A potential seller of a large land parcel here in the Greater Asheville area contacted me this past week. She spoke of her husband's untimely death, and the fact that , shortly thereafter, she had agreed to a two-year listing contract. Thus began a number of tough real estate conversations with her. These conversations are the subject of this series.
This conversation centers around -Fair Market Value
BACKGROUND: The widow, who lives out-of-state, now is alone in ownership of a parcel of land in the Greater Asheville North Carolina area. Referred to me as a Land Specialist, she had called to talk about this high-end acreage.
She does not want to part with the Land as it was her husband's "favorite place on Earth.." But her finances after the medical expenses from his illness made it a necessity.
In our first conversation, I explained that we needed to consider certain things about the property in order provide an honest report.
Even in the Asheville mountains, one of the most attractive areas of the country for second and vacation homes and for Land , a price reduction and the possibility of lost property value had to be addressed, as did the urgency of the sale. This would affect the price.
We would need to agree on pricing the Land "RIGHT"- right from the start or lose the window of opportunity. The first step in the process was (and is) to determine the Fair Market Value (FMV). To determine FMV, I began by focusing on COMPS research. My notes follow:
COMPS RESEARCH: (This took a couple of hours to compile and write up ...I made an appointment for a video conference with the widow set to discuss the email as per the information below.)
1. [ link provided] Here is a link to information about a property that sold in the area. Please be aware that this is not an "exact comp" as there are no comparable properties in the area, however, we can extrapolate information from it. The property is just about 6 AC . It sold for $160,000...To get a reasonable estimate, we need to add and subtract features/benefits of this parcel as compared to your 30 AC +/- parcel...Here is the description of that property: [there followed the information described.]
Computation:$26,000 per acre
2. HERE is a HOME [link provided] in the Asheville market on a large parcel of land that sold this past month in [the same eco-community] I will call the Listing Agent on this property to talk about the sale and report back to you on my discovery and recommendations. Again -to get a reasonable estimate, we need to add and subtract features/benefits of this home, find the value per sq ft. and then find the value of the land... Here is the description of that property: [description provided.] Computation : Acreage is priced at about $15,000 per acre.
3. HERE is another property:: [link and description provided]Computation: Acreage is priced at about $20,000 per acre.
PRICING ESTIMATE FOR SALE: $450,000
At this point I continued showing examples of how I computed the FMV, so that in our video conference, the potential seller-client would understand how we arrived at the figures. I would have to have a tough real estate e conversation about how her need to expedite the sale of the land would affect this.
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