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I have hired a licensed certified general appraiser to appraise two rural raw land parcels for "for sale" purposes. When I obtain the market value of these properties from the appraiser, how close, or how much on a percent basis higher or lower should I price these parcels for sale at?
I understand that ultimately the value of a property is what someone else on the open market is willing to pay for it, but if I price the parcels at close to what the appraiser says they are worth, and someone offers a lowball offer, would it be wise to then counter and attach the value the appraiser put on the parcel if it's close to what I'm asking for it.
The appraisal will show a grid with a range of adjusted sales prices. For that matter, you can request a range estimate instead of a 'point' value. Appraisers recognize that there there is always room for negotiation, etc.
Also, you can ask for a survey of list prices vs sales prices, so you can see what the average differential between asking price and sales price is. So if you feel confident at $X for your property, and the average list/sale ratio is 95%, you could ask $X/.95.
Like anything else, price will determine how fast it moves. Raw land requires a cash buyer or someone with a boatload to put down. Financing is slim for raw land, so financing via 401(k) will be likely, If not cash. Increase your odds if you are willing to hold paper.
Like anything else, price will determine how fast it moves. Raw land requires a cash buyer or someone with a boatload to put down. Financing is slim for raw land, so financing via 401(k) will be likely, If not cash. Increase your odds if you are willing to hold paper.
Are you really talking about financing through a retirement plan - 401(k) - or are you referring to the FHA rehab loan: 203(k) ??
Are you really talking about financing through a retirement plan - 401(k) - or are you referring to the FHA rehab loan: 203(k) ??
You can't use a 203(k) rehab loan for new construction.
I am saying financing for raw land is pretty much obsolete, UNLESS someone is willing to do a C-perm. The last two land buyers I worked with (this time last year), found the 5 year balloon so abhorrent (after 35% down) they both opted to used their 401 and took a loan against it. I would have much rather they took my loan. But, the land loans are running 8%+ and with points. They are not protected financing by the CFPB and anything goes......unless a house is attached to it. So yes, one bought a lot of 90K and put 30K down an finaced 60K out of his 400K Federal TSP. The other buyer put 100K on a 200K lot and financed 100K, also from a sizeable TSP. 401k loans are actually the most popular means to finance land.
Unless a land buyer has a builder and house plan, the land purchase is speculative at best. (This is assuming the land is purchased for a dwelling and not a self-build cabin or hunting getaway). The land will dictate what size home and what floor plans will work. So unless it's recreational, serious buyers have to have their act together for C-perm.
Well I received the appraisal. While it was comprehensive, I am a little perplexed as to how the appraiser came up with a value for my parcels. Comparable parcels in my section and nearby sections have sold for between $900 to $1500 an acre. The appraiser also had another development area of the same town used in the comparables about 15 miles away with values that are lower per acre ranging from $400 to $600 an acre. A comparable parcel adjacent to mine with the same characteristics that was included in the appraisers report was valued at $1496 per acre, yet my comparable sized parcel is valued at only half that right next door? Doesn't make sense. The appraisers report has all the sales prices and parcel numbers listed if I want to evaluate each one, but for rural land should acreage that's 15 miles away even though technically in the same town go into figuring a valuation or just property that's in a 5 mile radius?
Generally, what you're looking for is commonly called a list-to-sales-price ratio. If properties are typically selling for 5% less than list price then you could formulate an asking price that is 5% higher.
I'm an appraiser, and I provide more of a relocation type appraisal for clients who are selling. The typical market value appraisal uses data that assumes your property were on the market prior to the effective date of the appraisal. That makes it old data.
You need an appraiser to also take into account the properties you will be competing against on the market. That sort of analysis is where the appraiser would talk about the current market and things like the LTSP ratio.
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