They are buying the lot
A builder's price is derived from what can be built: permitted density, lot width and depth, setbacks, severance potential, and the sale value of the finished product minus construction cost and profit margin. The condition of your existing house is nearly irrelevant to that math.
Find out what the lot allows
Zoning, recent policy changes permitting multiplex units on residential lots, and severance potential can change the value substantially. A planner or an experienced local agent can tell you in an afternoon whether your lot supports more than one unit.
- Lot width often determines severance viability
- Multiplex permissions have expanded across Toronto
- Heritage designation or a mature tree can restrict the build
Test the price on the open market
The main disadvantage of an off-market sale is that no one competed for it. If the lot has development value, listing it as such and marketing to multiple builders regularly produces a higher price than the first offer that arrived in the mailbox.
Value the terms, not just the number
A slightly lower price with no conditions, a flexible closing date, and a rent-back arrangement while you find your next home can be worth more than a higher price with a long due diligence period and a right to walk.
Frequently asked questions
- Do I need an agent for a builder offer?
- Independent representation or at minimum an independent appraisal is worth the cost. The builder's number is based on analysis you have not seen.
- Is an off-market sale ever better?
- Yes, when speed, certainty, or privacy matter more than maximizing price, and when the terms are genuinely favourable.