would you pay more than it's worth?

[Erin]

I realize land is like anything else in that it's value is only as high as a buyer is willing to spend and as cheap as the seller is willing to take.  But how much should you be willing to spend?

My dilema:
Where we live, land is either a couple of acres or a couple hundred.  There's rarely an in-between.  We need the in-between.  We've decided 40 acres is about the bare minimum of what we could use and 120 is about the top end of what we can afford.  In the last two years, there have been a grand total of 3 parcels in this range offered for sale publicly.

On the bright side, land is quite cheap.  We're currently looking at a 40 acre parcel that the county has appraised at $300/ac.  It's been listed at the realtor for at least a year, but I think it's closer to a year and a half or two.  (I can't recall for sure and the realtor dodges that particular question.  lol)
The seller has an asking price of $650, but they came down pretty quick to $450.  That's still 50% more than market value.

But--In real numbers, it's $6000 higher.  Ironically, that's about how much it's going to cost us to put in a well. 

We're going to sit for a while with our current offer on the table ($310) since I know we're probably the best offer they've had so far.  I know there really hasn't been much interest in this anyway, which is part of why it's been listed so long.


My real question is:  how much would you consider coming up?  Or would you?  We love the way it's laid out. Basically a big bowl with craggy draws running down into a hay meadow at the bottom.   It's absolutely perfect for what we want--running our handful of horses and a couple of cows.

But we'd be laughed out of the county if we paid $450 for 40 acres of sage-y pasture with no water on it!  We'd never get a good deal on a used car, again. 

Thoughts?

[glenn kangiser]

It's all relative, Erin.  If you want it bad enough then it is worth what it takes to get it if you need it.  Usually over the long run the bit extra is not that much.  Down the road 30 years living on the place you want -- 6000 is nothing.  Less than a new car.  If you lose it and kick yourself for the rest of your life-- then you will realize that.  If that size parcel cannot be found then the owner knows what they have and that makes it worth it.  Law of supply and demand.

We paid over 3000 per acre for our land with only a well if that makes you feel better. 

Opportunity doesn't knock often.  Decide if you want to lose it by not offering more -- decide if you will be happy if someone else buys it while you are dickering for a better price.  The law of supply and demand dictates price to a large part.  If it is necessary for your future plans, then buy it -- bring up property values for others.

Don't worry about what others think -- their values are not yours.  You can still beat out a used car dealer -- they are a dime a dozen. Good luck.

[glenn kangiser]

Also -- try to offer them about 10 to 15% below the $450.  They may go that.

[MountainDon]

As Glenn stated the correct price is relative. When it comes to land you want, you are the market.

The county appraisal is just that; their idea of what it's worth. Is that figure the real value or what they call the appraisal value, the tax base amount? Here, the amount that the county bases the taxes on is about 1/3 of the selling price. I think the asking price, per acre, usually goes up as the parcel size goes down. So what's the county appraisal value based on?

Depending on how we look at what we paid for our mountain land we either overpaid or we underpaid. We could have bought some nearby land for 25% less per acre if we had bought 20 times as much. Or we could have paid 20% more per acre if we wanted a much smaller lot with close neighbors.

So, if you're buying with long term ownership in mind you might want to pay more. If it's being looked at as an investment with resale or subdivision in mind you'd want to pay less.

My opinion.

[Erin]

Truth be told guys, that's kind of the direction I was leaning.  It's the first place we've looked at that we were really excited about and that we could do something with.  I keep telling myself the extra $6Gs is worth it to us.  But then I start doubting and wondering if I'm trying to convince myself of that because I just don't want to have to wait for another couple of years...   

[glenn kangiser]

The dollar is in the dumper now so land will be worth many more dollars soon.  You were thinking right in my opinion.

Please keep us posted.

One other thing you may try is to give them their price and have them include the well.

[ScottA]

I've seen land like that sit on the market for years. the owner doesn't care if he sells it or not if the price isn't right for him. If you like it buy it. I agree with Glen offer  $410-415 and see if they bite. If not wait a couple of months and just pay the $450. $450 an acre is cheap by most standards so you're not getting hurt that bad in the end.

Land around here is crazy. For a couple of acres you might have to pay $10k an acre and for a couple hundred acres you might pay only $200 per.

[glenn kangiser]

20 acres with nothing here just went for $300,000 down the hill from me about one mile.  I guess when we moved here it really brought property values up.

We paid $68000 for our 20 acres 6 years ago with a well, spring- no pump -  and perk test.

[Drew]

Yup.  We paid $150K for 20 in early 2005 with no well.  Still, it had a hill at one end (Still does, as a matter of fact), a forest and creek at the other, and ~5 acres of prime growing field in the middle.  Given a divine bulldozer I don't know if I could do better.  It's 6 miles from the small town and 12 from the bigger one (13K pop.).

All I'm saying is that it gave us that "This Is The Place" feel when we saw it.  We might have done a little better on the price, but whatever that difference would have been, it would have been gone in 6 months.  So would the land.  If you've done your homework (And it looks like you have) and you like the place (And it looks like you do), you've figured out the hard part.  Glenn's advice sounds good.

Dang.  Now I'm homesick.

[glenn kangiser]

You're like me, Drew.  Need to rest on or in your native soil at night.  You need a hole in the ground.

[Homegrown Tomatoes]

Aw shucks, Erin, sometimes real estate is totally based on emotion.  When we bought our old house, it was because the big old pecan trees reminded me of the farm I grew up on, and because I walked in the front door and saw this big, pretty picture window on the south side with a stained glass panel above, and just felt like I was home.  What we paid for it, considering the condition it was in, was highway robbery, but we sold it less than five years later and made a darn good profit on it (sold it for $16K profit after only putting $2-3,000 into it.)  With land, especially land that you intend to keep a while, I think that spending a little more to get what you want may be worth it.  After all, they aren't making any more of it.  BUT, that said, I would give them the final-offer-take-it-or-leave-it and then hold my breath and see if they bite...  and then if not, after a while, you might come up a bit and see if the reaction is any better.

[Willy]

I paid extra for my land because it had a good well on it. The flow was over 28 GPM after moving on to it I found the places around me were lucky to get 1 GPM! Now the little extra I paid was not so bad. I bought the first peice of land I saw. I found a ad in the paper that said 40 acers, well, privet lake, views and located on a countie road $39,500.00 cash out. Of course I thought it was a joke living on the coast side of the mountains where 5 acres was worth allmost 100K plus. I went there in the winter and had a hard time seeing the place in the fog. I had to walk the land to see if there realy was a bluff and lake which was frozen solid. I sold a gun for my down payment to hold it. Sold my other place and paid cash for it. Now 20 acres (12 years later) of the land is worth $60,000.00 because of the view, elect, road access and I don't even use that part! So paying more then was not a bad deal for us. Mark

[John_M]

I say go for it!!  Life is too short to haggle over something that would bring you so much happiness.  $6000 over twenty years is $300 a year?  That does not seem like much does it? 

Land is an investment.....and like someone once said, they are not making any more of it!!

[Homegrown Tomatoes]

So, Erin, has any decision been reached?  Thinking about y'all as we're beginning the whole moving process.  Yikes.  We have all that to look forward to!

[Erin]

As a matter of fact, per glenn's suggestion, we put in another offer yesterday afternoon.  We'd pay their $450, if they'd pay $2K toward the well.  (Which brings us up to $400 an acre!)

But I feel good about it.  And have my hopes up.  Their realtor (who also thinks $450 is a little on the high side) said she'd never heard of such an approach and thought it might work.  She said she thought she'd probably have an answer by Monday and made sure she still had both my home number and cell. 


So-- fingers crossed, everyone! 

[glenn kangiser]

Hope it works out, Erin.  We'll be waiting to hear form you.

[Erin]

Okay...
Just got another counter offer about half an hour ago.  $16,500 straight up.  No guarantees of water (our lawyer suggested putting a clause in the contract that we'd only go through with the purchase upon the finding of water). 
That comes to $412.50 per acre...   

I just called my husband to let him know.  He's out on his pony right now and the wind is howling, so he can't hear the phone too well.  Consequently, I have no one to talk to about this!  My head is spinning...

[Homegrown Tomatoes]

Have you had a chance yet to talk it over with your husband?  At least they came down some... when we bought this place, they wanted to quibble over $1000.  I thought it was silly.  I know, it is a lot of money, but compared to the price of the house, it really wasn't... we finally reached an agreement that we would pay their price, but they had to cap off an existing well that was no longer in use (had to be done for the loan to go through) and had to do a little work on one bathroom.  I think the work probably cost them a little more than $1000, so they would have been better taking our offer with no strings attached.  But what a strange amount to ask per acre... maybe you should counter offer again with $412.00/acre, just to be ornery!

[glenn kangiser]

Sounds good, Erin.  Hope it works out -- you made real progress dickerin' there.

[Homegrown Tomatoes]

Well??

[Erin]

Okay.
Here's what we know. 












nothin'
We've been talking and chewing on this since Tuesday and have decided fine, if they want to do 'no strings' we'll go for that. 
For $390. 

And let them talk us up to $400 if needs be.  I'm going to make the counter-counter (counter, counter, counter...I'm losing track! lol)  offer on Monday morning.

On the brighter side, we think we'd probably hit water, though it's quite likely it'll be really low GPMs.  Consequently, we'd also design a grey water system into our plans and a rainwater preservation system.

[Homegrown Tomatoes]

Keep us posted on how it goes... sometimes it is worth it to bargain really hard.  (This is why my husband lets me do the car shopping... he's a pushover if he wants the vehicle, and I'm ready to walk out the door if they don't meet my price.)

[Erin]

This is why my husband lets me do the car shopping... he's a pushover if he wants the vehicle, and I'm ready to walk out the door if they don't meet my price

This is us too.  I'm usually the one who's done all the research, too, and know exactly how much that vehicle is worth and how much I'll pay if I go to the lot next door.  lol
When we were shopping for our current "good car" (a '97 F250 diesel) the dealers kept trying to talk to him!     I'd be the one asking questions and they'd turn their replies to the man.  At the secord or third lot we went to he finally said, "Oh don't talk to me.  She's runnin' this deal"  lol
We ended up paying trade-in price for it.  Now, four years and 90K miles later, we could sell it locally for about $1000 less than we paid.

Needless to say, I'm the one who's been doing the primary negotiations for our land deal, too.   

Though at the same time, that very need for the best deal, is what lead me to start this thread in the first place.  lol 

[Homegrown Tomatoes]

My husband is gradually getting a little thicker skin, but the first time we ever bought a car together he got embarrassed because I made the sales guy throw a little hissy fit, and then I thanked them for their time and walked out.  Of course they chased us down and came down to our price.  When we moved up here, we gave that little old Blazer to a family who needed it way worse than we did, and they're still driving it now, with no problems.  I need him to balance me out on real estate though, because to him, a decent house is a decent house, but I tend to be sentimental about land and features of a house.... I do the research though, and can give him a lot of good comparisons, etc.  Sigh.  One week until move date.  Really wish we were going straight to a place we could buy, but we have to get this place sold first... kids don't quite get that they won't have chickens until we move out of our rental place there.  Little one keeps talking about her planned flock of "Arycaunys" (Aracaunas) and the bigger one is talking about Buff Orpingtons.  Rent is hard to explain to kids who are used to having their own turf. 

[Erin]

And we're on the other side of that.  My kids have never known a home that was ours.  At six and eight, they know we're not going to live in this house forever.  We might not even live in it next year...   

The eight year old started designing his version of the Someday Place about six months ago.  Adding, tweaking, modifying... Dreaming the same dream his father and I do; that one of these days we'll have a home that belongs to us.
Frankly, I think they've always adapted better to the idea that the house/shop/barn/etc. weren't ours than they have that some of the horses aren't ours.  The fact that were we to move, Jake and Bud wouldn't go with everyone else really bothers my daughter...  A house is just a house.  But horses are family!