Valuation of a septic drain field?

Question

Landlocked property has an easement over a 1/4-acre ell in the neighboring property that otherwise blocks the property from the road and is largely (desirably, for privacy/noise) covered in trees. Owner of neighboring property is willing to selling the ell, and develop-able vacant land in the area goes for $10-$15/sf normally. Some larger (8+ acre), treed, hilly land nearby seen for $2-$3/sf. However, the ell includes the neighbor's septic drain field. Sale of the ell would require an easement for the septic drain field. So... as the neighbor would retain some value in the land (easement for drain field) and the land is essentially un-developable, what is a fair price range?

Kevin Sobilo · Answer

Perhaps read the original post, you seem to be missing what's there because the ESSENTIAL information is there!An L-shaped modest sized lot with an easement for one neighbor to drive through and for another neighbor to have a septic system upon. So, almost surely not a build-able 1/4 acre on its own when you consider its modest size, odd shape, setback requirements and the easements. So, I don't think comparable sales of properties that can be built on would be very useful and non-buildable lots are likely to be all over the map depending on a wide range of factors making each of them unsuitable for building.

Jim L. · Answer

Chris, while I apreciate this view, I disagree with the notion that an agent--with no more information available than I've given--will understand the land value any better in this situation than the amassed wisdom of the pool of investors available here on BP. As I am coming to see it, even an experienced appraiser would struggle to advise here because of the subjective value to the limited pool of buyers (as noted by Kevin). I'm looking less for "what is the market value" and more for "how would one best approach this negotiation?"

Kevin Sobilo · Answer

@Jim L., this isn't the kind of deal you can base on comparable sales. 1. You can't go find any other replacement property that meets your need here. 2. The seller also has a limited pool of buyers for this. It sounds like you and also the neighbor with the drain field would be the realistic pool of buyers. 3. The numbers give you a range of values for discussion/negotiation purposes, but in reality a deal like this isn't a market rate deal because there isn't a broad "market" for a property like this. This is mostly how much YOU want the property versus how much the SELLER wants to sell the property. For example, if the seller DIDN'T want to sell the property, a fair price might me MORE than that $10-15/sf range. Conversely, if the seller NEEDED to sell the property to raise money for something, a fair price might be closer to that $2-3/sf number. So, this is mostly about the motivations of the parties involved IMO.

Chris Seveney · Answer

I would assume an agent would have the address, a plot of the properties, sales comps etc. IS this in timbuktu or madagascar? the information you provided is essentially useless. Garbage in garbage out as they say when evaluating things.

Kevin Sobilo · Answer

@Jim L., I would start with casual conversation. People who aren't skilled at negotiating will often give away their motivations in casual conversation. Even agents do this when they should not be on behalf of their clients. For example, if you are casually chatting, you might find that the seller is trying to get together money to pay for their daughter's wedding in October. So, you know they have an immediate need and if they give any insight into the size and type of venue you can guesstimate what they need. An offer that "meets that need" has a chance to be accepted as that is the goal for the money they already have in their head. Casual conversation can also lead to understanding how they view the potential transaction in general. All that information can be useful in figuring out how to approach a negotiation. I'll give a COMPLETELY different example. I went to see a tenant occupied house once and the tenant wouldn't answer the door despite having a confirmed appointment. After speaking to the listing agent I found that all but one buyer had the same experience. Instead of walking away, I saw it as an opportunity and IMMEDIATELY submitted TWO simultaneous cash offers. One low offer where there would be no inspections, the tenant could remain for closing, and i only needed to get a walk thru and the other higher offer with full inspections and the unit made vacant for closing. As I spoke to the agent about these offers, I found that the seller had no written lease, no security deposit, and no keys to the house. The agent herself was not local and this was a low prices listing she wasn't thrilled about working. She only took it as a referral because she had worked with the seller's daughter before. So, the seller was NOT AT ALL equipped to deal with the difficult tenant situation and the agent wasn't prepared to put a lot of effort into a troublesome deal that was of low value. So, the more we spoke, the more I was able to persuade the agent to recommend negotiating on the lower offer where I took on the troublesome tenant and it was a quick easy deal for the seller and agent. With nobody able to see the unit in person, I had no competition negotiating and was able to get the house for over 20% under asking whereas it should have sold for full asking or slightly over on the open market. So, understanding the seller's situation helped me literally jump on this deal and exclude any other potential buyers and to get a discount. Note, as an experienced landlord I was able to get control of the tenant situation with little issue, raise rent and have had no real issues with the tenant since. They are still in place 2 years later now. What was overwhelming for the seller was something right in my wheelhouse to deal with.

Chris Seveney · Answer

@Jim L.Ask an agent - this is impossible for anyone to give you any type of legitimate response on this forum with information provided