Renovate, Rebuild, or Sell the Land? What Grove Owners Should Figure Out Before Listing

In my pricing post I mentioned that in a lot of Coconut Grove, the land is worth more than the house on it. Owners of older homes here tend to find that out late, usually after they’ve already spent money on the house.

So if you own an older home in the Grove and you’re thinking about selling in the next year or two, this is the conversation I’d want to have with you before you call a contractor.

Start with what your lot is worth empty

Before anything else, find out what your lot would sell for with nothing on it. Use recent teardown and vacant lot sales in your part of the Grove, not the neighborhood as a whole. South Grove and West Grove land don’t trade anywhere near each other.

Then compare that to what your house would sell for today, as it is.

If those numbers are close, your buyer is paying for the land, and most of what you put into the house won’t come back to you. If the house is worth a good amount more than the land, the house is carrying real value and fixing it up may make sense.

I see owners skip this step all the time and go straight to picking finishes. [Add a short real example here if you have one, like a seller who renovated a kitchen the buyer tore out.]

Selling as-is

This is usually the easiest route, and it’s the right one more often than people want to hear.

Your buyers will mostly be builders, investors, and people planning to build their own house. They’re buying the land. A builder will price in their profit and their risk, so you won’t get top dollar, but you also won’t deal with construction, permits, or carrying the house for a year.

As-is doesn’t mean you show up with nothing, though. Everything from my last post still applies. Someone buying your lot to build on still wants the survey, the flood zone, the elevation certificate, what’s protected on the property, and a clean permit history. The less they have to guess, the less they’ll knock off the price.

Renovating before you sell

This makes sense when the house itself is worth keeping. Plenty of Grove homes from the 1920s through the 1950s are exactly what buyers want, as long as the roof, electrical, and plumbing aren’t shot.

The thing that catches people is the 50% rule. If your home is in a flood zone and the work costs more than half of what the structure is worth, federal flood rules can require you to raise or rebuild the house to current flood standards. A renovation can turn into a rebuild pretty fast. Know where your number lands before you commit to anything.

Permits are the other issue. The City of Miami moves at its own pace, and you’re paying taxes, insurance, and utilities the whole time on a house you can’t sell.

My honest advice is to fix what a buyer’s inspector and insurance company will care about, like the roof, windows, and electrical, and leave the design choices to whoever buys it. A few smart repairs usually beat a full renovation.

Tearing down and building new

This can bring the biggest number, and it’s also where people get hurt.  At that point you’re a developer. You’re carrying the land, the construction costs, the design fees, and the insurance, sometimes for a couple of years. You’re working around the Grove’s tree rules, the conservation district, setbacks, and lot coverage. And if the house has historic designation, you may not be allowed to tear it down at all, so check that before you count on the land value.

You’re also betting on what the market will look like when you’re done, not what it looks like now.  Some owners have the money, the time, and the patience for it. Most would do better selling to someone who does.

Selling with plans

There’s a middle option. Some owners pay for a survey, a feasibility study, or early design work before listing, so buyers can see what the lot allows. It can bring in more buyers and take some of the guesswork out of the price.

It costs money up front, and the next owner may want something completely different. I’d only do it on lots where what can be built is complicated, because that’s where the answer is worth paying for.

Talk to your CPA

The route you choose affects your taxes. How long you’ve owned the home, whether you live in it, and what you’ve put into it over the years all change what you walk away with. Have that conversation before you decide.

Questions to answer before you choose

What would my lot sell for empty?
How far apart are my land value and my as-is value?
Is my home in a flood zone, and where would a renovation fall under the 50% rule?
Is the property historically designated or restricted in what I can change?
How long can I carry the property if I do work on it?
Am I fixing things a buyer will pay for, or things I would want?
Have I talked to my CPA?

If you don’t know the answers to the first two, that’s where I’d start. Book a call and I’ll pull the land and as-is numbers for your part of the Grove, and tell you which way I’d go if it were mine, even if that means selling it just the way it is.

Nayla Benitez, Broker-Associate
Berkshire Hathaway HomeServices EWM Realty
786.853.2333