GRAND RAPIDS, MI -- On its face, the home is unspectacular. Its paint is faded, an American flag hangs from a small porch, and paneling surrounding the windows is worn, with tiny cracks in spots.

But inside the two-story, two-unit rental owned by Karen and Steven Vander Laan at 520 North Ave. NE, the couple says personal and unique touches set it apart from similar homes in the Belknap neighborhood.

State records place the estimated market value of the residence and the one-tenth of an acre it sits on at roughly $80,000.

Grand Valley State University in November paid $520,000 for the property.

It was largest single purchase in a complicated and expansive land acquisition that will eventually allow the university to build a health campus on 11 acres on the city’s near Northeast Side, adjacent to the Medical Mile.

Variety of prices

Traffic drives along I-196 near the GVSU Cook-DeVos Center for Health Sciences in Grand Rapids Friday, Nov. 1, 2013. The GVSU board approved $18.9 million land purchase to expand medical programs. The property is bordered by Hastings and Trowbridge Streets and Clancy and College Avenues. (Cory Morse | MLive.com)

Sale prices for other properties on the Vander Laan's block ranged from $67,000 to $350,000. The second largest individual sale in the $18.9 million purchase of 83 properties was an apartment building with an estimated market value at $294,000. It sold for $475,000.



Related: See which properties in GVSU's 11-acre land deal sold for highest price

In large developments, it isn’t out of the ordinary for property owners to sell their home at prices that exceed market value, said Mike Murray, a principal at Colliers International, a Grand Rapids real estate broker.

“Some people want more because they don’t want to move,” he said. “They have every excuse in the world why they don’t want to sell until the price is right.”

Tom Hamilton, an associate professor at the University of St. Thomas in Minnesota, agreed.

“People, if they know about it, they can take advantage of it, because without that parcel, then the big thing can’t happen,” said Hamilton, an expert in property appraisal.

He added: “It’s not the Dollar Store or overstock.com where they cut prices because they have too much stuff. This is the opposite case.”

Students at Grand Valley State University's campus in Allendale

And that's the perspective Grand Valley State took in buying up the properties.

Matt McLogan, GVSU's vice president for university relations, declined to comment on the amount paid for individual properties, including the exorbitant price paid to the Vander Laan's.

The university focused on the total price paid per-acre, not the price paid for each property, McLogan said. The university paid about $1.7 million per-acre, which is similar to what other land deals in the surrounding area have been priced at, he said.

McLogan also said focusing on the market value of individual properties is a mistake, because in large-scale developments, “A collection of properties assembled to create a large tract of land produces greater utility, and thus value, than do the individual parts.”

Grand Valley has done it before. In April 2012 it paid $1 million for the Admiral gas station at 346 West Fulton Street, a property with an estimated market value under $200,000. The gas station was the final piece of land needed to complete the university’s downtown campus.

Deep pockets

The scope of the health campus deal shows the complexity and deep pockets needed to put together a large-scale purchase.

It required months of negotiations with a large cast of characters, including realtors, landlords and homeowners, some of whom were initially uneasy about taking part in the deal. Owners that didn’t want to sell, in some instances, were able to leverage their reluctance and obtain a better price.

The Vander Laan’s parlayed their doubts to a windfall. When approached by the university, they were dead set against selling. They proposed the $520,000 price – the same number as the home’s address, only with a few more zeros – expecting a rejection.

“The reason we picked that amount was because we didn’t think it would be accepted,” Karen Vander Laan said. “We didn’t think they would take that, so were hoping it would put off the whole deal.”

Initially, the price didn’t sit well with the university’s realtor. The Vander Laan’s said the realtor walked out on them after first hearing their offer. Eventually the realtor relented and agreed to pay, they said.

“We really thought we would end up settling on something other than that,” Steven Vander Laan said. “But we held out. It turned out to be a fitting number based on the history and heritage of the house, the ties we had with it.”

Wide fluctuations in sales prices can be seen throughout the deal.

While 520 North Ave. went for more than a half-million, a similar home across the street went for $230,000.

Nearby, Kathy Kulanda sold her home, 528 Sinclair Ave., for $85,000. Her home had an estimated market value of $43,200.

Meanwhile, other homes on her block with relatively similar assessed values sold with prices ranging from $95,000 to $175,000.

Kulanda said she was eager to sell her home because she was looking to relocate to a larger residence. But she said the higher prices offered to other nearby property owners is “disconcerting.”

“If they were going to be fair, they would have offered the same deal to everybody,” she said. “Do I wish I had gotten more? Yeah. But I can’t cry over spilled milk.”

Others, however, were more surprised by price differences.

Kenneth Van Dyke is one of four partners in a limited liability corporation that owned 247 Hastings Street NE, a building with seven apartments. His building sold for $475,000, the second most of all the properties.

He was taken aback when he learned 520 North Ave., a rental with 2 apartments, sold for more than his building.

“It’s comical,” Van Dyke said, when shown a picture of 520 North Ave.

But, he added: “I don’t look at it and say, ‘Oh my gosh, I wish we had held out for $800,000. I don’t react that way.’”

Other property owners were simply glad to be rid of their homes and were unconcerned with what others received.

“I want to travel,” said William England, who sold his home, 541 North Ave. NE, for $150,000.

Largest seller

By far, the property owner who made the most on the deal is The Beckett Group.

The property management company, which in recent years has landed in the news for unpaid property taxes and code violations, sold 24 properties to GVSU for $6.8 million.

The house pictured here at 525 North Avenue NE is one of the 83 properties purchased by Grand Valley State for an expanded campus project in Grand Rapids on Tuesday, January 28, 2014. Grand Valley State University purchased the property in November 2013 with the intent to build an expanded campus focusing on health sciences. (Andrew Kuhn | MLive.com)

The Beckett Group purchased the houses in the days leading up to the deal for $4.1 million, property records show.

That’s a profit of about $2.7 million, although the firm paid a couple hundred thousand dollars to consultants who helped it assemble the properties.

“It’s a win, win, win,” Josh Beckett, the company’s CEO, said of the deal. “The owner wins. We did very well. We’re very excited Grand Valley is investing in the neighborhood.”

Beckett said he began obtaining options to purchase the properties in February 2013. He believed the university would be interested in the properties because The Beckett Group in recent years was involved in the sale of nearby parcels to GVSU.

“It was a little bit of faith,” he said. “We went out on a limb and said, ‘We know they’re going to grow.’”

Beckett said the profit he made on the deal was fair.

He recalls working with his family and spending “hundreds of hours” going door-to-door and talking with owners to purchase the properties. Without The Beckett Group’s effort, the deal wouldn’t have happened, Beckett said.

He also said the deal shows his family’s vision for the area is coming to fruition. The Beckett’s first bought property in the North East side neighborhood in 2000, sensing it would benefit from the development on the Medical Mile.

“I think if you asked anybody in the commercial real estate, some have said it’s near impossible to do this,” he said. “It’s tough. Prices start flying.”

Brian McVicar covers education for MLive and The Grand Rapids Press. Email him at bmcvicar@mlive.com or follow him on Twitter