Real Estate questions

by Jim_TX 22 Replies latest social family

• 

  Jim_TX

  I couldn't decide which section best fit this - so decided to put it here. I apologize if I am wrong.

  Okay. I am hoping to get information / advice from someone on here that is a real estate guru.

  I own a small piece of land in the hill country. It's only .65 acres, but it's a start. It is appraised by the county it is in for about $16k. I pay taxes on it based upon that appraised value.

  I am thinking about selling it. One of the property owners next to this property is interested in it, but she is wanting to only pay something like $4k or $6k. (My original purchase price was $10k.)

  I am thinking that is way too low. I am thinking that I should get at least the appraised value - if not more.

  I would ask the question 'Am I nuts?' - but I would probably just get 'yes' answers.

  Is there any real estate gurus that can advise? I may not have given enough details like... the property is near a lake (well, a lake when it has water in it - it's dry right now).

  Ask if you need more details.

  Thanks.

  Regards,

  Jim TX
• 

  jamesmahon

  Not a real estate agent but an economist and might be able to help.

  It comes down to your own personal supply curve for that plot of land and what you think the demand curve is.

  In reality the supply curve is simple because there is only one plot of land and a price below which you will not sell it.

  The demand curve is trickier. You know at least one person values the block at $6k (you can ignore the appraisal as the appraiser is not really a potential buyer). This might be the peak that anyone would pay for the block. Is there any other information on similar plots that have sold nearby that might suggest that blocks have sold for more (or less)? What is the potential purchaser wanting to use it for? Are they going to build on it? If so this would raise the value of the block to them. If they are just going to use it for fishing and camping then maybe it may not be worth more to them than what they are offering.

  I think the thing people get wrong with selling property is not having the figure in their head at which point they would be happier with the money than the property. They focus too much on the demand curve (of which you only have limited information) and ignore the supply curve (for which you have complete information).

  If I was you I would avoid real estate agents if you can. If $6k is not enough then work out in your head what is enough for you. Gather what information you can as to why the market should pay this price. Then present it to the potential purchaser and see whether they meet your valuation. If having $6k would make you happier than owning the block of land then take the $6k, especially if the information you have is that it will not sell for more than this.

  Keep in mind that this value may be higher than the purchaser or anyone else is willing to pay. But that is fine. You just value the land more than anyone else and you own it so be happy.
• 

  MrFreeze

  When was your appraisal done? If it wasn't within the last couple years, I would say get another one done and tell the owners that is what it is worth, so that is what you want for it.

  Then again, it just depends on if you want full value for it or if you are really just want to get rid of it. If it was appraised at $16K, your neighbor will be making a killing.
• 

  jamesmahon

  MrFreeze

  But they are only making a killing if someone would actually pay $16k for it. I had a cottage on the market last year. Valued at £160k. Six months later loads of viewings and everyone said it was overpriced. Lowered it to £130k and still hardly any interest. A market appraisal really means very little.

  A house/block of land is worth the highest that one person is willing and able to pay for it (or what a person is willing to sell it for if it is greater - but then they have the highest market valuation and will own it until that valuation falls). The best an appraisal can ever be is what someone who has no intention of buying the land thinks someone else may pay for it. It is information that can help a negotiation but cannot make someone who does not value it at the appraisal value pay anymore than they are willing and able to pay for it. Many a sale falls through because both buyer and seller are not honest about their valuations as both are being greedy.
• 

  MrFreeze

  That is true but I'm going under the assumption that somebody will buy it at the appraised value. Rarely happens though.

  It pretty much comes down to how much that Jim_TX wants in return for it. Hard to tell on our end if we don't have any pictures or know what the comparables have sold at.

  How long have you owned it and what did you pay for it?
• 

  neverscreamagain

  Jim_TX-

  I live in the Houston area and a couple of years ago had been looking for acreage around the hill country, Wimberley, Blanco area. Everyone it seems has been purchasing land for vacation homes or 2nd homes over in that area. Prices have not fallen despite hard economic times. That area is still one of the fastest growing in the US. You might try checking on other similar lots that are for sale in the same area, with similar utilities and road access etc.

  The offer from your neighbor sounds like they are trying to lowball you, and see if you will bite, maybe they think that you have to sell or need the cash. Usually most people if adjoining lots come up for sale around them, they will pay a premium for them in rural areas, just so people can't build right next to them. After all that is sometimes why they moved to the country.

  Also, you can't always rely on the appraised value. Could be that you need to contest the appraised value. One of the easiest ways to find what people are paying is to just call up a realtor on a piece of property that is similar property, and see what they want for it.

  Hope this helps.
• 

  diamondiiz

  Call your local real estate agent or two and get them to give you a better assessment of what you can get for your land. (take average of 2 or 3 quotes) Local tax appraisals don't mean much, bank appraisal might give you a better figure on the present worth of your asset but they would charge you so go with real estate agents as they should do it for free and you shouldn't be under any obligation to list. If you find out that your property is worth, let say $10k, you should contact your local tax office and try to reduce the amount of taxes you pay on your property by disputing their assessment which you can do.

  Local tax offices are slow in adjusting property values to the real market value which is especially true in a market where the prices have fallen.
• 

  Jim_TX

  Okay - I see that I need to provide more details.

  1) The person that is interested - they already own three adjoining properties. They are playing Monopoly, and are purchasing properties as they come up for sale, just so that they can own a bigger piece of the monopoly board. While they say that they paid only $4k and $6k, I find that difficult to believe, and feel that they really paid close to $20k for one piece of property - just last year (I looked it up on the county appraisal logs). They live on one of the properties, and are trying to buy up all that they can afford. (If we were playing Monopoly, she owns St. James Place, Tennessee Ave, and New York Avenue, and I own Kentucky Ave.)

  2) As to what it is really worth - the appraisals have been steadily going up, and actually came down a bit in the last year or two. But, it is land. Land here in Texas is worth something. Especially land near lakes. Mine is within 3 miles of Medina Lake. The North side, but it is still a recreational lake that people go to on the weekends.

  3) I have looked at properties of equivalent sizes near mine - not right next to mine - but in the general area, and those properties are going for - a minimum of $25k - and up. No improvements. That is, no septic tank. No electric on a pole. No water in the yard. Etc. My property has electric at the street. Water can be run from the street also. Okay... no septic tank.

  My piece of property would add quite a back yard chunk of property to the lady's collection. She would not have to worry about someone putting up a mobile home, and ruining her view. She knows that.

  I don't have to sell the property - I can just sit on it and pay the taxes each year. I was just hoping to get advice from a realtor (not an economist - sorry, no offense meant) that may guide me.

  I am interested in another piece of property - 5.9 acres - that is in another location, and I could use the money from the sale as part of a down payment. But... if I can't get more for it than peanuts, I will just hang on to it.

  Another thought that I had was to sell it... take a loss... but not sell it to the lady that does not want to pay a reasonable price for it. It would have her grinding her teeth to have someone move in a mobile home and live there. She would know that she should have been more proactive, and perhaps offering a bit more, so as to not have someone else move in.

  Again, I am still looking for realtor input.

  Thanks,

  Jim TX
• 

  james_woods

  It sounds to me like they are not offering you enough money for this.
• 

  jamesmahon

  Agree with James_woods (hmm, makes me feel a bit sick but sure he feels the same). If other blocks have gone for more and she is after the 'set' then it may be worth a lot more to her - maybe more than to anyone else. You are thinking what you want to do with the money. Just work out how much you need to do that and see whether that is what she will offer.