So, I have a two-acre lot made up of a division of two single acre lots. The sum contains a full acre front with the back acre being taken up for the most part by a pond. The land is cleared and ready for whatever the buyer might want to do with it. It is zoned residential
A recent appraisal pegs the value at 25,000.00 for each of the two acres (which are virtually identical) bringing the total appraised value at 50,000.00. This is not in a rural area. Although I cannot see them for the trees, I could hit the local mall, a Circuit City, and a Home Depot with an air rifle.
What would you guess is a reasonable asking prince for the land? Is there a difference in the appraised value and a reasonable asking price in a situation like this, or is it customary to simply sell it for what it appraises at?
You are best off asking several real estate agents. They are in the best position to understnand the potential price for your property. If they ask you what you think its worth, just double the “appraised value”. I suspect that your “appraised value” might very well be your “assessed value” provided by your local municipality without regard for future potential. If you give them a high estimate of what you think the property is worth they are more likely to give you their best answer to adjust you to reality. If you give them a low estimate, they could be influenced by the possibility of a quick turnover and thus a quick buck.
Appraised value gives you a starting point but you need to check with a real estate agent. You see, it all depends on how the market is in your area. The appraisal is supposed to take this sort of thing into account, but in many areas of the country now it is such a sellers market that you can get much more than that. Also, it is often common for the asking price to be significantly lower than what you want for it with the expectation that people will overbid. The real estate market is very odd and changes with locality so call a pro.
Free market. It’s worth what ever you can get, appraisal be damned. That said, never start out asking or excepting offers less than the appraisal value and don’t budge to much from the appraised value for at least 6 months. It’s also hard to ask more than the appraised value because you don’t have anything to support your asking price if you do. Unless you have time and are looking for a sucker that is. . .
Man, I wish I lived in an area where the concept of land being on the market for 6 months existed. I am on a penninsula which is just about completely developed. Land and houses go in a max of two days, often two hours. Makes it damn hard to find a first home.
I do not know if it is what Euthanasianist obtained, but in many areas, experienced realtors or assessors will set up in business with the specialty of giving accurate real estate appraisals, evaluating the property and comparing it to roughly equivalent parcels that have recently sold, with the comparison taking into account the additional assets or liabilities of the subject parcel. This will produce a single value or a set of values based on hypothetical considerations (“if the County does indeed build the proposed connector highway and rezoning to commercial can be obtained, the property’s value would increase to an estimated…”)
Such a valuation is acceptable in a wide range of legal contexts where it is necessary to set a fair market value, for example in eminent domain proceedings or settlement of estates.
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My suggestion would be to put an asking price of about 15-20% higher than the appraisal on the property. The fact that the two acres are appraised at the same value causes me to believe that the figure is not a good appraisal, unless coincidentally the frontage of the front lot and the pond on the back lot happened to bring the value to the same figure. (Do you have to give an access easement for the back lot across the front lot when they are separately sold? Questions worth asking.) In this case, I’d ask $59,900 or something similar for the two parcels, then be prepared to negotiate down to the appraised value or marginally below if necessary. I’d also ask a realtor you trust to get a second-opinion appraisal, unless the one you have gives distinct reasons for the two parcels each being worth $25,000.
(I am not a professional anything except a professional assistant to a guy who has done substantial real estate investments, so don’t take this as anything like a professional opinion, just useful advice from someone who has seen this sort of thing done.)