hello!

We’ve always wanted to buy land and build our own home. For one reason or another we’ve never had the courage or the finances to do it. Now we find ourselves with two teenagers and a tween and wonder where the years have gone. 
Anyway, an opportunity has arisen to buy some land close to our own home (less upheaval and resistance from teenagers) but my gut feeling is that it is completely overpriced. I trawled through every plot of land for  sale in Scotland last night and still feel that it is overpriced. Does anyone know how plots are priced up? I have a few points I can go back to the estate agent with tomorrow but I’d like a bit more,  I’m assuming there’s a kind of formula like pricing up actual property??

If anyone has any insight I’d love to hear. 
Thanks,

L. 

[SuperJohnG]

Welcome and as far as the title goes...you'll be in good company!  

 

If you give us an idea of the location and size,.price we can chip in with some feedback. In reality land prices are rogue territory and based nearly on nothing but the seller's desire to sell, requirement for money and pot luck sometimes. 

 

 

I originally was trying to cut a deal south of glasgiwnfor a 140k plot which was rural an 0.6 acres wIth PP but 20k to bring in services. I offered 85k  and got nowhere, the lady was steadfast. Fortunately she was as 6 months later I bought 4 acres with pp and two woodlands on it...for 50k. Dream come true. 

[Simplysimon]

hi and welcome to the site,

 

7 minutes ago, Ellkell said:

Does anyone know how plots are priced up?

you own a bit of land and you decide on a price, as you are in scotland it could go to a closing date and find it's level or it could sit for years as overpriced. our plots were fixed price, they seemed good value as to position and size but were advettised as a completed house price and if you didn't look at that house price you wouldn't see the options to have part finished house or just buy the plot.

[Ellkell]

So this is a Victorian villa with a large garden and the garden has been sectioned off to sell. At the moment there is outlined PP for three plots, approx 500 sq m each for £150k each. As I said my gut was that it was too much but after I visited them I knew it was. But still want to buy and build so need good negotiating data to get that down. 

[Ellkell]

10 minutes ago, SuperJohnG said:

Dream come true. 

Sounds perfect!! Well done. 

[Ellkell]

10 minutes ago, Simplysimon said:

just buy the plot

This is def just buy the plot. 

[Ferdinand]

Welcome.

[Bozza]

The true value of any plot of land is what a buyer is prepared to pay for it.      You mentioned that the plot is a good location for kids presumably schooling, friends, etc.  That has an added value to you.

 

I ended up paying approx £85k more than I had wished to pay for a plot.   Why, because it was a great location, great for my kid (school catchment), not in middle of nowhere - which my wife was against.  I offset that additional cost by building a smaller house than I had intended to.  

 

You’ll have an idea of what you wish to build size wise, and your build budget.   As plots are all so different, a better approach might be to try to establish the value of that plot with a completed house on it.  So if your Self build 4 bed house or whatever costs £300k to build and the plot is £150k, and 4 bed new builds in that location go for £750k the plot is good value.  If such a house goes for £350k it’s obviously not.   

 

With self building the amount of “profit” can depend on so many things because you have complete control of the spec and how much of the work you can do yourself which obviously is more advantageous profit wise.  As you know turn key is the most expensive build method.  But even if you do turnkey, something has gone badly wrong should you not turn a profit.  From my perspective if I turn a £ profit that’s great, but the added value for me is location, quality of house etc etc etc in compared to similar value houses nearby.  
 

Like SupeJohnG says if you provide details of the plot here there’s plenty of experienced self builders here who can give you impartial advice on the pros and cons of it which will help you decide whether it’s worth it, or not.

 

 

 

 

 

 

 

 

 

Edited September 6, 2020 by Bozza

[SteamyTea]

19 minutes ago, Bozza said:

I ended up paying approx £85k more than I had wished to pay for a plot.   Why, because it was a great location, great for my kid (school catchment)

About 3 years worth of basic fees at Eaton College (other Public schools are available, the one I went to is about half the cost).

Edited September 6, 2020 by SteamyTea

[Ellkell]

19 minutes ago, Bozza said:

The true value of any plot of land is what a buyer is prepared to pay for it.      You mentioned that the plot is a good location for kids presumably schooling, friends, etc.  That has an added value to you.

 

I ended up paying approx £85k more than I had wished to pay for a plot.   Why, because it was a great location, great for my kid (school catchment), not in middle of nowhere - which my wife was against.  I offset that additional cost by building a smaller house than I had intended to.  

 

You’ll have an idea of what you wish to build size wise, and your build budget.   As plots are all so different, a better approach might be to try to establish the value of that plot with a completed house on it.  So if your Self build 4 bed house or whatever costs £300k to build and the plot is £150k, and 4 bed new builds in that location go for £750k the plot is good value.  If such a house goes for £350k it’s obviously not.   

 

With self building the amount of “profit” can depend on so many things because you have complete control of the spec and how much of the work you can do yourself which obviously is more advantageous profit wise.  As you know turn key is the most expensive build method.  But even if you do turnkey, something has gone badly wrong should you not turn a profit.  From my perspective if I turn a £ profit that’s great, but the added value for me is location, quality of house etc etc etc in compared to similar value houses nearby.  
 

Like SupeJohnG says if you provide details of the plot here there’s plenty of experienced self builders here who can give you impartial advice on the pros and cons of it which will help you decide whether it’s worth it, or not.

 

 

 

 

 

 

 

 

 

Yip, I get all that and have taken that into consideration too. 

[Bozza]

2 hours ago, Ellkell said:

Yip, I get all that and have taken that into consideration too. 

Ok so you’re probably not quite as   “completely inexperienced and probably out of my depth“ then  
 

So what are the local house prices telling you?  -v- what you’d like to build.

 

 

 

 

 

[Bozza]

3 hours ago, SteamyTea said:

About 3 years worth of basic fees at Eaton College (other Public schools are available, the one I went to is about half the cost).

But I’m a working class Northerner.  Can you imagine the shame of me sending my kid to a public school and her ending up with a posh Southern accent   
 

In all seriousness we weighed that up and due to the local school being extremely good performance wise, we put the money into a build that we’d get a better return on and where she can maintain her friendships etc.  Which of course she’ll inherit in due course.   Other reasons too of course!

 

 

 

[Redoctober]

Yes, I agree with @Bozza although one other consideration to factor in would be your long term intentions. Are you looking to sell in the near future or making it a "forever" home. So many variables to consider.

Edited September 6, 2020 by Redoctober
typo

[nod]

Welcome to the forum 

 

We are in the process of trying to complete the purchase of a plot plots for our second build 

 

While we purchased our first with some negation and quickly agreed a price 

The next one has proved more difficult We eventually settled on 30k less than the asking price but this has left us open to others coming in with better offers 

The only thing keeping us in there is that we have the funds available  and we are quite away down the line with searches etc

 

From chatting to the land agent it seems the price with most plots is decided by the seller 

The agent can only advise 
 

What we have found different to four years ago when we purchased our first plot Is that many plots that are perfect for one house are being given planning for two 

Making some of the self build plots a bit more affordable But cramped 

 

The point you make about it being local to where you live especially with teens still living at home 

Is a massive plus 

 

Good luck with your decision 

 

[Temp]

6 hours ago, Ellkell said:

Does anyone know how plots are priced up?

 

Does it have planning permission?

 

If I had a plot for sale with planning permission I would get estimates for the likely finished value of the completed house. I'd take off 15-20% profit for the builder and subtract an estimate of what the house would cost to build. The figure that's left would be my guide price for the plot - put it this way I wouldn't pay more than that if I was buying it. I'd then check that against what estate agents estimate the plot is worth.

[Ellkell]

6 hours ago, Ferdinand said:

Welcome.

Thanks

[Ellkell]

2 hours ago, Bozza said:

Ok so you’re probably not quite as   “completely inexperienced and probably out of my depth“ then  
 

So what are the local house prices telling you?  -v- what you’d like to build.

 

 

 

 

 

Glad to hear that

It’s in a wee pocket of a street that is so mixed. The road is halved with one end being local authority flats and terraces selling £50-80k and the other end being big Victorian villas that sell for £700k upwards. I think a 4/5 bed detached in these plots would go £380-400 with a decent spec. I know what I would like to build In my head but don’t know costs for it yet. If land 150 then build would obviously need to be under 250 but this is where the inexperience comes as I don’t know if that’s ok. 

[Ellkell]

2 hours ago, Redoctober said:

Yes, I agree with @Bozza although one other consideration to factor in would be your long term intentions. Are you looking to sell in the near future or making it a "forever" home. So many variables to consider.

Yeah. This would be it. Till retirement and after. 

[Ellkell]

44 minutes ago, nod said:

 

From chatting to the land agent it seems the price with most plots is decided by the seller 

The agent can only advise 
 

What we have found different to four years ago when we purchased our first plot Is that many plots that are perfect for one house are being given planning for two 

This is interesting, thanks. 
And yes, this is an issue here. It’s split as three but should only be two. Ideally we’d buy all three, develop one and sell on and then do our own behind it. There’s no conditions with planning so if three people buy they can develop exactly at the want so could block light etc. Also, because squeezed in a bit the gardens are north facing but if we did two we could turn them 90 degrees and go with west gardens which I’d prefer. We can’t do that at current asking price though. 

[Ellkell]

29 minutes ago, Temp said:

 

Does it have planning permission?

 

If I had a plot for sale with planning permission I would get estimates for the likely finished value of the completed house. I'd take off 15-20% profit for the builder and subtract an estimate of what the house would cost to build. The figure that's left would be my guide price for the plot - put it this way I wouldn't pay more than that if I was buying it. I'd then check that against what estate agents estimate the plot is worth.

Thanks for this, this is helpful. 

[Ellkell]

Thanks everyone. Definitely getting me thinking more. 

[Pocster]

Get a valuation on your finished house . Work backwards . 

[Ellkell]

11 minutes ago, pocster said:

Get a valuation on your finished house . Work backwards . 

Makes sense. Thanks. 

[Pocster]

2 minutes ago, Ellkell said:

Makes sense. Thanks. 

Anything is only worth what someone will pay for it . Even with no plans you can get a rough valuation on what ( for example ) a 4 bed house at x sq metres is worth . Then you can get a build cost ( unless you are planning to do the work yourself ??? ) .

[AliG]

Although the theoretically correct way to price a plot up is to remove a developer's 15-20% profit from the price, the reality is that self build plots often go for a price that means they are around breakeven. So the plot plus house build is roughly the value of the finished house. Self builders seem happy with this as they benefit from getting the house that they want.

 

I suspect that developers look at it in a much more hard nosed fashion as well as having volume/experience benefits, so their build cost would be 15-20% less and that is where their profit would come from.

 

I found the planing site and planning application. It is not a conservation area and it looks like other houses have been built in garden ground nearby in the 80s. I thought 500sq metres might be small sites but nearby they have allowed houses to be built taking up most of the site, the houses are described as 4/5 bed with double garages.

 

So you could probably build a 200ish sq metre house plus double garage valued at around £450,000, guessing from values in the area. This makes the site a little overpriced depending on build costs.

 

Reading the planning permission there are a number of conditions re landscaping etc. I think it might be quite difficult to buy and build on one only and they probably want to sell it as a whole to a developer. It is also not clear how access would be shared between the three houses if you just bought one plot. No site plan was available on the council site.

 

 

Edited September 6, 2020 by AliG