The over-asking bid for a house is so last year. Meet the over-asking land sale.
The Boston suburbs transformed into a cutthroat real estate enterprise during the pandemic, as buyers craved more space outside the city. A low interest rate environment made borrowing money more affordable and enabled bids to soar well above list prices.
Higher interest rates might impede some buyers in the market, but the laws of supply and demand reign supreme over Greater Boston’s housing market. In even more exclusive enclaves, the disparity of overwhelming demand for supply that is scarce is widely apparent. It is even sending buyers into bidding frenzies for plots of raw land.
A 1.67-acre lot at 50 Laurel Road in Weston recently sold for $2,400,000 after listing for $1,590,000. Joni and Jon Shore, a mother-son Coldwell Banker sales associate duo with a focus on Metro West, represented the buyers in the deal. They won out over more than 20 bids, the Shores said in an interview with the Globe.
It doesn’t appear the eye-popping price is an anomaly.
“There’s evidence of other buyers who want property like this,’’ Jon Shore said.
Land sales with the intent of eventual residential development aren’t new. There have been a little more than 19,000 of these deals across Massachusetts since the beginning of 2015, according to real estate records from The Warren Group, a data analytics firm.
But the look of residential developable land transactions today is different than in the past.
Available land to build a home on is incredibly hard to come by in affluent suburbs like Wellesley and Weston. That is why you often see buyers acquire a home, tear it down, and then build something new to their liking. When a developable stretch of land like the one at 50 Laurel Road comes to market, that can spark a bidding frenzy these days.
Teri Adler, a managing partner in Metro West for MGS Group Real Estate, had a client buy an acre of raw land in Wellesley for $2,150,000 on New Year’s Eve. This property was on Buckingham Terrace, a very high-end cul de sac. Her clients decided not to build a house on the property and instead listed it for $2,695,000 earlier this year. They wound up getting $2,800,000 for it after a bidding war among four sets of buyers.
What exactly does one build on land that costs so much?
A builder was the winner of the Adler deal and is planning on listing the estate he is creating there for $9,900,000. The Shores anticipate a home somewhere in the ballpark of $5,000,000 to $6,000,000 going up on land sales like the one they had made in Weston.
Builders are even getting in on the teardown game. Another home Adler sold in Wellesley at 8 Deerfield Road had seven offers on it. Some were buyers hoping to renovate and create their dream home, but the rest were contractors who intended to tear it down. It, too, sold to a builder for $1,725,000 after listing for $1,500,000.
“The thing is [these deals are] typically all in cash, or they’re not having finance contingencies, which is nice for sellers,’’ Adler said. “What’s not typical is that builders in the past would always lose out because they would never bid as high as an end-user. But now, the builders are the ones winning these bidding wars, which is astonishing to me because their costs have gone up so much recently. They’re there, and they’re hungry for this land.’’
But there’s a cautionary tale for builders getting into a game typically reserved for individual buyers.
“A developer really needs to build something substantial,’’ Jon Shore said.
“There’s more risk involved with the developer because they need to make a big profit, list it again, pay brokerage fees and all of that.’’
More sales that went for over the asking price:
1 Littles Lane
Asking price $1,349,000
Sale price $1,400,000
60 Livingston Road
Asking price $2,195,000
Sale price $2,373,000
47 Scott Road
Asking price $1,350,000
Sale price $2,000,000
Lot 7, Conant Road
Asking price $1,100,000
Sale price $1,300,000
Source: Multiple Listing Service
Cameron Sperance can be reached at [email protected]. Subscribe to the Globe’s free real estate newsletter — our weekly digest on buying, selling, and design — at pages.email.bostonglobe.com/AddressSignUp. Follow us on Twitter @globehomes.