A nice land prospect popped up on the MLS this morning. At first glance, it all looked good, in fact it could be great. According to the listing agent, the property located at 2220 26 Ave SW is unique based on the size and garage potential.
“Attention all investors and developers. This huge lot of over 650 sq. m is designated M-CG zoning allows for a brand new 4 plex to be built which could be similar to the ones recently built across the street. What makes this property even more exciting is the ability for the new development to feature an 8 CAR GARAGE. Double tandem garages for each of the 4 new owners. With nearly 165 feet of depth on one side and 148 on the other, it will still allow for good sized yards for each of the lucky new owners once developed.”
The realtor identified a unique feature of the site, it is over depth compared to virtually any other similar lot in the city. This could offer the builder a much easier time dealing with the parking requirement for a four unit building. It has a good zoning category, M-CG. We know this zone well, having built a recent project in this community under the same rules. The physical size of the land is a good bonus here at about 7000 sq ft vs a regular 50x120 lot at 6000 sq ft the builder has an extra 1000 sq ft to play with. This could act as a sink for stormwater runoff if it is landscaped, meaning the civil engineering cost could be lessened for the project, or as the listing suggests, allow bigger garages (appealing to many buyers).
But wait. If the lot is 50 ft longer than a regular lot, shouldn't it be 9000 sq ft in area? Oh yes, the listing description fails mention the width is only 45 ft. The listing notes this elsewhere in the ad, to be fair, as 13.7m. The M-CG parking requirement indicates 1.25 stalls are necessary per unit, so to get a four unit permit on the project you must offer 5 stalls. 45 ft would only allow 4 stalls, no visitor parking stall, and barely enough space for those 12 pesky recycling/garbage/compost bins.
This width constraint is a huge risk factor. Should an eager builder offer up an unconditional $639,000 for this property? Perhaps the City can be approached for a relaxation on that fifth parking stall, so four townhouse units could still be built on this sizeable property. Maybe the City will even issue the DP as requested, and maybe the community association will overlook the parking requirement waiver, and will not appeal the permit to the appeals board. Or maybe the DP will be appealed, go to the appeals board for a hearing, and the appellant will lose. This is now a chain of unpredictable "maybes" that could prove very costly to the builder if even one of these decisions goes the wrong way.
What gets me bothered in all of this is not the buyer beware nature of land deals in the inner city, it is the role of the listing agent. I wonder if they don't know what they are doing. Are they ignorant of key redevelopment facts? This lack of knowledge is not a great trait of the broker you hire to sell your property. However, if they do know, this is worse because they are then intentionally not disclosing critical info. In this instance I would wager the listing agent is aware of this width constraint, because the agent knows enough to try and spin the possible negative (not enough room for bylaw required visitor stall), into a positive (room for 8 tandem garage stalls). For this reason we may conclude the listing agent does know about the width constraint for permitting a four unit project on this site, and decided not to publish it. The listing agent is solely representing the buyer in the transaction and only putting forth the most marketable information about the prospect of the land for development density. Surely this is OK?
The problem though is the information they are putting forth is incorrect. If this was a marketable security, such as stock, this oversight could have consequences for the sponsor. However, real estate transactions have a far lower hurdle for disclosure than say, a new tech stock IPO coming out with a price of $25. But this is a property apparently worth $639,000, ideally suited for building four townhouses, just like they did across the road (on 50 ft lots), according to our listing agent.
At this point an interested builder can do even more diligence on the property. For example, lets look at the title. The property last sold in 2015 for $525,000. I guess the purchaser then proceeded to do the rezoning from RC2 to MCG, or maybe it was already zoned MCG. I suspect not and looking into this would be way too much effort. This cost approximately $10,000. Rather than go ahead and get a development permit on the site and prove the property's development potential (this would require real effort/time/money), the seller decides to collect an easy $100,000 or so, less after commission, and move on. This is much easier than dealing with the City, and all those other steps we discussed that still need to be done to get a project permitted.
I have found most often the listing agent prices a property and describes it in the listing based on its theoretical development potential, rather than its actual development potential. This listing is a classic case of this. The listing agent makes the case that the property will offer exceptional parking amenities for the builder to take advantage of, but in fact, the property is so deficient in parking space for the necessary stall that can't be easily accommodated, the project could be in serious trouble before it even starts. For this reason, I won't be a buyer of this property. I'd council caution to any of my builder friends out there about this one, to ensure they jump in with their eyes open. Project economics on this get really ugly if the City will not relax that parking issue, or some creative workaround proves impossible.
Any listing agents out there? You can comment below if you think the listing agent is simply doing their job putting the best features forward about the property and letting the buyer figure it out themselves if the lot is a good development site. Or, should the listing agent disclose such a significant deficiency with the property dimension and the zoning bylaw in the description. Later on in the actual listing it does show the width of the building in metres, but the need for a visitor stall is a major oversight. I can see both arguments here having merit regarding the role and responsibility of the listing agent. I think the listing agent should not be allowed to make bold, forward looking statements on theoretical development potential in such in informal manner as a listing description. I think a listing agent should be responsible for the accuracy of what is written in the listing notes, and not make zoning bylaw interpretations of key clauses on behalf of a seller. I would much prefer to see a listing agent avoid speculative comments on development potential when, so often, they get it so wrong.
Thanks for reading my extremely lengthy comment on land buying. Not sure anyone will make it this far, but if you do, your thoughts are welcome here.