how to value one of a kind land sale

Question

This used to be a trailer court till it died of old age and didnt meet new water regs and septic issues.

It is ADJOINING the city's water treatment plant.  This was here first and they come and muscle everything in a huge well head protection area out.

they have bought every property on this side on the road for a 1/4 mile or more each way and everything down to the river about 2 miles back in.  They want this last piece of the puzzle.

BUT I dont want to sell them the land,,,my good friend/last manager stayed on and is living on this roughly 5 to 5.5 acres.  I thought he could continue living in his existing house/mobile home, when this all began 8 years ago.

He ended up having to move a double wide modular and putting it on  its own block foundation, septic, new electrical service,,,now remodeling to bring up to date.

City has paid 8 to 10 K per acre for surrounding land back when land was selling for 2kto 3500k now land has doubled.  They just bought a short quarter (Thats 160 acres for non farm peeps) for a short  million bucks,,,like $980,000  wONDER WHAT MAGICAL ACCOUNT THEY WROTE THAT check out of???

They are always saying how broke they are.  Point being dont want city to buy BUT my buyer has ready buyer any time he wants to sell.  Think I should get what city would pay me  from friend.  That value is bound to go up for him!!

It is such a unique property in unique location comps dont even come close to comparing...How do I put A value on it,,cant tease the city and say how much you give for it and sell it to another.

They get ticked off they can find a thousand problems till they run out whoever owns it. NO appraisal will be close as NO comps or similiar situations

HOW do you value such a property?

Bill Gulley · Answer

I think your best apporach will be using the income and cost approach since comps are not there for a market approach.

Actually the past land sales are valid but should be adjusted for the size of the land sale, smaller areas that are legal building sites sell more per acre or sq. ft. than do tracts. The cost of the septic and improvement would then be added, less depreciation.

SInce the home is modular, can it be moved? Have you looked for other home sites? What other comrable home site would there be in the area (township)?

Another issue is that the city has devalued the property by moving the WT facility next door. This too can be shown prior to the facility being put in. This external obsolecence can cally kill your property value. While taht issue could have been brought up before the facility was built, you can have the argument now.

These issues rarely come out as seeming fair to property owners, but sometimes you do get a good deal. Now that the WT facility is there, who would want it? I know at times there must be an odor blowing your way. While someone might want to live there, most probably would not, thereby reducing values.

Dealing with a municipality means they can devise a public good cause and force sale. In doing so they must indemnify you for other costs as well if you are being moved. Moving costs and other misc. expenses can be claimed in addition to the purchase price.

What you might consider is having the city get involved with relocating the home and covering costs of a new site with a little money for the trouble. The alternatives will show the costs involved to value your property as well.

Good luck, and you'll need to be reasonable, I assure you they can win if push comes to shoving you out....

Bill Gulley · Answer

Don, you said that the city wants it to complete the last part of the puzzel. Does this mean the city has contacted you formally about buying or is this speculation. If you have not been notified you might sell the property to your friend (with him being aware of the issues, I'm sure he is) and carry the deal. After such a deal seasons a little bit this would go along way in establishing the price that would have to be paid by the city. True, they will appraise it, they also have to clear all liens and encumbrances to buy it. If your deal is somewhat reasonable and justified they won't be able to bark about it. Your friend would then be an owner occupant and be entitled to additional expenses and you being paid off.

If you have had official notice of intent, then this plan is out the window, except that you could show any recent sale agreement to establish a willing and able buyer. The other is to buck the system and get two appraisals, they take the average and there it is! Good luck...

David B. · Answer

RE: Eminent Domain/Condemnation - Check the laws and procedure for a municipality to condemn a property in your state. Typically, they would have to pay fair market price, which could be established throough an appraisal or whatever method the law permits. If you feel the value substatiated by the muncipality is not what a willing and able buyer would pay, you would need to argue your case to obtain the value you desire. It can be challenging and in some cases you may need a lawyer.  I agree w/ a previous post that your current tenant could receive relocation benefits under HUD's uniform relocation act (UDR).

Good luck.

Tod R. · Answer

This makes sense to me. I know you don't want to sell, but you have a strong buyer at a price you may or may not be able to get otherwise later.  I know its not what you want for you and your friend, but given the fact that its the city and they can come and get anyway, this isn't too bad of a plan B.

Karen Margrave · Answer

The City can take the property through Eminent Domain. The value is what a willing seller and willing buyer negotiate. I'm not seeing where someone would buy a piece of property that they know could be taken through Eminent Domain proceedings for far less than what they purchased it for. If they do, and the City takes it paying far less than the purchase price, YOU might end up on the hook with the buyer for the difference. I'd use an abundance of caution on this one.

Just Don · Answer

thankfully this is NOT  a waste treatment,,,but they have there well field and numerous wells in the area.

NO odor emits from it.  They even have automatic sprinklers and a great lawn,,,behind a chain link security fence 1/4 mile from where any one could see it,,,what a waste of time and city tax dollars at work.

It is true smaller home sites sell for more per acre than larger farm parcels

there is great demand for home sites of this size on a major highway close to town,,

Just Don · Answer

well it used to have income producing,,,not anymore,,but doesnt cost me anything either,,,guy living there pays all costs including taxes.

It is zoned agriculture and cant be rezoned for any purpose since rhey call that spot zoning

city would claim any use violates their well head protection  regs.

Except for these two buyers would have trouble marketing it  BUT I do have 2 buyers today,,thats what it takes.

Ned Carey · Answer

Land has no value other than what you can do with it. That is usually how land is valued. When it is put to it's "highest and best use" what kind of income will the property generate.

Knowing the end value, you then work backwards. Given the income what is the value of property. Then what will it take to get the raw land to a stabilized operating  property. The time  & cost to develop, build, and lease up and stabilize the property are all taken into consideration.

Not an easy process. I wouldn't begin to know how to do that kind of evaluation. I recommend you look for a CCIM certified commercial broker who specializes in land.  - Ned

how to value one of a kind land sale

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