Have you been thinking about selling that land plot but are not sure what it is worth? These five steps will help you determine a realistic price and increase your chances of a fast sale.
1. Land register file and UT conditions
The First thing you have to do is to get these two documents. The land register file contains information on the land plot, right of ownership, possible encumbrances and restrictions. Urbanized technical (UT) conditions will tell you how much and what you can build (residential, commercial, touristic units). This is almost the most important factor for determining the sales price, unless you are selling an agricultural land. Do not forget to ask about planning documents, detailed urbanistic plan (DUP), whether new plans will be adopted in the future, etc. You can get all of this information at the local municipality. When the moment comes to negotiate with the potential buyer it is important that you have as much information as possible.
2. What can be built
This is the second most important factor that affects the sales price. For example, if UT conditions are for a building, this is how you will determine price per sqm: determine the net construction area by deducting 20-25% (common area, elevators, hallways) from the gross area and then divide the total sales price by the total net sqm.
3. Construction costs
Construction costs are also something to keep in mind: the price for low and mid quality of construction ranges between €400 and €600 per sqm, high quality between €600 and €800, and luxury starts from €800/sqm. This data may not be important to you directly, but it is very important to the buyer since these costs add up to their total investment and will have a certain influence on their buying decision.
Utilities are paid per sqm of total net area. All the information about the zones and coefficients can be found on the municipality’s web page. Find the zone that your plot belongs to and calculate the relevant costs for utilities.
Sum the price of square meter with the construction and utilities prices, compare it with the sales price of the real estate square meter in your neighborhood and see if the difference between two figures leaves room for the investor to make profit. Keep in mind that the investor who is investing in construction is taking over the risk of construction itself, sale of the units as well as the risk of possible market discrepancies. Therefore, you need to know that his potential profit often has to be higher than your profit from the sale of land in order for the entire investment to be considered cost-effective. Sale of land usually does not carry any risks if it is done properly, but any investment, even in the most ideal conditions, is risky.
There are many other things that you should be aware of when you’re selling real estate. Be rational and have realistic expectations. The sales prices you hear about are usually not the ones that are negotiated in the end. Therefore, be careful and consult with your real estate agent about the whole procedure.
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