Holdout | Propertylogy

Holdout

By on September 21, 2018

A holdout refers to a landowner or property owner who uses a refusal to sell as a negotiation strategy for getting the best price during the process of assemblage.

This is a common tactic used by real estate owners as they instinctively know that owners who sell the earliest tend to obtain the worse possible prices.

And when a big builder has acquired most of the required land with just a few remaining in the jigsaw, they can get more desperate. And therefore more willing to put in a higher offer for the land.

However, things don’t always turn out the way a holdout hopes for.

Developers who refuse to meet the outrageous demands of a holdout can develop the land with just the land parcels they have purchased.

This is why we sometimes see small houses that are out of place standing right in the midst of larger commercial buildings.

This can create very strenuous living conditions for the outlier.

When a buyer is taking up options instead of outright purchases, holdout property owners can sometimes be put under pressure by other owners who have already agreed to sell.

This is because a developer acquiring options will surely be abandoning the assemblage purchase if it is unable to secure the plots that they intend to buy.

By refusing to sell to the buyer, the holdout jeopardizes the deal for everyone else.

However, if the buyer who is acquiring the options to flip the land, then homeowners might be more reserved with the sale when they realize the mega windfall the buyer would receive from selling those options to a big name builder.



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