A listing for the five-bathroom, seven-bedroom house on High Point Road in Toronto contains no images of the inside of the home itself, nor any details of the property.
Still, it comes with a $ 16 million price tag — all based on its potential.
To help buyers imagine what could be built on the two-acre property — located in the Bridle Path, one of Toronto’s most prestigious neighborhoods, with neighbors like rapper Drake and singer Celine Dion — the seller included three sets of architectural plans that envisioned the property as the luxury estate it might become.
It’s a trend that’s on the rise.
Sellers of teardown properties in hot luxury markets have started listing their properties with architectural plans already included, with the hopes of attracting luxury buyers and fetching a higher price for the land. Sometimes, properties even come with permits in place, so potential buyers can start building from the moment they close.
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“In the ultra-luxury market, what we typically find is that a particular buyer may not be familiar with the zoning and what’s possible with a particular property,” said Eileen Lasswell, the listing agent for the High Point Road home. “It really starts to allow that particular buyer to use those plans as a launchpad.”
Luxury teardowns are growing in popularity, with the number of listings increasing amid widespread inventory shortages, according to an analysis by Realtor.com, which defined a luxury home as one priced over $ 1.5 million. Teardown high-end listings have been picking up since 2020, with the number of these listings increasing by 19.8% between 2020 and 2021, keeping pace with the overall luxury home market (up 19.4%).
Prices for these properties are increasing, too. Compared to the first quarter of 2021, luxury teardown prices are up 14.9% as of the first quarter of 2022, meanwhile, total luxury prices have stayed consistent in the same timeframe, according to the data.
In the last quarter, luxury homes marketed as teardowns were on the market for 22 fewer days than typical luxury properties, indicating an interest in ‘build-your-own’ opportunities as compared to buying an existing luxury home.
A property that comes with plans in place may sell even faster by helping buyers reduce due diligence time spent researching what kind of home could be built on the lot.
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Helping a Buyer Envision Their Dream Estate
In the case of the High Point Road property, the seller hired three architects — Audax, Memar Architects and Richard Wengle — to design a home that would be more reflective of the larger manors typical within Bridle Path, the exclusive Toronto enclave. Each of the plans features different luxury elements, such as an orangery, a climbing wall and an indoor swimming pool. Two of the plans are designed in an “iceberg” style, in which the bulk of the property’s square footage is located below-ground.
“A lot of people do not even realize that that’s possible in Toronto,” Ms. Lasswell said.
One set of plans envisions a home that would not require any further city approvals, while the other two would require going through that process, which can take six months or longer, Ms. Lasswell said. Each plan includes estimates on timeline and building cost.
“A lot of these buyers, they have the money, but in all likelihood they’ve never built anything to this scale before and they do not even know where to start,” she said. The plans can help them to get a “realistic view” of what it will take to build their dream estate.
“Generally, a buyer is not going to choose to build a house exactly as designed, but it does give them the opportunity to at least have a starting point,” Ms. Lasswell added. Ultra-luxury buyers may often seek to customize their home, working with their own architect to add a poker room, a basketball court, or other personal touches.
Sellers should be prepared for the high price tag of drafting plans. Hiring a renowned firm to create plans for a major estate may cost upwards of $ 300,000, or closer to $ 50,000 for a smaller property.
Buyers expect to see full plans, too. More than flashy renderings, they want to understand how the house would be laid out.
“Are there any staff quarters? How big would that be? Where would they be? Is there a second kitchen? Are there multiple access points? What are the security features? ” Ms. Laswell said. “You really need to start to be detailed otherwise, you’re going to have a lot of questions and the renderings may actually do more harm than good if you’re just doing something very basic.”
Despite the major cost to the seller, the plans are indispensable in educating buyers and ensuring that the seller gets a strong offer with a faster turnaround, Ms. Lasswell said.
“Properties with a price of over $ 15 million in land value, they do not come up that frequently,” she added. “I can not imagine marketing this property without having at least put that together.”
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Adding Value to the Final Sale Price
Including architectural plans can add significant value to a property poised to be razed.
Brothers Ryan and Matt Burns, real estate agents with Compass in East Hampton, New York, encourage sellers of teardowns to include possible plans.
“They do tend to sell faster and for more money, just because it’s less of a question mark or a buyer,” Matt Burns said. New plans can also help a “misfit house” —one that’s outdated and smaller compared to its neighbors — stand out in a competitive market.
This year, the Burns team listed a two-bedroom, 900-square-foot cottage on .37 acres with plans and permits in place for a new five-bedroom, 4.5-bath modern home in a desirable neighborhood close to the village center. The property, with plans included, is listed at $ 2.4 million.
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The seller, Josh Helfand, had bought the property in April 2020 with the hopes of tearing down the existing 1986 structure and building a new home for his family. Over the course of 10 months, he worked with his sister, architect Jessica Talley, to design a modern farmhouse-style home with a pool and backyard garage and secure building permits. When his plans changed, he decided to sell the property with the plans in place.
“It should certainly add value to the right buyer,” Mr. Helfand said.
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Flipping a Home With a Permits in Place
Securing permits for a build can also be a way for home flippers to add value to their investment without having to engage in the building process.
In Toronto, Ms. Lasswell sometimes works with investors who purchase teardown properties, hire an architect to design a new home, complete the permitting process, and then turn around and sell the property and plans to a buyer who wants to build.
Within the time it takes to get the permits secured, the housing market may have pushed the value of the land upward, too, resulting in additional profits for the investor beyond the value added by the permits.
Plenty of buyers are attracted to these shovel-ready properties, especially with the lack of housing stock within some of the top luxury markets.
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“You’re not only saving time in terms of dealing with the city, but you’re also saving money in terms of not having to finance a property for six to nine months while you wait for the permits,” shel said. Additionally, buyers can be more confident in their construction budget, as they can start right away, rather than waiting several months when the price of lumber and other materials can shift.
As Ms. Lasswell put it: “Time really is money.”
(Mansion Global is owned by Dow Jones. Both Dow Jones and Realtor.com are owned by News Corp.)
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