The developer is not paying for your house: it is paying for what it can build in its place.
A developer pays for land according to what it can build and sell on it, not according to the price of neighbouring houses: its offer can beat a private buyer's, but it is only secured at the end of the process. The sale almost always goes through an agreement subject to conditions (building permit granted and free of appeals, soil, financing), and you should usually allow 12 to 36 months between the agreement and the final deed. Everything depends on how that agreement is drafted.
How a developer sets the price of your land
The developer works “backwards”. It starts from what the local land-use plan (PLU) allows it to build on your plot, estimates the selling price of the future homes, then deducts construction costs, fees, financing and marketing costs, taxes and its margin. What is left is what it can pay for the land: the “charge foncière”.
Two consequences for the seller. First, the price depends on building rights far more than on the existing house, which is often due to be demolished. Second, two developers can make very different offers for the same land, depending on the scheme they have in mind, their costs and their interest in the area.
Worked example: a developer's backwards calculation
Fictional case, rounded figures. A house on 1,500 m² in the inner suburbs of Bordeaux; the PLU allows a small building with 800 m² of living space, sold at €4,800 per m² including VAT.
| Revenue excluding VAT (€3,840,000 including VAT) | €3,200,000 |
| Construction (€2,000 per m²) | − €1,600,000 |
| Fees, financing and marketing costs (15%) | − €480,000 |
| Developer's margin (10%) | − €320,000 |
| Demolition, utility connections, development tax | − €110,000 |
| Maximum it can pay for the land | €690,000 |
If the same house is worth €450,000 to a family, the gap is real. But it assumes the permit is granted as planned: one storey less, and the offer drops accordingly.
Unilateral promise or compromis: what you sign
With a developer, the usual document is a unilateral promise to sell: you commit to selling, and the developer obtains an option it may or may not exercise. It must be signed before a notary or registered within ten days of its acceptance, or it is void (article 1589-2 of the Civil Code). The compromis, which binds both parties, is less common.
In return for tying up your land, the developer pays an immobilisation fee, often 5 to 10% of the price, held by the notary. If a promise granted by a private individual lasts more than eighteen months, the law requires a notarial deed and a fee of at least 5% of the price, paid or guaranteed by a surety (articles L. 290-1 and L. 290-2 of the Construction and Housing Code). If the developer walks away for a reason not provided for in the contract, you keep the fee; if a condition precedent fails, it normally gets the fee back.
A high price is worth nothing if the promise lets the developer walk away at no cost.
The conditions precedent to watch
They decide whether the sale will happen. The most common ones:
- The building permit granted, free of any appeal or withdrawal: third parties have two months to challenge it from the first day of continuous display on the site, and the town hall three months to withdraw it if it is unlawful.
- Soil surveys and the absence of pollution, sometimes the absence of archaeological excavations.
- The developer's financing, and sometimes a minimum number of homes already reserved by buyers.
Each condition must have a date: deadline for filing the permit, deadline for obtaining it, total length of the promise. Without a filing date, the land can stay tied up for months with nothing moving. Be wary of vague conditions, or conditions left to the developer's sole judgement, such as a high reservation rate.
If the permit is refused or cancelled, the sale falls through and the developer generally gets its fee back: you will have tied up your land for one or two years for nothing. A neighbour's appeal can delay a project by one to three years; set out in the promise what happens in that case (limited extension, additional fee).
How long should you allow?
Allow a few months for negotiation and the developer's checks, six months to a year to prepare the permit and have it examined, then at least two to three months for it to become final. In total, most often 12 to 36 months between the promise and the deed of sale, compared with three to four months for a standard sale. Meanwhile, you remain the owner: property tax, insurance and upkeep are still yours to pay.
Preparing the sale properly
- Check what the PLU allows: zone, height, footprint. It is the basis of the price; see how to read your land's PLU in six steps.
- Ask for several written offers, with the planned scheme: the number of homes or square metres explains the gap between two prices.
- Compare the conditions, not just the price: length of the promise, amount of the fee, dates, guarantees.
- Have your own notary review the promise before signing.
Servicing the land before selling is rarely worthwhile: the developer builds the connections into its calculation. On tax, a private individual selling land does not charge VAT; any capital gain follows the usual rules, and the sale of the house you live in, with its land, is exempt. Some towns also apply a tax on the sale of land that has become buildable: your notary will check.
Not all land interests a developer: depending on its size, dividing it into a few plots sold to private buyers can bring in as much, more quickly. See the five signs your land is worth more than a standard sale and the steps, timescales and costs of a division.
Our approach
We work on large plots of land and houses on large plots, from La Rochelle to the Basque Country. We look at what the PLU allows and which buyers may be interested (developer, land subdivider or private buyers), then help you compare offers and their conditions before signing. Answer within 48 hours. See also our page selling building land.
Frequently asked questions
How much does a developer pay for building land?
What the PLU allows it to make from it: it starts from the resale price of the future homes and deducts its costs and margin. Depending on the possible scheme, its offer can clearly exceed a private buyer's, or fall short of it.
What happens if the building permit is refused or challenged?
The condition precedent is not met and the sale does not go ahead; the developer generally gets its fee back. In the event of an appeal, the promise often provides for an extension: limit it in time.
How long between the promise and the final sale?
Most often 12 to 36 months, the time needed to obtain the permit and for the appeal (two months) and withdrawal (three months) periods to run out.
Should you service your land before selling it to a developer?
Generally not: the developer prices the connections itself and builds them into its offer.
How much is the immobilisation fee?
Often 5 to 10% of the price. For a promise of more than eighteen months granted by a private individual, the law requires at least 5%, paid or guaranteed by a surety.
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