How do I negotiate with an unreasonable list price?

[Trevor Fenton]

A little background on the situation:

My parents neighbor has her property listed on Zillow as "For Sale by Owner". She has also had a "For Sale" sign in her yard for close to 6 months now.

Property Details: (Per County Public Records):

• 1.8 acres - $17,800
• 1978 Manufactured Home (Doublewide on permanent foundation w/basement) - $38,770
• Total Property Value - $56,570
• Home Sq Ft - 1300 SF
• Basement Sq Ft (unfinished) - 1300 SF
• Detached Garage - 1200 SF

My parents and I went to look at the property and to our surprise the place was in shambles. The carpet in every room was in terrible shape and needs replaced, the kitchen was the original everything from 36 yrs ago and falling apart. She did not have potable water in the house because the water softener broke a few years ago and she never replaced it. She has her own well just like my parents do on their property. One of the two bathrooms is half torn apart because she had started to renovate it but never finished it. She personally tried to mud, paint and texture one of the hallways and it was not a success. The basement is unfinished and a window in the basement is broken out and instead of replacing the window or glass she has it boarded over with a piece of plywood. Overall the place is in pretty poor conditions to my eye and with all of these issues I've seen on the surface she has the property listed at $125,000. She said a few people have come by to look at the place. One came back with an offer of $57,000 because they said that is all the bank would let him take a loan out for on the property. She simply told the person "I'm not going to just give the property to you". So my thoughts are that 1) there is a lot of sentimental value in this home since she's been there for the past 36 years, and 2) she doesn't realize how much work needs to be done to the property to restore it and get it back to good condition.  

The selling points for us on the property is the convenience of how close it is to my parents house, the 1200 SF detached garage/shop on the property, and the prospective rental income that can be generated for it's location and high demand. We don't think we'd have any issue finding renters for the property. The problem we are facing is that she's asking more than double the county appraisal value on a property that needs completely flipped before it's renter ready.

My questions are:

• How accurate are the County Appraisal Values? I'm assuming they don't take into account the actual condition of the home for it's value. Instead they are based off of location, square footage, and acreage?
• How can I approach her in a manner that isn't insulting and brings to light all the issues there are with the home? Can an appraisal be done where someone comes to the home and inspects it? And who would pay the owner or the buyer?
• Is this a property that I should even be interested in with all the work that needs to be done? Am I crazy for thinking this is a good opportunity if I can convince her that her asking price is unrealistic?

Any insight or feedback would be greatly appreciated!

Thank you,

Trevor