Tuesday, December 29, 2009

Can a Ghost Buy a 10 acre lot?

November 12th, 2009
Can a Ghost Buy a 10 Acre Lot?

A 10 acre lot is a weird animal more driven by zoning rules than market

A 2-3 acre lot on paved cul-du-sac often sells for more than a 10 acre lot
in the same area.

For example, look at Hennepin County acreage lots.

There are currently 84 rural non Lake Minnetonka lots from 3-10 acres listed
on the MLS from $99,900 - $1,295,000. This year 11 to date have sold with
prices ranging from $90,000- $350,000.

In the 10-20 acre range there are 29 lots on MLS listed between $110,000 and
$3 million. There has only been one lot sold in this range in Hennepin
County so far this year,

There appears to be a pending sale for a 10 acre lot-but I believe it a
"phantom sale" The buyer is a ghost and may have trouble with the photo ID
part at the closing. The listing agent said the developer just handed him
some paper work, said his buddy was buying a lot, and told him to put up a
"sold sign". The closing date has passed. Its an old developer trick to
drive demand, with the belief that people are sheep and will buy once
someone else makes the first move.

Inspecting the lot, I see why the lots haven't sold in "The Development". I
call these "bowling alley" lots. Someone just chopped up a corn field using
existing road frontage on a poorly maintained gravel road. No effort was
made to create value.

Who is the buyer? I'm currently marketing 4 acreage waterfront parcels for
sale (3 near Victoria, 1 in Maple Grove) and have sold acreage residential
pieces in the past. This is what I have found these buyers are looking for.

1) Privacy. A 10 acre bowling lot that is an open corn field has less
privacy than a wooded 1/3 acre suburban lot. What these buyers really want
is 2 acres surrounded by 80 they don't own, don't pay taxes on and can't be

2) Agricultural. They want horses or other animals. These folks typically
want more than 10 acres.

3) They want outbuildings for car collections and repair or small business
or hobby storage.

4) They are willing to drive farther to pay less.

5) To be able to hike and hunt and play privately in their own backyard.

6) They just want some elbow room yet still live in a neighborhood. That is
why the 2-3 lots are far more popular than the 10 acre ones.

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