What price should you offer?

Once a buyer has defined the acreage and boundaries of the seller’s property legally and on the ground and determined the nature of the seller’s ownership, the question of offering price presents itself.

For most buyers, their thoughts on offering price are anchored in the seller’s asking number.

That’s not the right place for the buyer to be most of the time.

I’ve come to the conclusion over the years that most buyers do not need to buy most properties at which they make a purchase run. A buyer may need to buy some property at a particular time, but not necessarily a particular property. A buyer’s level of need always depends on his BATTP—Best Alternative To This Purchase. The better a buyer’s BATTP, the more negotiating power he’s likely to have.

Buyers can choose among properties, particularly in a buyer’s market.

If, as I believe, most property purchases are essentially discretionary and voluntarily from the buyer’s point of view, it follows that buyers should have a formula for determining a property’s right price from their perspective. Read more »

Eight Questions a Buyer Must Answer Before Submitting an Offer

1. Boundaries lines.
Do the boundaries of the seller’s property on the ground follow the boundaries as described in the seller’s deed? They should. A surveyor can plot the deed’s boundary description on a topographical map, which will help you determine in a general sense whether the deed matches the ground reality. If the description does not match what you find on the ground, hire a surveyor to figure out what’s wrong.

2. Physical and legal access
Does the seller have legal and physical access to the property he’s selling? If the seller’s property has frontage on a state-maintained public road, the seller should have direct access. If the seller’s property does not have direct access to a state-maintained public road, the buyer must make sure that the seller is conveying a legal and physical right to cross the property of another(s) to get to that state-maintained road. Read more »

Six People You Should Have on Your Team Before Submitting an Offer

1. Local lawyer.
Every buyer should talk with and retain a local lawyer before buying country property. This individual can provide invaluable knowledge and advice. An out-of-town buyer may want to have his local lawyer negotiate with the local seller. Talk with your lawyer about possible legal issues that might arise with particular properties.

2. CPA.
A CPA can help you figure out the seller’s numbers—his basis, equity, remaining debt, appreciation and after-tax income from your offer. He can help you determine what the property is worth and whether it’s priced fairly in terms of itself and the current market. He can help you set up your purchase in the most tax-advantaged way. If you’re buying a working farm, he can help you analyze the seller’s financial information. Read more »