If existing houses are cheap relative to land and constructions costs, and supply is high, it may not be worth developing even if the agency says "do whatever you want".

If the real estate is producing a steady return, you can make more aggressive bets with stocks or other alt assets.

I have solid cash flow, but i make more money from service type business's, like property management, construction and Realty services.  

And your Realtor would know more about what’s typical with new construction in your State, but I feel they should be fighting for your interests, and be the one having the conversation with the sales rep about a reasonable amount for the earnest money deposit, on your behalf.Glad you haven’t signed anything yet and hope you manage to come to terms that work for you.Keep us posted!

I went back through all my numbers for 2024 and subtracted all the construction costs of improvements we have made and found quite a bit... so once I remove all that net profit looks like $110k. 

I normally just do new construction on these pemb, so I have never done an actual modification of an existing pemb to increase the square feet. 

Nearby new build 3/2 SFRs start in the mid-200's, and there's a lot under construction.

Getting multiple contractors involved will be your best bet to get a reliable estimate, though you need to come up with a scope of work.

Traditional bank financing with a construction loan for repairs

Ongoing construction projects valued between $26 billion and $30 billion fuel employment opportunities.