Developer wants to buy land I own, should I look for Broker, Lawyer, Agent or rep myself?
A very large warehouse developer wants to buy a plot of land I own. They're buying out houses nearby and I own 2.5 acres in the middle of their site. I want to maximize my profits, and was planning to make a deal directly with the developer's agent. I've done lots of deals on my own so I don't need help navigating the paperwork or structure of the actual contract. 

&amp;#x200B;

I do want to maximize my profits -- what are you throughts on working with a broker, Lawyer, or Agent? 

Any tips on navigating this type of deal, or anyone have experience on the buyers or sellers side of this type of deal; what to look out for, etc?
[{"id": "it071b1", "text": "Dm me where its at I can give u some sale comps on recent sales", "replies": [], "depth": 1}, {"id": "it0adan", "text": "Please for the love of God get an agent. An attorney will not tell you if you\u2019re getting a good deal, how long it should take, what terms to push for. They\u2019ll just confirm and advise on language. Find a broker that has those kind of sales in their resume and lean into them to give you terms you should be asking for.", "replies": [], "depth": 1}, {"id": "it0ahfc", "text": "Lawyer. Broker will want ~3% and for not much value", "replies": [], "depth": 1}, {"id": "it0b31c", "text": "I would independently figure out the value of your property for the buyers intended use. As a broker, I would do this for a fee in my marketplace.\n\nAlso, a long time ago a developer I knew told me some advice about assembling properties. \"Make sure you buy the biggest piece first and cheap because the final pieces may be small but you will pay up for them\".  Sounds like your property may be a big part of the developers overall site so you may have some strong leverage.", "replies": [{"id": "it0osql", "text": "Their final cost is $300/sq ft. So with a 2.5 acres what would the land be worth to them?", "replies": [{"id": "it0qufv", "text": "2.5ac\\*43,560\\*300=$32.67MM.  Id be strongly considering a sell.", "replies": [{"id": "it0wowo", "text": "I think he meant the warehouse they will build will be worth 300 psf then asking how to back into the land value.  Industrial land for 300 psf would be great though.", "replies": [{"id": "it1b3jx", "text": "buildable SF makes the most sense here but 2.5 acres is only going to allow for about 25k SF. $300/SF is still by far at the top of any market I\u2019m familiar with right now.", "replies": [{"id": "it1fhvc", "text": "Theyre building 400,000-600,000 sq foot warehouse and our land is right in the middle of that. Their past projects in same area cost $300/sq foot to build (land plus construction)", "replies": [{"id": "it1g6t2", "text": "Got it. $300 all-in makes sense and actually cheap. You would be served well and likely save you a ton of money to hire an advisor, primarily for terms other than price. And I agree that this fee is highly negotiable. Best info you can get now is what is going on with your neighbor\u2019s properties and all available info on the developer and their financial partners. It\u2019s a weird time\u20266 months ago pricing for this type of deal is 25%+ higher.", "replies": [{"id": "it2c1bl", "text": "Why would this deal be so much more expensive before? Just curious!", "replies": [{"id": "it2pgij", "text": "6 months ago was close to the peak for acquisition pricing and market rents. Market has changed drastically since then. Primarily due to interest rates and the cost of capital increasing 2x but also supply has shifted a bit with a lot of sublease space hitting the market (i.e. Amazon).", "replies": [{"id": "it317yd", "text": "Thank you", "replies": [], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}, {"id": "it1f0su", "text": "Ah yeah I gotcha", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "it141zv", "text": "\u201cFinal cost\u201d of what? If you\u2019re referring to hard dollar cost of the rentable square footage, it seems really high, unless it is going to be a manufacturing facility with a lot of build out.", "replies": [{"id": "it1fcyf", "text": "Prime warehouse in prime area, 300 sq foot is how much it costs them to build.", "replies": [], "depth": 4}], "depth": 3}, {"id": "it1vhvj", "text": "Figure out what rent PSF they expect to get, divide that by some reasonable development yield, back out their construction costs PSF, there\u2019s their supportable land value. Three key variables you need to figure out. Cost and rent are knowable, yield is more of an art.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "it0dph0", "text": "A broker is worthless in this situation - you already have your buyer. You need comps and you need to understand the value of your site to the developer. You can do this in your own, or with the help of an appraiser.  Model out what you think the buyer can build, figure out how much that\u2019s worth, and back into what they can pay for the dirt. This isn\u2019t difficult to figure out.", "replies": [{"id": "it0es4a", "text": "Can I PM you more details? I didn't want to reveal too much in this post.", "replies": [{"id": "it11pag", "text": "I\u2019m a warehouse developer.  PM me and I\u2019ll give you some of my thoughts.", "replies": [], "depth": 3}], "depth": 2}, {"id": "it0p5cv", "text": "Exactly this, you need to figure out the upper limit of what the developer can pay for the land in order for the numbers to work. If you were to bring in anyone to help with closing, lean towards an experienced commercial realestate investment financial analyst who can add value in creative ways to get the number you want to work within appraisal the developer needs to get financing.  \n\n\nShort form: \n1. Find what developer can pay \n2. Ask what developer wants to pay \n3. Negotiate somewhere in between those two numbers", "replies": [], "depth": 2}], "depth": 1}, {"id": "it0foyf", "text": "A lot of conflicting information here, so throwing in my 2 cents with context.\n\nBroker can give a Broker Opinion of Value for a fee. This is an estimate of the value of your property based on comps in your area. Probably worth the $500 or so dollars to validate your own research. Make sure the broker specializes in land sales in your region, otherwise, the information you get will be suspect.\n\nA good lawyer will, contrary to other comments, know how long it should take and what terms to look for. As a former development lawyer, a good lawyer will know everything except land valuation . If you price shop lawyers, you're nearly guaranteed to get zero value from the experience.\n\nAppraisal is probably overkill here and will take forever. Every appraisal I get now (as a developer) is taking 4-6 weeks, and you don't need most of the information they will provide.", "replies": [{"id": "it0xqcn", "text": "Is it still $500? I remember BOV costing $500, 10 years ago.", "replies": [{"id": "it0ykll", "text": "Honestly, not sure what they cost now. This is what I used to pay 6-7 years ago. Either way, not a huge chunk of money.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "it0fy7h", "text": "Let them close on all adjacent properties. Reel them in. Then maximize.", "replies": [{"id": "it0n604", "text": "This is the way", "replies": [], "depth": 2}, {"id": "it20drg", "text": "Reminds me of Carl from the Pixar film Up. Dude probably made bank with how long he waited out.. but he probably lost the offer because of balloons \ud83d\ude02", "replies": [], "depth": 2}, {"id": "it34abp", "text": "I've seen that blow up in people's faces before.  \n\nLast assemblage I worked on, second to last seller got the highest price.  Last one held out and held out and finally the developer said \"screw it, we'll build around you.\" \n\nLast seller eventually sold, but for a fraction of what the second to last got.\n\nHogs get slaughtered.\n\nu/anonymous22person, IMO, get a couple of opinions of value from brokers in your market and see how they compare to the offer.  Do not tell them that you have an offer or at what number.  \n\nIf the valuations are higher than what you're being offered, hire one and go to the world and see who wants to pay the highest price.  In my market, pretty much no one pays absolute top dollar unless it's a competitive bid.", "replies": [{"id": "it3yuhj", "text": "This is the way", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "it0h2se", "text": "Why on earth wouldn't you involve the best agent you can find to extract maximum $$$ from these guys.", "replies": [{"id": "it0i9nc", "text": "Tips on finding the best agent?", "replies": [{"id": "it0m2d9", "text": "Look for recently sold properties comparable to yours sold in last 6 months for prices you find attractive. Google the address of the property to find a cached listing with the listing broker\u2019s information.", "replies": [], "depth": 3}, {"id": "it0m473", "text": "Agents MARKET properties. That\u2019s why you hire them. You don\u2019t need marketing, you don\u2019t need an agent.", "replies": [{"id": "it0oh0d", "text": "That\u2019s not necessarily true as marketing is only an aspect of the value a broker can bring to a sales transaction.", "replies": [], "depth": 4}, {"id": "it0y08n", "text": "This minimizes the benefit of an agent", "replies": [], "depth": 4}, {"id": "it1pm3q", "text": "Maybe on the residential side\u2026 commercial is a different beast.", "replies": [{"id": "it8oskz", "text": "Buddy I sell hotels. You don\u2019t need an agent if you have a buyer.", "replies": [], "depth": 5}], "depth": 4}, {"id": "it1vqfd", "text": "Agreed! Further negotiations can be handled between lawyers who don\u2019t charge commission. However, agents often can bring strategies, ideas, options to the deal like no one else. If OP has doubts, concerns, lacks experience and is ok with sharing the wealth, bring in an agent. The more eyes on the deal with OP\u2019s best interest, the smoother it will go. It\u2019s  not just about profits, there\u2019s many issues that can delay or stop the deal from happening. The lawyer is very valuable but limited perspective.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "it0jdb5", "text": "Every deal is unique. As a broker I\u2019d say add 30% on top of the price they offered, unless it\u2019s really good for you. If they scoff, hold out. I\u2019ve seen land owners kill it 2-3 years after the surrounding development is occupied and doing well.", "replies": [{"id": "it1gm8d", "text": "Yup. And if they don\u2019t buy it the next builder will take it once these guys have erected their structure.", "replies": [], "depth": 2}], "depth": 1}, {"id": "it0l3cn", "text": "Well, there is two aspects you need to price - separately.\n\nfirst is market value of the land alone. Comps will give you generally a good idea of what the value per Acre is based on equal zoning etc. This is value X.\n\nSecond, will be value based on how important your piece of the puzzle is for their assemblage. this is a pretty arbitrary number  and this is where negotiation skills come in handy. This is value Y.\n\nThird is, what can this land be worth in the future if I dont sell, let them develop. This is your opportunity cost. Opportunity cost should be less than X+Y for you to do the deal.\n\nIf you want validation, approach the most important broker for that asset type and ask them how much of a FEE would they charge you to get you a price based on the variables X &amp; Y and see. But be careful because theses guys bend over backwards for developers so you dont want them then going over to the developers and giving them an edge on the negotiations.\n\nAlternatively, you could negotiate with the broker a lower % of the deal given you brought the deal. this way they are incentivized too. So instead of standard 3%, maybe a 1%. And having that buffer &amp; broker is a good tactic for negotiations. Theyre fee may get you more in value than what they cost so dont be afraid to pay them. Have a convo with them and see if they can be an asset to your process.\n\nI would only use a lawyer for making sure paperwork is tight but not for value estimate or negotiation.\n\nGood luck!", "replies": [{"id": "it0p1ah", "text": "Perfect answer thank you!", "replies": [], "depth": 2}, {"id": "it1abd2", "text": "This is a great answer. I would also consider a broker fee structure where the broker is only incentivized by a fee of a % of additional price they can achieve through negotiations. There is no reason they should get a full fee when you brought them the deal. So if your offer from the developer is $100k/acre for easy math and your broker gets them up to $200k/acre, then the brokers fee is 10% of the additional 100k they got you. \n\nAlso, depending on how big your land is of the site you could request an offer where you stay in the deal as an LP. The land value is used as your portion of equity in the deal and you get a preferred return and upside.", "replies": [{"id": "it1evqs", "text": "Depending on the state, this type of commission structure could be disallowed.", "replies": [], "depth": 3}, {"id": "it1ggdo", "text": "This idea is ass-backwards and a great way to get a non-pro broker desperate for any deal. You need an asset on your side not some cheap paper pusher.", "replies": [{"id": "it1lccv", "text": "Exactly. An asset adds value and a liability costs you with no benefit. This structure ensures this owner he is getting a broker adding value. If the broker can\u2019t increase the current offer why pay for them to \u201cpush paper\u201d as you say. OP already said he can execute this on his own, so no need for a broker to do any of that, he already has the buyer, and he just needs to maximize value. % of price increase over the current offer with a fee cap. That\u2019s how I would get there.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "it0le0p", "text": "Most deals I see, a broker wants 2-3%. So on a $2mm deal, you\u2019ll pay $40-60k. A good real estate or acquisition attorney will invoice you a 1/6th of that, and provide a lot of good guidance as well. Charging about $150-250 on billable hours takes a long time to add up to $40k.\n\nYMMV, but that\u2019s my two cents.", "replies": [], "depth": 1}, {"id": "it0qgvd", "text": "Have a commercial appraisal done. Tell the appraiser the circumstances.", "replies": [], "depth": 1}, {"id": "it0ufw8", "text": "I\u2019d piggyback onto the other comments. Lawyer is only going to review and confirm language. Not a ton of guidance on pricing. \n\nYou\u2019re saying they offering $300/ft for the dirt? What\u2019s the end value on exit?", "replies": [], "depth": 1}, {"id": "it0vuuq", "text": "An attorney", "replies": [], "depth": 1}, {"id": "it0vxxf", "text": "You don\u2019t need a broker/agent, they\u2019re not going to help you here. You don\u2019t need a lawyer YET either. Do your own diligence on setting a price then pay for an appraisal. Get a lawyer / closing attorney when you have an offer / contract to review.", "replies": [], "depth": 1}, {"id": "it0y7gp", "text": "Call the top 2 or 3 Commercial brokers who specialize in land sales. Get comps. Find out how much the developer is willing to pay. Compare that to the comps. Ask the broker if they have a buyer who'd pay more if the developer doesn't offer anything close to comps. Best to look at comps with closings after the last rate hike... also keep in mind that with rates increasing your value will start to drop and the amount the developer can afford to pay will also decrease, so don't rush, but also don't take your time. The next rate hike is expected next month so that could make things worse for you. Good luck!", "replies": [], "depth": 1}, {"id": "it109f1", "text": "you have the luxury and liberty of asking several brokers their opinion on every aspect of your property. might as well do it and it may be worth hiring a broker. regardless if you do or don\u2019t, you\u2019ll want a real estate attorney for the contract", "replies": [], "depth": 1}, {"id": "it19iq5", "text": "ITT a shit load of brokers hoping you don\u2019t hire an attorney who will tell you the broker is fucking you.", "replies": [], "depth": 1}, {"id": "it1arlk", "text": "Broker here - Definitely consult a broker at minimum, they will be more than happy to talk. Think about what you want to do with the money. Land Sales often bring in higher broker fees, at least the ones I\u2019ve been around.. you definitely have a lot of leverage to negotiate that down substantially. \n\nAnother thought - I would recommend you entertain the idea of a land equity joint venture approach as well. Get in on the project and let them develop the land. You just sit back and collect some cash on the hold and/or sale of developed site. Land value is top $$$ and construction loans and hard to finance currently. You\u2019d be helping them substantially. (If they are actually that big, they are probably cash and don\u2019t need you\u2019re)\n\nWorth a look! I\u2019d advise you to consult a CRE Attorney if you want to pursue this route. \n\nAt minimum talk to a broker. Look at the main guys in your area. Call them all and take notes! Decide what to do from there, but always keep in mind what you want to do with the $$$ after. Best of luck!", "replies": [], "depth": 1}, {"id": "it1fz0c", "text": "Just be unreasonably high and discomfort them into their highest numbers. The \u201cforeigners\u201d ( not going to say which race) do that in the LA market all the damn time and they get ridiculous prices.", "replies": [{"id": "it1g9a5", "text": "And if you bring a local professional broker into the deal, they\u2019ll be the \u201cgood cop\u201d and keep the communication going when you keep your nose high. Be patient. This will definitely get you the highest dollar about. \nPardon my language, but \u201cF\u201d the comps. You\u2019re only negotiating against yourself if you study those. Comps are good for a market deal, but here you\u2019re aiming for above market since it\u2019s a keystone parcel.", "replies": [], "depth": 2}], "depth": 1}, {"id": "it1pg02", "text": "You have no knowledge on the value of your property - more than likely you\u2019re going to get fucked. Developers agent will make you sign a limited consent agreement. Aka he doesn\u2019t owe you shit. \n\nHire an attorney or get a commercial agent whose well versed.", "replies": [], "depth": 1}, {"id": "it323vu", "text": "Real estate attorney, if you are comfortable negotiating it yourself.", "replies": [], "depth": 1}, {"id": "it37lcz", "text": "Pls ignore the mess I\u2019m about to type as I\u2019m on mobile and mobile sucks for long posts (at least for me). I\u2019ve assembled several projects. Get both. Developers always have stupid contracts that frustrate the process and having a good attorney will help you navigate that part of the process much better than a broker can (if the broker claims they can help, red flag). As far as trying to capitalize on value, talk to an industrial Broker who is actively involved in the market who\u2019s also done the same. They\u2019re easy to find, simply look at LoopNet for new builds that aren\u2019t completed yet. The broker who has it listed is typically someone who deals in land because the land guy, 9/10 times, gets the building listing once it goes up. You need to figure out how much acreage they\u2019re buying, what they\u2019re building and see how much each extra $1psf affects the total project per land square foot  (that\u2019s the only thing developer cares about, if you\u2019re truly in the middle of it). So for example, let\u2019s say your 2.5 acres is part of a 25 acre assemblage (10%), each extra dollar you negotiate only adds $0.10 psf to the project (based off land). Each $10psf only adds $1, and so on. \n\nWhat state are you in?", "replies": [{"id": "it396rk", "text": "California. My 2.5 acres is part of a 400,000-600,000 sq ft warehouse. Their cost to build (acquisition and construction all in) is $300/ sq foot.\n\nFrom those numbers is it possible to extrapolate and rough estimate the value of the land itself? Theyre paying close to $900k for single family residences adjacent to our land.", "replies": [{"id": "it3f4op", "text": "We get estimates from builders on what it costs but it doesn\u2019t tell the whole story (off sites, she\u2019ll only, etc). When I get to the office, I\u2019ll send you some rough figures but they may be outdated. Im in SoCal and 2.5 acres is well above $900k. Is your site currently zoned for industrial? (Generally doesn\u2019t matter if the current use is residential). Pls do yourself a favor and don\u2019t discuss YOUR number with the neighbors\u2026 everyone negotiates their own deal. If you can get some insight from them on theirs, that helps.", "replies": [], "depth": 3}, {"id": "it5pzge", "text": "Sorry got tied up today. I\u2019ll send info tomorrow.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "it3ozb3", "text": "If you already know the value of your land, get an attorney. It will be usually cheaper than a brokerage fee.", "replies": [], "depth": 1}, {"id": "it3uewr", "text": "You mentioned the developers all in cost is $300 but consider investigating\n\n\\-What are large tracks of land trading for, ie. whats this land worth to the developer\n\n\\-What is the building worth upon completion, ie. identify comps.\n\n&amp;#x200B;\n\nIt sounds like you are in Los Angeles Inland Empire and Industrial land for buildings that size vary but start from $70/sf in the Perris/Riverside area and go up to $150/sf in Chino Ontario Pomona, if the site is fully entitled and zoned already.  Likely it's not.  Just a basic yard stick for your considering, there are many attributes to consider.  You might be able to get more or less than that but the market is softening a bit so keep that in mind.\n\n&amp;#x200B;\n\nKeep in mind they are going to probably want a very long due diligence period for this transaction.", "replies": [{"id": "it4kyjx", "text": "Thank you!", "replies": [], "depth": 2}], "depth": 1}, {"id": "it6f1ko", "text": "I would probably not seek an agent for this, aside from paying one, as others have said, for a BOV. I say this working at a repe firm in acquisitions and also having my agent\u2019s license. \n\nFind a good real estate attorney at a large reputable firm. I deal with attorneys regularly and the best ones know how to make deals and understand clauses that go into them. But they aren\u2019t really going to be negotiating price. You\u2019ll pay top dollar (but still less than a standard commission) for a good one that can help guide and protect you. \n\nIf you\u2019re truly comfortable with your ability to negotiate on the deal, and have done lots of deals on your own, then a broker would be redundant here. Run your own comps in addition to the BOV and decide what you believe is a true value for the land and what you\u2019re happy taking (there should be some cushion here). If what they are offer is the actual market value then great, slap a premium on it and call it a day.  However if you don\u2019t feel you know what strategy to implement in negotiations and there is a large gap in the offer from the value, get a good agent.", "replies": [], "depth": 1}]