Our neighbor has many times expressed interest in selling his land which is next to our home. We have told him that we’d like to buy it. We asked his price and he has said make him an offer.
Just a few details about the property: first of all we are thinking of asking him to finance the deal, we are not able to make a cash offer. It is 1/2 acre, it has an old mobile home on it which is probably not livable, many shingles have come off of the roof and even he has admitted it rains inside, so our offer will not include the mobile home. Other than that it only has 2 very old sheds. There is someone in our town that sells lots, so I called just to get a price on what his going rates are. His lots are 1 acre 32,900 he finances with $5000 down at 12.75%. His area is just a little bit nicer than ours. We are considering offering him 22,000 with $5000 down and 10% interest. Is this a crazy offer too low or too high? I’ve never done this before so we would have an attorney draw up the deal. I just don’t want to insult him by offering too little but I also don’t want to pay too much.This is IF he agrees to financing it. Any and all feedback would be greatly appreciated.
I think you’re way to high.
Your comp is 32900 for 1acre retail.
I don’t pay retail for Real estate, so I’d offer 70% of retail minus rehab costs.
In this case I’d get a bid to remove the trailer and septic tank if it has one.
So for 1/2 acre, I’d bid 70% of 16450 minus 2500 to remove trailer and septic.
So $9k. For financing, I’d offer 10% down and 24 payments of $337.5.
From there he can negotiate you down to 20% down and 6-8% interest.
It sounds like you have $5000. You can always offer him that as payment in full instead of the finance deal.
If you’re not embarassed by your offer you’re offering too much.
Hi,
I agree with Pete to a point however this is your personal home and not an investment, I believe you want a good relationship with your neighbors and do not want to create ill will when it comes to this lot.
Because this is your home and you don’t get to make an insulting offer and walk away I would start with something in line with your comp $16,450 for the half acre the outside contractor costs to remove the old mobile home, remove the sheds and remove any old septic system say for example $2500 so your new base price would be $13,950 then I would start out offering about 10% to 15% less as a starting offer.
I would explain without mentioning cost that you will need to clean up this lot and got a couple of quotes for the job, you don’t want to be unfair but wish to negotiate something reasonable and that you would need to put something down and have him / her finance the balance for some years.
I think I would start for example with a $12k offer with $3k down and then cleaning the lot yourself saves you most of the clean up cost.
But get 2 or 3 bids to clean the property up and remove the mobile home, then deduct the cost and start negotiations about 15% or so below that. If you go in to low you will piss this guy / gal off and will create ill-will between the two of you and will never get the lot.
Be reasonable and try to make this good for both of you, this is your home and this lot is extra space for your family not an investment your making to build a spec home on and sell in 6 months!
Good luck,
GR