Archive for Friday, February 2, 2007

Pricing a vacant parcel can be hard

February 2, 2007

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Setting the asking price for a vacant lot can be difficult, especially if it's the only one in the neighborhood.

Q; We purchased a vacant lot in a retirement community in another state several years ago and initially planned to build a home there when we quit working in 2008. Now our plans have changed, and we want to sell the lot. The builder has almost completed construction of the entire community, and prices for finished homes have jumped since the project began, but there are no other vacant parcels available to help us set an appropriate asking price for our raw land. How can we find out how much our lot is worth?

A: Establishing the value of vacant land is often difficult, especially if few or no similar parcels in the same area are on the market or have recently sold. This means that setting an appropriate listing price will take some extra work, but the fact that prices of completed homes in the community have soared suggests that the market value of your raw parcel has climbed too.

Your best option now would be to first contact a few real estate agents who sell property in the retirement community and ask them to refer you to an appraiser that they trust. Interview at least a few of those appraisers for their suggestions and make sure that the one you eventually hire to perform a full-blown appraisal has plenty of experience in evaluating raw land.

Next, contact the developer itself to see if it would be interested in purchasing your lot. You obviously don't want the builder to think that you're overly anxious to sell, because doing so could prompt a low-ball offer.

If the homebuilding company is interested in buying your lot, the independent appraisal you ordered could help you to negotiate a higher sales price. But if the builder doesn't want your parcel, the appraisal will at least help you set a listing price that should attract lots of other potential buyers.

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