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Question from the newbie.

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MAIorBust

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Feb 25, 2007
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Certified General Appraiser
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Texas
So I imagine that quite a few of you dabble in R.E. investing along with appraising so I have a question for you. My situation is as follows....

My father owns a 100 acre tract of land in northwest Alabama where he built a 5000 square foot home with plans to retire there about 10 years ago. Since then his job has forced him to move and as of right now I am the only one living in the house. He has had it on the market for over 2 years. A LOT of people are interested in the home however the house is situated in the middle of nowhere and it just won't sell. I do not believe that it is overpriced. Land comps in the area have the land value alone at around 300k. He is asking 450k. My question is this...we are thinking of offering owner financing and I want to know what you think about this method of selling the property.
P.S.
He owes about 200k on the property still.
 
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JoTetherow

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Nov 29, 2006
Professional Status
Certified Residential Appraiser
State
Nebraska
i was always told there are 2 reasons a house does not sell.

price and marketing.

if the price is too high, it wont sell

if the property is not marketed correctly it wont sell.

what does the realtor say?
 

MAIorBust

Thread Starter
Junior Member
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Feb 25, 2007
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Certified General Appraiser
State
Texas
i was always told there are 2 reasons a house does not sell.

price and marketing.

if the price is too high, it wont sell

if the property is not marketed correctly it wont sell.

what does the realtor say?

In New York you might have some competent R.E. Agents who's opinions are deemed valuable, unfortunately that is not the case here. It was appraised by a residential appraiser at 550k. I think it is more along the lines of our asking price. There are very few homes in the county here that sell for over 400k unless they are waterfront so there is virtually no demand for this type of property for people who can afford it. Back to my question.....
 

Midwest Guy

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Dec 12, 2006
Professional Status
Certified Residential Appraiser
State
Missouri
The financing that you have questioned about is commonly known as "Bond for Deed," of "Land Contract." Check state laws for legal proceedures on such an agreement.

In Missouri and Illinois laws are relaxed for making such agreements. These state laws favor the seller as holding title to the real estate until the agreement is completed.

It could be possible to refinance the loan at a later date with a mortgage company or bank. A refinance, paying off the seller, would give you title to the property.

If the property appreciates in the next few years, you skip the down payment and have an almost typical refinance.

Check laws in your area, not legal in all states.
 

Terrel L. Shields

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May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I do not believe that it is overpriced.
the market believes it is unless you estimated the exposure time to be 2 years.

Your problem is being over-built. It discourages the agricultural buyer who wants no such house. Its location makes it too far out of the way for the average "executive home"....my guess. You need a rich retiree who just sold his Cable TV company for $10,000,000 and wants a hobby farm.

I would never BUY property on a contract for sale but its not uncommon to SELL and does help move property. Also, I would consider attempting a non-absolute auction and selling in tracts and offering SOME (not all) financing. Auctions often get good exposure. The papers often run stories about the "big farm" selling.

Since a buyer could trash the house, i would not finance more than the value of the land so if you got it back it would still be worth what you are owed. And if you offer to take a second and them get a 1st loan somewhere, i would make sure that I wasn't carrying more than 10% or 15% at the most because if the 1st lien holder gets it back, you have to either walk or buy it back yourself...no would like that. I would want to be owed so little that I could walk if I had to.
 

MAIorBust

Thread Starter
Junior Member
Joined
Feb 25, 2007
Professional Status
Certified General Appraiser
State
Texas
Now thats what I was looking for! Thanks. I really like the idea of trying to split up the land. I think we will give selling the house alone a shot and keeping the land. Thanks again.
 

Mark K

Senior Member
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Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
What's the market for smaller tracts, 10-20 acres each, and can the property be split (per local regs) and sold in that fashion? House and 20 acres and 4 20 acre tracts, or the house and 10 acres and the other 90 as one agri tract? Research the local market and find out what the buyers want.

And NO, I would not sell the house on contract. The bare land parcels, maybe, but absolutely not the house. Been there, done it, will never do it again.
 

Dee Dee

Elite Member
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Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Terrel's on the right track.

One of our fellow forumites helped her mom sell off her property by having it split up and auctioned. In the end her mom made a significantly higher profit (like, more than 50% higher) than what it would have sold for in one large parcel with the house.
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
The OP said you have a lot of interest in the property, however it won't sell. :huh:

You said it appraised for 550K and you're asking 450K and no nibbles. Somebody is wrong, very wrong.

Don't know if splitting it in several tracts will help if it's in the "middle of nowhere" but I would explore that route along with coming to grips that Daddy built a one off that nobody wants :flowers:
 

MAIorBust

Thread Starter
Junior Member
Joined
Feb 25, 2007
Professional Status
Certified General Appraiser
State
Texas
The two biggest problems are the location (30 mins from city) and the fact that in my market 150k gets you a REALLY nice house(overbuilt in our area). Dad is great at many things....R.E. is def. not one of them! We talked about it today, and decided that selling the house alone and keeping the land would be his best option at this time. Thanks for the ideas guys....
 
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