Structuring this land transaction?

Question

Hello, BP! I'm sure many have had friends of family hear that "You're in real estate! Help me with this problem!" Here's mine...this is to help out my in-laws, the wife's parents.

What they are looking at is 3 parcels of land, owned by their "next door neighbor."

Here is the county GIS: http://idahoparcels.us/county/benewah.html 110 N 6th st is the in-laws address.

The 2 parts under it, starting with 104 N 6TH STREET, and the one on the bottom right, are owned by the neighbor looking to sell.

The couple, Jay & Dona, own it outright. Plummer is a very small town, and they've been trying to sell it since 2013, at least, when my in-laws moved in. A few properties have remained for sale for years, due to it being a small town, and the active mill. What they're wanting is between $30K - $35K.

I'm thinking is seller financing of the land. Then, since I'm not sure if the couple will want to hold a note, I'm thinking of also bringing up investors that buy performing notes, as an option to consider.

I'd also be mentioning that there is a willing buyer--the next door neighbor!--who would actually have an interest in buying it! Selling it will bring them money, instead of having it be a drain, paying property taxes: highlight the negatives of holding it vs the positives of finally selling.

Any other suggestions for tackling this?

Gail Greenberg · Answer

For ease of discussion, let's call your in-laws "Harold & Maude."

So Jay & Dona have been trying to sell this land for 4 years and they want $30-35K.

And you are asking for seller financing why - because Harold & Maude don't actually have the $30-35K?

This is what I see:

* In terms of making a pitch to Jay & Dona, i think the real leverage is that they've been trying to sell for 4 years with no takers. They MUST know that since there is no demand for building lots in this little town, that really their ONLY chance of selling the land in the foreseeable future is to sell to the neighbor who wants a bigger parcel.

*So, let's figure out how to make a deal that works for everyone. I don't know how Jay & Dona arrived at their price but if they still don't have a buyer clamoring for it, it's probably overvalued. So the first thing I would do is have a 3rd party give an appraisal of what the land is actually worth.

*I assume it will come back at a lower number than the current ask. But even it it doesn't, ask Harold & Maude if there is a lower price at which they could just buy it for cash?

*Take the appraisal (if it's less than the current asking price) and prepare a "2 Tiered offer." In a 2-tiered offer, you say, I can offer you $XXX (a lower price than they're asking and a lower price than the appraisal) for your land in CASH, it will be a simple close without most fees and without requiring bank approval. Or, I can offer you $(a higher price) if you would be willing to seller-finance, which will give you monthly income and keep you from losing a bunch in taxes from getting a lump sum.

I wouldn't complicate the conversation upfront with talk about how they can sell the note later, but certainly answer all their questions about how notes work.

Good luck!

Gail

Structuring this land transaction?

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