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Contemplating a land purchase...

jagermeister

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#1
Need some advice here, guys. I've been keeping my eyes open for vacant land for the past couple years, with the intention of buying and paying off before I'm ready to build. I'm currently paying for a small condo, which I plan to rent out when the time comes to build a new house. Well I've been drooling over a 10 acre parcel that I found a few months ago. I've been trying to call the owner to discuss it since then, and finally got through to him this afternoon.

At this point, the 10 acres is part of a 19 acre parcel, which would need to be surveyed and split when the time comes. According to county auditor records, the owner paid $45,000 for the 19 acres back in 2000. Here are some details of the property: It's got great character with enough elevation change to accomodate gravity drainage, plenty of space for any kind of sewage treatment system and replacement, rural water is accessible at the road, it's about 8 acres open/grassy field and 2 acres wooded, and it's only about 3 minutes away from a state route and interstate.

It would be the chunk on the left side of the parcel...
10acre_parcel.jpg

So here's the scoop... I talked with the owner for about 10 minutes, asking some basic questions like what's he asking and possibility of land contract, etc. As far as a price, he flat out told me he didn't know what he wanted for it and told me to make him an offer. He said that the property has been for sale for a number of years and would like to get rid of it. My question to you more experienced land owners/land purchasers is what kind of offer would you throw out there to this gentleman if you were in my shoes? Keep in mind that I am only 26 yrs old, married, and I'm doing "ok" but certainly not "rich." I don't really want to offend the guy, but at the same time, I don't know him so what do I have to lose? A little advice would be greatly appreciated!
 

CJD3

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#3
You could start by looking at the current tax bill for the property (public record) from the county auditor (on line) and dividing the land value by 19 (acres), then times your 10 acre. "Tax value" is usually lower than "fair market value".
You may also know a local Realtor or appraiser(friend) that could give you some sold prices on raw land (per acre in the area.)

You mentioned it has been for sale for years... What was the price?
There will added cost to having the 10 acres split out from the 19 involving a surveyor and new legal description. Be sure you know who is paying for it; him, you or a split.

As far as the Land Contract goes.
ALWAYS have it recorded at the county courthouse and never pay w/ cash. Use check or bank checks.
Good luck!!!
 

jagermeister

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#4
You could start by looking at the current tax bill for the property (public record) from the county auditor (on line) and dividing the land value by 19 (acres), then times your 10 acre. "Tax value" is usually lower than "fair market value".
You may also know a local Realtor or appraiser(friend) that could give you some sold prices on raw land (per acre in the area.)

You mentioned it has been for sale for years... What was the price?There will added cost to having the 10 acres split out from the 19 involving a surveyor and new legal description. Be sure you know who is paying for it; him, you or a split.

As far as the Land Contract goes.
ALWAYS have it recorded at the county courthouse and never pay w/ cash. Use check or bank checks.
Good luck!!!
See that's the thing... he didn't have an asking price. Or at least he didn't tell me what it is/was. He simply told me to make him an offer. I just don't know what kind of offer to make. According to the auditor website, "Land Value" is $95790 and "Taxable Land Value" is $33530... for the 19 acres. In my head I'm thinking of throwing a number out there between 20 and 30 thousand for the 10 acres, but I'm afraid it'll offend the guy. Maybe I'll do like you said and try to contact a realtor in the area to find out what the going rate is. I guess I could also search through the auditor site to find parcels that were purchased recently in that area, and see what they sold for per acre.
 

Beentown

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#5
If you were to PM a general area I can get you what I would offer. In todays market don't be affraid to lowball. We just got another house to flip two weeks ago. It is the most money that has been thrown in ($155k) but the asking price was 267k. My partner offered 145k and they actually countered 155k:smiley_chinrub: We did one more walk through and agreed on the price. New windows, roof and some lipstick and we should be done...should.

Beentown
 

Beentown

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#7
From what I am seeing I would offer 3k per acre. He may be offended but if he wants to sell then lets start dealin would be me take on it. On average regular land (i.e. no ponds, rivers, houses, etc...) it is averaging 5-7.5k per acre. Only one other plot is listed with a realtor that is just land. They were asking 10k and acre...which has been on the market for at least two years. I expanded the search and saw nothing until I moved 6 miles! That suprised me. Must be alot of FSBO going on.

Beentown
 

jagermeister

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#9
From what I am seeing I would offer 3k per acre. He may be offended but if he wants to sell then lets start dealin would be me take on it. On average regular land (i.e. no ponds, rivers, houses, etc...) it is averaging 5-7.5k per acre. Only one other plot is listed with a realtor that is just land. They were asking 10k and acre...which has been on the market for at least two years. I expanded the search and saw nothing until I moved 6 miles! That suprised me. Must be alot of FSBO going on.

Beentown
That's pretty close to what I was thinking. What have I got to lose right? The township that this parcel is in has a zoning requirement of 10 acres to be a "buildable" lot, and it's kind of out in the boonies so that's probably why you didn't see many listings. Thanks for the help, Beener!
 

hickslawns

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#10
Honestly, I would offer $45k for the entire 19 acres. If you can swing it that is. If you need 10 acres to build, then leaving him 9 acres is like leaving him a liability which is only an asset to any property adjoining it. He has a limited amount of potential buyers at this point. The more land you can buy now, the better. I am trying to get all my ducks in a row for similar reasons. In the end, we will either have a substantial chunk of land, or we will be sitting in a better financial position. Either way, it will not be bad for us. The market is still very soft though, so I don't think you can hurt the guys feelings too much. You could always negotiate starting at $2k per acre and go up from there. You can always offer more, but it is hard to start at $5k/acre and then go down on your negotiations. Just some thoughts.
 

Beentown

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#11
If you need 10 acres to build, then leaving him 9 acres is like leaving him a liability which is only an asset to any property adjoining it. He has a limited amount of potential buyers at this point.
Thought about that earlier also. He has no motivation to break it up. Either way good luck.

Beentown
 

jagermeister

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#12
Honestly, I would offer $45k for the entire 19 acres. If you can swing it that is. If you need 10 acres to build, then leaving him 9 acres is like leaving him a liability which is only an asset to any property adjoining it. He has a limited amount of potential buyers at this point. The more land you can buy now, the better. I am trying to get all my ducks in a row for similar reasons. In the end, we will either have a substantial chunk of land, or we will be sitting in a better financial position. Either way, it will not be bad for us. The market is still very soft though, so I don't think you can hurt the guys feelings too much. You could always negotiate starting at $2k per acre and go up from there. You can always offer more, but it is hard to start at $5k/acre and then go down on your negotiations. Just some thoughts.
Great points there, Phil. Buying the entire parcel would mean less surveying costs, too. Not sure if I could swing it or not just yet... gonna have to count my pennies and see where I stand. 19 sure would be better than 10!
 

Beentown

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#14
There are certain things worth sacrificing for. And I have a feeling that would be worth it. Hell buy the land and a trailer. Payoff the land then use that equity to build a house...now talk your wife into that!

Beentown
 

jagermeister

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#15
There are certain things worth sacrificing for. And I have a feeling that would be worth it. Hell buy the land and a trailer. Payoff the land then use that equity to build a house...now talk your wife into that!

Beentown
Baaahahaa... I lived in a trailer until I was in 7th grade... I know I could handle it, but the wife, no way in hell LOL.
 

formerbowhunter1023

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#16
When you tell him that it's going to cost $2K to survey the land, I bet he reconsiders. I would call a local land surveryor and find out what they would charge as prices vary just like they do in real estate. Then I'd use that to negotiate for the entire 19 acres. If it were me and I could afford it, I'd make the run at the 19 acres first for two reasons. One, I can put more space between me and my neighbors. And two, I'd have more hunting ground.

If I was going to forsake the 9 acres and buy the 10, then I would offer in the $3K range as well. Down here, I'd low ball it even more, but I have to figure land is $500-1K more expensive where you are. There are still some retards asking and paying $3K an acre down here, but they are few and far between.

But there's no way I'd buy the 10 before exhausting resources and effort on the 19 first...