This is a story of a family friend who had inherited a big parcel of land that is more than 50 hectares. Not having the money to develop the land, he entered into an agreement with a realtor to make it a residential subdivision. The contract is 50% distribution - half for the land owner and half for the realtor. The developing was immediately started and in less than a year, the selling of the lots had started. However, when some lots were sold and the land owner received the first share, that's when he realized that the net revenue was pretty small because there were so many deductions - aside from taxes, there's the commission which ate a chunk of the sales, there was also the developing costs and other hidden charges. To make the story short, our friend was shortchange.
Your friend is so lucky to have inherited such a big chunk of land. I am not an expert when it comes to real estate but in my opinion, real estate brokers will always benefit more from this kind of situation because they know the ins and outs of realty including the tricks on how they could profit more. They work mostly for profit so they would never work with an individual when they know they won't gain more.
In fairness to the developer, the raw land will remain a raw land without the capital infusion of the developer. It is a big investment to subdivide the raw land and building roads takes a lot of money. In the long run, the land owner still benefits because he was given several big lots as part of his share aside from the proceeds of the sales of the lots. Now that subdivision is already crowded and I'm sure the value of the lots have multiplied. And my friend? He was lucky with the inheritance and is living well off with that fortune.
Land developers, more often then not, and all across the world tend to be crooks. It's pretty standard in the construction industry as well. Or even worst they tend to be part of organized crime. Your friend may have been duped by these criminals, who levy all sorts of "fee's" and tend to be in cahoots with local politicians. I feel bad for your friend if (s)he was taken advantage of by these crooks. I know of an area here in Canada where the police force is considers one of the top 3 most corrupt in the country, the local economy is basically run by the Mob and other criminal enterprises and the local political leader just happens to be one minister in charge of "justice" and the often spouted "tough on crime agenda" which really just means locking up petty thieves and low-life drug users. A really big development was planned, and low and behold just before that development news was released it was found out that the Mob bought up all the land around that development and converted it to parking lots. Basically they had inside information from the local government and this was an amazing way to launder money and ensure a steady stream of cash coming in with little investments. Don't even get me started on the condition of the roads in the province of Quebec and it's ties to organized crime.
Gee, @ScooterBrandon, that's a strong statement about being crooks for real estate developers. But in fairness to you, that experience of our friend with a developer is surely discouraging when it comes to money. We honestly feel that our friend was shortchanged with the deal which was almost one-sided. That is a neat lesson for rich families with vast land to be careful in planning of a development. Always choose as partner only the reputable real estate developers which have a good track record.
I am not an expert in matters real estate but it is apparent there was an oversight on the part of the land owner. The proceeds from sale of the housing should have been channelled to a joint bank account in which the two should have been signatories. A third party with a bias in inventory should have been able to calculate and ensure the disbursement of what is due to the landowner. Any realtor in favour of shortcuts should raise a red flag.
Ahh okay fair enough, just wanted to add a different view on the subject. Yes indeed a good life lesson.
I didn't even know Canada had corruption problems. I think of that happening more in the US or other parts of the world. Mexico for instance, is notoriously corrupt. However, I guess the lure of making big money is there for realtors who want to make a fast buck. I could see how it could be tempting to rip off people interested in the land. One thing, I am not sure how it is in the Phillipines, but here, if you have a big tract of undeveloped land you can sell some of the wood on it for profit.
Your comment reminds me of our former boss in the office. When he retired, he bought a large tract of land that he planted with gmelina and mahogany, they are tall trees that are good for electric posts. Our boss even showed us a computation that he would get rich after 20 years when the trees are fully grown. But now the electric posts are concrete and wooden posts are obsolete. So what happened to his farm was just a farm of trees because it is also prohibited to just cut those trees for logs, he has to get permission from the department of environment. It was a losing business.
