I have an option to buy 2 adjacent lots (2.5 acre total) from another land investor (or wholesaler) at discounted price due to septic/sewer issue. One lot is eligible for perc test and other lot is not. There is an adjacent lot next to the one eligible for perc test showing it’s approved for 1 bedroom build. The lots are in low density residential area that is intended for single-family homes. Last year, sellers purchased two lots for $80k total and county assessed them at $64k. I was offered to buy both lots at $45k. I am not sure if eligible lot will pass perc. Septic system will cost $20k-$30k. From what I’ve seen on Zillow $10k/acre is a good deal. The lots are central and less than 1 mile from hospital. What is a good price to renegotiate?
If you’re seeing around $10K per acre as a good price, then 2.5 acres might be worth about $25K in a “clean” market.
You’re being offered both lots for $45K, but one lot comes with a risk (it may not pass the perc test) and a potential septic system cost of $20K–$30K. That means if the eligible lot fails, you could be adding a big expense on top of the purchase price. Given that risk, you want to protect yourself. You might not get the full value of the property if you end up having to install a new septic system or if only one lot ends up being buildable.
With these factors, trying to renegotiate closer to $30K total seems reasonable. This lower price would help cushion the potential septic repair costs and the risk of one lot not being buildable.
The seller’s offer of $45K might seem attractive at first glance, but factoring in the septic system costs and the uncertainty around the perc test, aiming for around $30K would give you a better margin for error. Maybe even lower, considering you’re a wholesaler and you should be getting an even sweeter deal than most.
You might consider adding some contingencies in your offer—like a perc test contingency—so you can back out or renegotiate further if the test doesn’t go well.
I’d be highly suspicious of this deal. They bought last year for $80K and now want to sell them to you for $45K. A $35K haircut? I think they spent last year figuring out they wouldn’t work and are no w trying to dump them on you.
Thanks for your comment. I do think the seller overpaid for the lots. I do question if it’s a good idea to even buy and weighing how central the location in the city.
Thanks Sean! I’ll shoot for <$30k. I found out that an alternative to failed perc test is a low-pressure pipe (LPP) septic system.
I’m curious to know, what makes a lot ineligible for a perc test?