Is Your Land Worth More Than Your House? This guide offers insight into selling your home for land value.

In neighbourhoods all over south west Oakville, and Burlington we’re seeing a massive uptick in custom homes being built. With new construction north of the QEW being focused on small homes crammed onto small lots, many families are looking to build a new home in an established community.

How does selling a home for land value differ?

Selling land is a different beast than selling a home. You aren’t staging a living room; you’re selling a vision of what could be. Whether you have a vacant lot or a “tear-down” property, here is how to extract every dollar of value.

 

1. How to Spot a “Land Value”

Look for these three market signals:

• The “Infill” Trend: Walk your street. How many neighbors have knocked down original homes to build custom 2-story residences or modern “multiplexes”? The 3-Unit Rule (As-of-Right): Under current Ontario law, most residential lots now allow for three units as-of-right (e.g., a main house, a basement suite, and a garden suite). If your lot is large enough to accommodate this without a zoning battle, its value to an investor just skyrocketed.
• Lot Dimensions vs. House Condition: If the cost to modernize your home exceeds 50% of its replacement value, but your lot is 60+ feet wide, you are likely sitting on a development site.

 

 

2. Don’t Overlook Severance

In premium pockets like South Burlington and Morrison, the “best use” might involve a severance. A single large lot is valuable, but two smaller, buildable lots are almost always worth more. We recently saw a lot in Olde Oakville severed into three parcels, resulting in a total sale price significantly higher than the original single-lot valuation. Recent zoning updates have made it easier to build infill properties like duplexes, triplexes, and townhomes.

 

3. Who Buys Lots For Land Value

Knowing your buyer makes selling to them significantly easier… There are three niches that buy these lots:

• The Custom Home Builder: They want “clean” lots in established school zones.
• The Long-Term “Land Banker”: Investors who buy the “worst house on the best street,” rent it out while the neighbourhood continues to appreciate. (note: desirable neighbourhoods don’t usually see the same dramatic market corrections that traditional investment properties see, like condos. That’s why smart money buys valuable land).
• The Multi-Generational Family: A growing segment of buyers looking to build a custom home that includes a detached garden suite for parents or adult children.

 

4. Maximizing Value Before You List

As experienced agents, we can usually spot whether the highest value of the home is the lot, and we will assess what we need to market the home for the land as well. But sometimes the best marketing is a mix of marketing both the current property as well as the land. There are many buyers looking to live in a home now, and potentially build a new home on the lot as their family grows.

If the home is being sold for lot value, it’s often beneficial to engage with an architect. The architect can do a mass study, which is a quick sketch showing the total square footage that can be built on the lot. It gives the buyers insight into the type of home that could potentially be built on the lot. The architect, and any potential buyer, will likely need a survey. While some homeowners have their surveys, if you do not, the city registry might have a copy up for purchase. If not, you may need to order a new survey, which can take 2+ weeks to complete.

5. Should You Sell Directly To A Builder?

Builders are business people… many builders are also “land bankers”. That means they purchase and hold knock-down homes for a later date. This helps them either sell their potential clients the lot they need to build a home, or it can help them through quite markets by keeping themselves busy with their own builds.

There are situations where a builder approaches a group of 4-10 houses and offers above-market value for the properties because the collection of property is worth more than the value of each lot sold individually. This is usually the case along busy roadways where the developers are looking to build high density real estate. In those cases, a real estate agent usually cannot bring additional value to your sale, but you should always consult with a real estate lawyer.

If a builder is knocking on your house to purchase your home for a custom home, it might be worth exploring putting the home on MLS. If one person is looking for your lot, it could mean a dozen more are interested if they knew you were looking to sell.

If you have a large lot or an older home in Oakville or Burlington, it might be worth exploring what the land is worth, and whether it’s a good idea to prepare some documentation to amplify it’s value to potential buyers when you go on the market.