Can You Sell Residential Property as Commercial Land in Raleigh NC?

A property which will be used as commercial in the future does not necessarily need to be rezoned by a seller prior to sale. When a seller’s property has commercial potential, we list it on the commercial websites and market it to commercial buyers as transitional property. When a buyer comes along, they apply for Special Use Permits or Conditional User Permits during the purchasing process. This way, when a blanket commercial permit is not available, Wake County planners can approve specific uses of the land to the buyer. Eric Andrews utilizes Pay To Play contracts for these types of transactions so that sellers are getting paid throughout the selling process. This incentivizes buyers to move the project along as quickly as possible. If you have transitional property you are considering selling in Raleigh, Durham or Chapel Hill North Carolina, contact Eric today.

Interviewer: If somebody has a house in Raleigh that wants to sell it and they want to sell it as commercial, should they rezone it? Or how do they actually sell that land as commercial?

Speaker 2: So that’s an excellent question. They could rezone it. And if they got like blanket commercial, that’d be highly valuable. But Raleigh planning is not in the position to give blanket commercial unless everything around you is blanket commercial.

So we have something that’s called spot zoning, and we have something that we call domino zoning, and it’s not Dominoes the pizza place. It’s dominoes like if one falls the next falls or whatever. So certainly if you had a piece of property right here and on either side of you was residential, the likelihood of you getting any kind of commercial zoning is pretty slim.

But if you have one that’s commercial next to you and residential on the other side, they may allow you to be commercial or something in between like office and institutional. And so it’s not absolutely necessary to get the rezoning if that’s the highest and best. One of the things that Raleigh and a lot of the other municipalities like to do is they like to do what’s called special use permits or conditional use permits. And they’ll say, look, we’re not going to give you a blanket commercial, but if you want to do a vet, we’d love to have a veterinarian hospital here. So we’ll give you a conditional use permit. You can do a veterinarian hospital if it’s 2,500 square feet and you’ve got 32 parking spaces, we’ll let this be a veterinarian hospital.

Interviewer: So you would take the person’s house and list it as commercial. And then the commercial buyer, well, you’d list it as…

Eric: We would utilize the commercial sites, but in the commercial world, we would call it transitional land or transitional property, we’d say commercial potential. And you know, and people are going to investigate that. If you’re in the middle of a subdivision, it has no commercial potential, we’d look foolish. But if you’re on a major, you know, you’re on Strickland Road and there’s a shopping center right next to you or whatever, then even though this is a brick ranch on five acres, it’s highly likely that the planning department would allow some higher and better use.

Interviewer: So you would sell their property as transitional on like sites like LoopNet that people would get a lot more money for it than if they sold…

Eric: But it’s going to have to have the entitlements. So I can’t say, Hey, this would be a great place, you know, on LoopNet. I can’t go on LoopNet and say, Hey, this would be a great place for an animal hospital. And it’s not zoned for an animal hospital. The buyer gives us a contract, makes it conditional on rezoning. And rezoning right now is not, I mean in some instances, rezoning could take six, nine, even twelve months, depending on the rezoning that you want.

And so you have to have a pay to play contract. We’ve talked about that before. But you got transitional land, it might be the highest and best use, but the seller needs to be cooperating with the buyer to get it to that higher use of the higher value. Because certainly, if we look at Raleigh, 1,600 square foot ranch on five acres, I don’t know, maybe that’s worth $400,000, but five acres of commercial land could be $2 million in the Raleigh area. So it’s definitely a huge difference. So we can go with an inflated price, even though it’s not zoned for that, if it has the potential.

And one of the things that a good agent needs to do, an experienced commercial agent needs to do is they need to have discussions with the planning department. What are you looking for? What’s the potential of this property? You know, if I did this, would, you know, and it’s a tug and pull kind of game. They don’t want to tell a whole lot, but you got to get a whole lot. And if you’re getting red flags, that’ll never be commercial air. You’re barking up the wrong tree. Mrs. Johnson lives there. She won’t allow it. You know, if it’s no chance, it’s no chance, but they’re like, no, this is in our future plan, we see this being commercial, then it has some opportunity.