We found some land only 1 mile from our current farm and want to purchase it. The owner is asking $3500/acre which definitely seems like a fair price, but I would still like to negotiate.
I don’t really want to pay realtor expenses for this as I found it word of mouth. It is not advertised. Has anyone bought land through the owner and what did you do to prepare?
Also, when you look at the appraised value vs asking price how do you determine how much to ask for?
TIA!
We got a copy of the appraisal from the seller which had the comps used to arrive at the appraised value. The bank was also helpful…they knocked one of the ‘comps’ out right away as it was a lot in a subdivision…not open land. So that brought the avg price of the comps down.
Then, on our own, we looked at what we thought were other similar pieces in the area either for sale or recently sold, how long they have been on the market (one piece had been reduced twice in the past year and still hasn’t sold), and used the appraisal comps and adjustment values from them to help us ‘adjust’ the properties we found (mostly flat is worth more than sharp slope, etc.).
Notes of all things used to support our offer price were kept and explained to the seller. In our case, the asking price/appraisal was pretty high in our opinion. We didn’t try to low ball…we gave what we thought was a very fair offer.
Did you get the land?
He accepted our offer and didn’t counter. We are waiting for a closing date from the bank. :winkgrin:
Doing a “market survey” on bare land is not simple. With the aid of the 'Net you can search comparable pieces in your area, but might have to throw a wide net to get some idea of asking prices. If you find sold items and can determine asking price it might be possible to get an idea of the “discount” in your area. In TN (at least in our county) I can access the Property Assessors data base and determine the last selling price. This is time consuming as you are doing the research, not just reading it.
Do you have a mortgage? Is it agricultural land? With whom did you finance? Do they have an appraiser? Can you contact that appraiser directly? If so, might they give you a “back of the envelope” idea of value? My lender has a certified appraiser on staff and I’ve known him for 20 years. He has given me informal advice in the past; he also tells me where to look to verify his assessment. That’s one of the advantages of stable business relationships. 
What is the current assessed value? Does your state assess at 100% FMV? Can you easily access this data (as I can in our county)?
If you feel that the asking price is fair then if you want to “test” the price I’d “test” it lightly. If you “low ball” the seller and they get offended you won’t get very far. Do you know the seller? If not do you know anyone who could “introduce” you? The personal touch in things like this can go a long way towards a successful transaction.
Last, and far from least, do you know a Realtor who you could pay for a “informal” market value survey? They would likely do the same thing you would do personally but have better and more easily accessible “raw data.”
When land is for sale “by word of mouth” the approach you make is very important. Keep the touch light and you’ll have a decent chance of making a deal.
Best of luck in your program.
G.
Lots of good advice. Do your homework on this one, and make sure you get a copy of the purchase contract ahead of time so you can read every. single. word.
We bought land that we found ourselves (Mr. Trub actually posted a ‘looking for land’ ad in the penny saver).
No realtor involved but there was a lawyer involved, which I think is a requirement for a real estate transactions in our state. Small fee to the lawyer and Is were dotted and Ts were crossed.
Our land required planning board approval and all that so survey, testing for the septic and all that had to be done. That was all done at the sellers expense (and worked into the price, clearly).
Good advice all around.
I have purchased several pieces of land without a realtor. If the seller does not have an appraisal, you can get one of your own. Find a successful attorney who does real estate work (you’ll need one for the contract and the deed anyway) and get a recommendation for an appraiser if needed.
As for the contract, if you have the opportunity to have your attorney draft it, that’s to your advantage because (s)he will be looking out for your interests. If there’s any doubt about zoning, septic, water, then you need to take what you and your attorney think are prudent steps to assure yourself that there are no “gotchas” in the mix.
If there’s anything else to say, it would be to make a sincere effort towards a win-win outcome. It’s so much nicer when both parties come away with a positive feeling!
Good luck!
I’ve bought property in a number of states. Rarely used an agent. Especially as more and more information became available on the internet. I just contacted the seller or the listing agent. I have found when there is only one agent involved you can pretty much always knock off at least 3% off the price. Because they know most of the time the buyer comes with their agent and the 6% commission will be split.
In your case the property is only 1 mile away from yours. I assume you know what your property is worth so, all things being equal, that land is worth around the same. Most sellers I have found expect buyers to offer at least 10% lower.
You draw up an “Offer to Purchase Contract” with all of the normal contingencies. The most import, “this offer and purchase is subject to the property appraising at or above the purchase price” Buyers also like to include “subject to financing”. As a seller I don’t like “subject to financing” unless the buyer agrees to allow the property to remain on the market until the buyer presents a letter from their lender that financing has been approved.
An mutually agreed deposit amount is made with the signing of the agreement/contract. It should be clearly stated in the agreement the terms upon which the deposit will be returned. As to “holds” the deposit IMO it is best to find an escrow agent. Some banks will do this, small attorneys, depending on the location there are business’s that specialize, act as Escrow agents for a small fee. If you do all the “leg and paper work” a real-estate agency might do it for a small fee. I am sure there are internet reference sites that will walk you through the process.
The above is just the basics. You will need to check, zoning, ingress, egress requirements, encumbrances and or deed restrictions, depending on the location water rights, if the owner of the land behind it has access to their property through this one, etc. If utilities have to be brought in across the adjoining properties make sure ALL of the utility easements are in place. You will need one for each property they cross even if it is only one foot on someone’s property. You might not need the utilities but it will effect the re-sale price if sold to someone that will in the future. Title insurance does a pretty good job of doing most the research before signing on.
Thanks for the helpful replies. Although the land is only a mile from our farm it is going closer to a bigger city and generally nicer road so is slightly more expensive. From the GIS I can see what the wooded land and cleared land is valued at. The wooded is about 2 and acre and cleared is about 4 an acre and she is asking 3500/acre. There is more wooded land than cleared land.
Do you make on offer before checking out perking, water etc? Or make the offer contingent on that?
I know the sellers cousin - that is how I know about the land. Guilhereme, what do you mean by light touch? I’ve been quite friendly, but would think I could negotiate the price. I would like to pay 3/acre which I don’t think is lowballing.
I’m checking with farm credit too to see if they have contacts or more advice.
I do not see where you say how big the parcel is.
Some things that go into how high or low the price is for a piece of land (in my neck of the woods) is the size of the acreage. Usually smaller plots sell for more per acre as they are looked at more as residential type lot. Even more per acre once it is an approved building lot (planning board approval, perk test, etc, if you are expecting the seller to do these tests at their expense then expect to pay more for the land). Access to water front (creeks count as water front) brings the price per acre up. Being in a 100 year flood plain brings the price down.
It is 27.29 acres. I think about 7 is cleared and the rest wooded. From the GIS and when I walked the property it looks like more than 7 is cleared although that is what the tax card says.
Also does anyone know if that tax card says what the appraised value is - is that the true appraised value? I know for our farm it is way less than if we were to put it on the market.
[QUOTE=Serigraph;8014355]
It is 27.29 acres. I think about 7 is cleared and the rest wooded. From the GIS and when I walked the property it looks like more than 7 is cleared although that is what the tax card says.[/QUOTE]
Things could have changed since that tax card was last updated.
If there are any building site eligibilities would make a big difference to me in what needs to be looked into.
I wish I could buy plain ag land next to me for $3,500! It’s double that. And double that if there is a building eligibility. Jealous!
Assessed value is NOT appraised value (tax cards). At least here.
This actually says appraised value on the tax card so I’m not sure what that means. Tried to call the county but we had a snow storm so everything is closed.
It means that is what the county has appraised the land for tax purposes.
It does not mean that is what it will sell for. Get your comparable prices from what things actually sold for.
I realize prices vary greatly by locations but those prices seem low to me.
[QUOTE=Serigraph;8014285]
Thanks for the helpful replies. Although the land is only a mile from our farm it is going closer to a bigger city and generally nicer road so is slightly more expensive. From the GIS I can see what the wooded land and cleared land is valued at. The wooded is about 2 and acre and cleared is about 4 an acre and she is asking 3500/acre. There is more wooded land than cleared land.
Do you make on offer before checking out perking, water etc? Or make the offer contingent on that?
I know the sellers cousin - that is how I know about the land. Guilhereme, what do you mean by light touch? I’ve been quite friendly, but would think I could negotiate the price. I would like to pay 3/acre which I don’t think is lowballing.
I’m checking with farm credit too to see if they have contacts or more advice.[/QUOTE]
Pretty much what you’re doing!
If you want to pay $3000/acre you have to either offer a bit less and deal with counter or make the offer at $3000 and reject any counter offer. If you go below $3000 that might spark a negative reaction from the seller. Meeting with the seller face to face and talking with them can give you an idea on how to approach the issue. While you might like to pay $3000/acre I presume you have a maximum that you would pay. Just how you organize all this really depends on who you are dealing with and how “motivated” they are as a seller. A “motivated” seller will take less than a patient seller.
There are few, if any, “hard and fast” rules on this. Best of luck in what you decide to do.
G.
[QUOTE=Serigraph;8014382]
This actually says appraised value on the tax card so I’m not sure what that means. Tried to call the county but we had a snow storm so everything is closed.[/QUOTE]
IDK if this is helpful, but my “appraised” value (from the county) on my home/acreage is 16% less than what we actually paid for it. My assessed value is about 18%-19% less than we paid. We bought our home 2.5 years ago, so it wasn’t that long ago. They never moved it up to purchase price and we have added a building too. They were there the next day to add that on. 
Thanks so much for everyone’s input!
Appraised value by the county, isn’t market value, but the tax rate on the land. If the county wants more money, but can’t raise the rate, then they just raise their appraised value, resulting in more revenue. Appraisal for purchase price is by a commercial appraiser.
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