UDATE 1: I find it hilarious when failed developers attempt to resell their property that was purchased at the peak of the last up-cycle a few years later, in a recession, and tack on a couple hundred grand for their trouble (you know the 'trouble' they had, as in they couldn't develop their property so they need to sell it). In this case the land value has apparently increased by $250k in the last two years, that'd be about $10k per month, $342 per day, every day through the recession...hmmm.
UDATE 2: City tax valuations are a curious matter. Here we have a property that sold for $1.15M in 2014. You'd think that the City assessor would take that as the value for tax purposes. But no, they don't use market values, they use some hybrid of what a place was worth last July in its current condition (?). I have had demolished houses assessed upwards, this seems impossible because the current condition was demolished and last July it was a shack. Regardless, the City only values this property at $755k on its tax roll. This is way too low, another example of how the cash starved city undertaxes certain classes of property, and rigorously taxes other classes.
Frequent visitors to this blog will know how I enjoy pointing out how unethical those parties involved in land deals tend to behave. In a way I am sympathetic, because these are big ticket items that are changing hands, the commissions are huge (and can be for very little work on a land deal), so all parties are truly incentivized to act as poorly as possible on behalf of the seller.
The property we are featuring today is a stellar example of the way our local real estate professionals will go to almost any length to disguise the truth when reselling failed development sites. The location is great - note the underlying land is good, it is the deal that is terrible, and those people representing the deal that really sour me on the real estate sales profession. Lets look closer at the details of our case today;
- address - 615 2 ave NW - sunnyside
- size - 62 x 120 ft site - great size for building on
- zoning - MCG - this is a ground oriented multi family site that offers good development potential, so the land use is fine
- price - originally asking $1.5 million, now down to the bargain price of $1.4 million
- what the realtor chose to misrepresent- claims a development density of 5 units
- what the realtor wants the buyer to not know - the owner has already tried to permit a 5 unit townhouse project, met with significant resistance at the community level because the planing department authorized a project with relaxations (otherwise project was impossible to develop), had the project permit appealed, and lost. This is definitive proof that due to parking and other concerns a unit arrangement of 5 on this lot will not work without major clean sheet redesign work, and even then a project appeal will likely tie up the builder for months.
- how to get a similar project permitted? - It is conceivable this project would be re-permitted again with a concrete underground parking garage, that would offer six or more parking spaces. This would be a huge risk from a cost benefit perspective, and likely render this project far from economic, especially at its inflated asking price of $1.4M.
In summary, to misrepresent about how this is a 5 unit development project (without mentioning this property just failed as a 5 unit development), to price it such that it is not remotely viable as a project if only 4 units are allowed (I'd argue not viable even at a density of 6 at the asking price), and to neglect to mention how damaging the community led opposition and appeal of the project was to the land value is highly suspect.
I'd love to own this lot, but I can't value it above $800k. Even at $800k I'd be concerned about the viability of the project. Perhaps another builder could pay more, or somehow make it work, but $1.4M is a crazy number.
Best case for this one is it somehow gets auctioned off in a judicial sale. If that happens, I will be there with a bid, ready to take it as is, where is. This is another property that will be interesting to see how it unfolds if it is sold. I will update the blog when there is any update to the status of the sale.
Note to the City - generally you are so obscenely cash hungry you'll go out and reassess my projects right after I start building to increase my assessment. Yet, here we have a property owner claiming his land is worth $1.4M, yet is is taxed at a value of only $755k. I'd love to see this property get re-assessed at its full asking price. The City tends to value older properties far too low, and the City budget really suffers for this. It would be hard to appeal a high tax assessment for a listed property such as this one given its recent sales activity.