I’d like to know how much is typically paid for Rights of First Refusal? Or is there anything typical about them? The particular situation I’m interested in involves adjoining properties, where if Property Owner A were to sell to a third party, Property Owner B could be at risk that the new owner of “A” would make changes to the property (fences, tree removal, etc) that would significantly decrease B’s quiet enjoyment of his property.
Any Real Estate Dopers out there who have dealt in such transactions?
I assume you are talking about a “right of first refusal” to buy 'A"s property. For the scenario you have described there is no typical metric other than a determination between the parties of how much this right is worth to B.
I’m no help on the valuation question, but I’d recommend running a ROFR by a real estate attorney to make sure it’s enforceable in the proper jurisdiction so that the buyer doesn’t pay for bubkis.
rather than the cost of the option, I would be more concerned about determining the “fair price” of the eventual purchase were it to go ahead. After all, as a seller if I already know I have an interested buyer I may try to take advantage of the situation and mark it at a higher price than I otherwise would.
Balancing this of course, (in jurisdictions where it can make a difference) there would be no need for a real estate agent and the resulting fees if there is an option to purchase in effect. (this can come to a substanial amount of money - up to 5% of the purchase price).
I would be inclined to think that for a residential property between agreeable neighbours the option should be priced at a symbolic level more than anything else - maybe $1k plus legal fees or similiar.