I am totally green to real estate. My parents left me 5 acres of land that has 2 rental mobile homes. One of the renters wants to buy the home they live in with some land. They have been excellent renters for 10 years but the home is in poor shape and has become a money pit for me to maintain. The land and homes are owned free and clear. They say that they only want a couple of lots.
I hate to sound foolish but how big is a lot?
How can I find out the market value of the property without calling in a real estate broker? I already have the appraisal value from the tax office.
Also, they are requesting that I hold their mortgage due to other financial obligations. Again, they have an excellent payment record with me. What would be my first step and how can I protect myself?
Not a foolish question at all.
Lot size is normally determined locally by the zoning authorities for the county, town, city, municipality, etc.
City lots are most normally smaller than lots out in the country, commonly 1/4 acre or so. A common size in the country is 1 or 2 acres. The town my parents used to live in (in New England) changed the zoning to 5 acre lots. So, it varies. Call the town, city, or county zoning board and ask.
I would say that you could divide the property up and sell them the land and the mobile as a LHP (land/home package)…BUT (yeah, there’s always a 'but"!), you will probably have to spend some money to sub-divide…again, ask the zoning board.
The tax appraisal usually has NO bearing on the reality that we live in! Land is worth what a willing and qualified buyer will pay. A decent real estate agent will probably give you and opinion for free. It might be worth it to get it appraised for sale.
In that you inherited the property, you could do very well holding a note for the buyers. Some mobile deals are very lucrative.
Hope this helps some…
To add to what Keith said…
The value of the land depends on what it can be used for. So to find out what it’s worth, you’ll need to start with the basics, such as what does the current zoning permit and require – uses, min. lot sizes & widths. Another issue is the number of lots that the parcel can be subdivided into. Keep in mind that for instance, a 5 AC parcel zoned for 1 AC lots will usually produce fewer than 5 1-AC lots. Land is wasted due to natural features, shape and other things. You typically can’t develop 100% of any parcel.
Tax value is not indicative of the perceived or appraised value of the property. Tax values are always less than the appraised value. This is a good thing as you are paying taxes on a lower value. The value of your property should be based on recent sales in your area of similar properties. The true value is what the buyer is willing to pay.
Your local zoning board can give you information regarding the lot sizes and other zoning issues.
Regarding the current renters desire to stay…you could draw up a land contract or a private mortgage through you. This will make it easier for them, when they clear up their personal issues, to attain ownership. They could “refinance” the property which will cost them less “out of pocket”.