Neighbour wants to buy the land that they encroached

[Frank Jiang]

Good that they didn't play the card of adverse possession. Hopefully it will not come up.

Basically it is an encroachment. My neighbour's fence/short wall was built on our lot and it formed their backyard. The area is about 500 sqft. They have a really small backyard after expanding the house last year. The new house probably worth $2.5M. They offer to buy additional 1000-1500 sqft land from us. We have 30K sqft lot on hillside and the encroachment is at the rare part of the lot and not really usable for us. But it is all flat and critical to the value of their new house.

How should I price the land? Does anyone have suggestion on things to watch out for when doing the adjustment of the boundary? I am in Los Angeles County, CA.