How do you price property today?

I know of two separate sellers, each of whom is marketing a tract of more than 5,000 acres. Each is priced at about $1,500/A. I think fair value for each is in the $700/A range. That’s not a low-ball number. It’s how I pencil out the assets. And maybe I’m being generous.

The stock market is down 40 percent over the year. It continues to decline. The Dow is down about 2,250 points in seven days. The economy is stronger than this paniced market, but is being tugged down by weakening sales, tight credit and a dozen other factors.

The stock market appears to have decided that the $700 billion in federal money will not put a floor under the fall if it’s used as Secretary Paulson testified he plans to use it. Op-Ed articles in the WSJ and other papers have presented alternatives that deal directly with stopping foreclosures, refinancing mortgages, capitalizing banks, etc. I’ve yet to see a proposal for ending credit-default swaps and unfathomable derivatives, which together, as much as anything else, set us up for this mess.

My own uneducated sense of this is that we will work our way into a recovery, one property at a time, with one buyer and one seller finding a price. If sellers don’t budge from inflated valuations, all the liquidity in the world won’t get buyers to buy.

Everyone is waiting for the pain to stop.  I don’t think we reverse this trend without pain being spread widely and deeply. A price set six months ago won’t work today. Each seller has to fight this fight with himself and his lender. It will be ugly and hurt a lot. A property that is overpriced by 100 percent needs to come down 50 percent.

Brokers are encouraging their clients to drop 10 or 15 percent. Recent WSJ ads are coming down by 25 to 30 percent or more. I’m interested in what brokers on both the seller and buyer sides think about this predicament, which has ensnared us all.

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Curtis Seltzer is a land consultant who works with buyers and investors. He is author of How To Be a DIRT-SMART Buyer of Country Property at www.curtis-seltzer.com where his columns are posted. He is also a contributor at www.landthink.com.

Are land brokers being scammed by scummy buyers?

A land broker in Alabama contacted me recently about a very clever scam, designed by a phony buyer to tease out the broker’s banking information.

Have other land brokers been approached by buyers who say they want to wire money to the broker and need the broker’s account information?

If this is a growing concern, I’d like to do a column on it.

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Curtis Seltzer is a land consultant who works with buyers and investors. He is author of How To Be a DIRT-SMART Buyer of Country Property at www.curtis-seltzer.com where his columns are posted. He is also a contributor at www.landthink.com.

Is timberland overpriced? If so, what to do?

It’s a rainy, miserable Saturday afternoon. I’ve just spent several hours looking through some 1,200 timberland listings on www.landflip.com.  I’ve also scanned other Internet sites.  Dozens and dozens — hundreds, even — of 100- to 300-acre properties are listed in the Southeast and to a lesser extent in the North. They are priced mainly in the $2,000- to $4,000/A range.

I’m looking for timberland investments. These tracts don’t pencil out at these prices.

If all of these properties are moving lickety-split from seller to buyer in a couple of months, then keep the prices where they are. If, however, they are not moving, then the current economic situation (layoffs, high fuel prices, credit tightness, uncertainty, loss in stock value, etc.) suggests (loudly, not quietly) that sellers reduce their prices and offer some seller financing. Read more »

Conservation easement and property taxes

Conservation easements (CEs) provide a break for their donors on local, state, federal and estate taxes.

What has been the experience of LandThink visitors with reductions (or lack thereof) in local property tax once a CE has been put in place?

CEs donate one or more rights in a property to a land trust or similar organization. This is done to conserve some environmental value–keeping land open or in agriculture, limiting or prohibiting development, protect habitat, etc. The donated right has a monetary value.

Are land owners with CEs getting their properties reduced in subsequent tax assessments to reflect the donation? Are there standard formulas? Are donors being treated fairly?

If your land is enrolled in agricultural land use or in a managed timberland program (both of which reduce property taxes), are CE lands getting an additional local property tax break?

What are your thoughts?

Oil and gas leases

A boom is happening in places with oil and gas reserves. Deep “plays” are now economically feasible where they weren’t two years ago when oil was a lot cheaper.

In West Virginia, Pennsylvania and New York, gas in the Marcellus shale is in play. Acreage is being leased and drilled; pipelines are planned. Similar frenzies are occurring in Texas, Wyoming, South Dakota, Arkansas and other locales.

Landowners need to educate themselves about the language in these leases and what their lease rights are worth.

The West Virginia Surface Owners’ Rights Organization (www.wvsoro.org) is working with the West Virginia Farm Bureau to educate property owners. These folks are not against leasing and o&g production; they’re for fair compensation. The WVSORO website links to all state o&g laws as well as posts regarding the dollar amount of current offers for acreage and royalties. Everything is negotiable. Lawyers working for landowners are listed, along with other resources.

I’m interested in hearing what’s going on around the country, from the landowners’ perspective.

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Curtis Seltzer is a land consultant who works with buyers and investors. He is author of How To Be a DIRT-SMART Buyer of Country Property at www.curtis-seltzer.com where his columns are posted. He is also a contributor at www.landthink.com.