Buying property?

[Mallardsx2]

Unique situation with there being a house on it for sure.

If you can swing it, I would buy it and split that house off and sell the house asap to recover as much money as possible (and to lower the taxes). Then, re-finance the vacant land and get it enrolled in a conservation program ASAP. I would then clearcut it to the ground to recover as much money as possible. ( Save $5000 and replant hundreds of sawtooth oaks). If its field, lease them out for as much money as possible until it is paid off.

 

[CPAjeff]

Are there any expectations from the seller as to what you can/will do with it?

 

[Addicting]

You can pull sold properties on Zillow. I'd allow for the fact that they want you to have it and discount 20-30%. In the end it is hard to go wrong buying property. Is there a home on it, you mentioned it included their current home. If no home I think the process becomes easier. Make them an offer that you are comfortable with and if they take it then buy it. If you end up not using it like you thought you would then sell it in a year or two and likely make a little money. Also you could cut out a bigger buffer behind your home and sell the remainder and likely not end up costing you much money.

The home is being sold separately from the property. We have no interest in the house. It’s a nice house but not a retirement house as it has a stair requirement. It would be a great place for a young family.

 

[Dakotakid]

I suggest getting a market valuation from a trusted realtor friend or appraiser. A third party should give you a starting point, and avoid either side feeling like someone is taking advantage of the other.
doesn’t mean that valuation is what you have to go with but it is an informed starting point.

 

[Addicting]

Are there any expectations from the seller as to what you can/will do with it?

Enjoy it is the only one.

 

[Addicting]

I suggest getting a market valuation from a trusted realtor friend or appraiser. A third party should give you a starting point, and avoid either side feeling like someone is taking advantage of the other.
doesn’t mean that valuation is what you have to go with but it is an informed starting point.

They had someone do that and it was an outrageous appraisal. The problem is with realtor coming to do it they have a vested interest in selling for as much as possible.

Land dot com shows the comps sold between 4-5k an acre recently. That is good enough info for me to know kids what retail is on it.

 

[npaden]

They had someone do that and it was an outrageous appraisal. The problem is with realtor coming to do it they have a vested interest in selling for as much as possible.

Land dot com shows the comps sold between 4-5k an acre recently. That is good enough info for me to know kids what retail is on it.

On a deal like this you might float the idea of a installment sale to them. I've done one of those and it worked out really well for everyone. If there was a recent passing, then they won't have to worry about capital gains taxes due to the stepped up basis, so it might not appeal to them as much, but if they've held it for a while and there is a big gain then stretching it out over a few years could save them some income taxes.

 

[belshawelk]

Just don't look at the value of their land. You have to look at the value of yours and the theirs combined. Larger parcels are getting harder and harder to find. They may not be any comps like it nearby. If its reasonable and you can swing it, its very very hard to loose on land unless its way over valued, but that's where the values of both parcels need to be considered.

 

[Addicting]

On a deal like this you might float the idea of an installment sale to them. I've done one of those and it worked out really well for everyone. If there was a recent passing, then they won't have to worry about capital gains taxes due to the stepped up basis, so it might not appeal to them as much, but if they've held it for a while and there is a big gain then stretching it out over a few years could save them some income taxes.

I asked them about a land contract and think that is the best route. We don’t have to deal with a refinance or high intel and they can record the sale as whatever they want when we pay it off. It would push the sale out 10 years or so as well so it’s not a double whammy from the house sale.

 

[CPAjeff]

Enjoy it is the only one.

Sounds like quite the deal then! The last sentence of your original post has a very valid question - "The wife and I feel it’s something we need to do but how do you put a realistic price that won’t offend them."

A realistic price is what the market dictates, whether that's easy on the wallet or not. Bringing a realistic price to the table, with comps to back it up, won't offend them. It sounds like you have a great relationship with them, judging by the simple fact that they approached you to purchase the land. If the market value of the piece is outside what you're comfortable spending, then I'd be sure to be honest with them on that topic. If I was a betting man, I'd bet they'll be the ones who offer a discounted price instead of you asking for a discount up front.

 

[Hem]

I had the opportunity to by the 5 acres next to me. Price was slightly over market value. Wife said no.
Now there is a house smack in the middle of my best view. Value of land has quadrupled.
Buy it.

 

[Dakotakid]

Have purchased several on contract would recommend escrow services and using a lawyer for contract. Cost is minimal and was worth it to me.
If neighbors and you are good with 4-5000 per acre then should be good.
Interest rate and amortization is helpful.

 

[Addicting]

Have purchased several on contract would recommend escrow services and using a lawyer for contract. Cost is minimal and was worth it to me.
If neighbors and you are good with 4-5000 per acre then should be good.
Interest rate and amortization is helpful.

I e done one in the past as the seller and found it was a pain to deal with the interest rate. They paid more than the scheduled amount and I kept having to redo the payment.

I didn’t find a good product to use for that.

This time to save energy and make it cleaner, I think I will offer a flat 1000 per year for a 10 year note.

@CPAjeff maybe you can point me to a better way from your username.

Or @Big Fin when you get back can point me in a direction?

 

[CPAjeff]

I e done one in the past as the seller and found it was a pain to deal with the interest rate. They paid more than the scheduled amount and I kept having to redo the payment.

I didn’t find a good product to use for that.

This time to save energy and make it cleaner, I think I will offer a flat 1000 per year for a 10 year note.

@CPAjeff maybe you can point me to a better way from your username.

Or @Big Fin when you get back can point me in a direction?

Lots of online tools to help with the amortization schedule(s) or even a simple excel spreadsheet could work. But, like @Dakotakid pointed out, it would be money well spent to go through lawyer for the contract work.

 

[Buffs35]

If your plan is to be there at least 10 more years, I would consider offering them a right of first refusal for a term of 5 to 10 years. That way they know you have to offer it back to them first under the same terms as any bona fide offer you receive during that time. It can be structured any way you like, very flexible. It can give them price of mind and could help to negotiate a lower price.

 

[Addicting]

If your plan is to be there at least 10 more years, I would consider offering them a right of first refusal for a term of 5 to 10 years. That way they know you have to offer it back to them first under the same terms as any bona fide offer you receive during that time. It can be structured any way you like, very flexible. It can give them price of mind and could help to negotiate a lower price.

They don’t want it back, they want condo life. At 80+ they have no desire to be roaming around those woods.

 

[mdhunter]

Always buy adjacent land if it’s priced at market and you can afford it. If nothing else, you can sell it later and have some control over the process and possible buyer. BUY IT!

 

[Wildabeest]

I e done one in the past as the seller and found it was a pain to deal with the interest rate. They paid more than the scheduled amount and I kept having to redo the payment.

I didn’t find a good product to use for that.

This time to save energy and make it cleaner, I think I will offer a flat 1000 per year for a 10 year note.

@CPAjeff maybe you can point me to a better way from your username.

Or @Big Fin when you get back can point me in a direction?

I sold a cabin in MT a few years ago and did seller financing. Pretty nice getting that 7% interest for 7 years with a balloon at the end. Payments are managed through the escrow company that did the closing. Buyer pays escrow company plus a monthly fee; escrow company pays me; escrow company takes care of all of the calculations. Easy peasy.

 

[Addicting]

I sold a cabin in MT a few years ago and did seller financing. Pretty nice getting that 7% interest for 7 years with a balloon at the end. Payments are managed through the escrow company that did the closing. Buyer pays escrow company plus a monthly fee; escrow company pays me; escrow company takes care of all of the calculations. Easy peasy.

So with that it’s in their name now? Or do you have it still in your name and have to do a second closing once they have fulfilled their obligation? Who is handling the taxes?

 

[CRJR45]

No help , but good luck