Valuing my property for sale to the neighbour

[wheninrome]

Hey Folks,

My neighbour's property has recently sold to an investor. The purchaser is also interested in purchasing mine (family home that we're happy to move from in the long run anyway), because I pointed out to them that if someone owns both titles it is entirely possible to build another home on the gap between our houses, although neither individual owner can currently take advantage of it.
My question is about how I can ascertain a fair and reasonable sale price for my house - made up of value of the current home, which would be market price on the local market, which is straight forward to ascertain - but would also include the additional value that the purchaser would realise by owning both properties in order to build a brand new house in between.
Location is Papakura, Auckland, realised section would be 400sqm, flat section, easy access to services.
Any guidance would be much appreciated.
Thanks in advance,
Michael

[Davo36]

Hire a valuer mate.

[wheninrome]

Thanks Davo, forgive my ignorance - a newbie - do you think a valuer would be able to accurately assess this? Its not something that could be derived from recent sales, I imagine.

[Bobsyouruncle]

A valuer will save you time but the process is simple enough.
The owner of both sites will have
1. Property A on its own site valued at $XXX
2. Property B on its own title valued at $XXX
3. New vacant section valued at $XXX

Let's say 800K plus 800K plus 300K

So 1.9 mil finished value.
Subdivision cost = 150K
So buying the 2 properties needs to cost 1.75 mil less whatever margin he wants to make. So if he wanted to make 100K profit he would need to buy both sites for no more than 1.65 mil.

Stick in your own numbers then you will know the max he would pay and you can negotiate from there.

[wheninrome]

Thanks Bobsyouruncle! Seems simple when you put it like this. I'll have a play with these numbers tonight.

[donthatetheplayer]

I'm not sure you can factor in the sub-d potential. The property you are selling has none. That's really the upside for your neighbour if he owns both. I think you would really be aiming for a premium sale price on your property as it is because you know the upside potential if your neighbour owns both. This is a good negotiation point but that's all.

Any valuer will not factor in sub-d potential on your site alone. You'd need to get a valuation on both properties based on them having common ownership and being developed.

Your neighbour would be foolish to pay you based on development potential. That upside value can only sit with someone in possession of both sites.

You are in a strong position to negotiate and get a premium sale price though.