Posted: 10/22/2015 5:16:34 PM EDT
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I'm selling a piece of property that appraises at 1/4 of the sale price because there are no similar properties in the area for the bank to compare it to. It basically assesses as acreage. The sale price price is based on certain easements and zoning grandfathering. Because there are no comps in the area the bank will only loan the buyer the appraised value despite his outstanding credit/income/etc.
The local banks suggested owner financing but I am not willing to do that for a variety of reasons. How else could the buyer get financed for the full amount? Any suggestions are welcome. Thanks. |
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Especially if they improve upon the property, say with a structure and you hold the note to the land. Steady income on your part to keep taxes down. Quoted:
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You know owner financing " could" work out for you. Especially if they improve upon the property, say with a structure and you hold the note to the land. Steady income on your part to keep taxes down. And if they miss a payment or two you can take it back and start over. |
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And if they miss a payment or two you can take it back and start over. Quoted:
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You know owner financing " could" work out for you. Especially if they improve upon the property, say with a structure and you hold the note to the land. Steady income on your part to keep taxes down. And if they miss a payment or two you can take it back and start over.  hehe !
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I'm selling a piece of property that appraises at 1/4 of the sale price because there are no similar properties in the area for the bank to compare it to. It basically assesses as acreage. The sale price price is based on certain easements and zoning grandfathering. Because there are no comps in the area the bank will only loan the buyer the appraised value despite his outstanding credit/income/etc. The local banks suggested owner financing but I am not willing to do that for a variety of reasons. How else could the buyer get financed for the full amount? Any suggestions are welcome. Thanks. Property is only worth what someone will pay for it. That's the saying. What they leave out is one more part, "...in cash." Without cash your property is only worth what lending institutions will pay for it. If normal institutions won't back it, you'll have to do it yourself. Alternatively, have the guy look into farm credit or other rural land lenders. The rates will be percentages higher than a normal mortgage, but that's because the risk is higher. |
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You could potentially challenge the appraisal but I doubt you're going to see a value that's 4X the current appraisal. It is not unusual for a bank to refuse to loan more than the appraised value. The buyer is probably going to have to either come up with cash or put up some other piece of property as collateral. I am impressed that you found a buyer willing to pay 4X the appraised value though - good work! |
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You could potentially challenge the appraisal but I doubt you're going to see a value that's 4X the current appraisal. It is not unusual for a bank to refuse to loan more than the appraised value. The buyer is probably going to have to either come up with cash or put up some other piece of property as collateral. I am impressed that you found a sucker willing to pay 4X the appraised value though - good work! Fixed it for ya. |
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It's a private motocross track with lots of earthwork ($$$) and zoning/grandfathering that permanently prevents it from being shut down for stuff like noise complaints. It appraises as untouched acreage. Do you run it as a business? If so, it should probably be sold and appraised as a business with the land being part of the transaction. If not, then you basically have dirt, some of which is in a pattern with some small hills on it. Either way, if you/they are placing value on future profits, then they need to get a business loan. ETA.....If you do decide to seller finance it, finance the whole thing. Because If they do a bank note, and you finance the balance, your note will be subordinate to the bank note. Since we've already established that you are selling it for more than it's worth, you'll get nothing if they fail to perform and the bank liquidates the land. If you do decide to finance the balance, then you had better get something else as collateral. |
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Are you using the tax rolls for value? Talk to a few "home town" banks in your area and find out which appraisers they use then go and speak to them and see what they say about improvements, etc. I was using the tax appraisal. Good call on getting it reappraised. |
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I was using the tax appraisal. Good call on getting it reappraised. Quoted:
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Are you using the tax rolls for value? Talk to a few "home town" banks in your area and find out which appraisers they use then go and speak to them and see what they say about improvements, etc. I was using the tax appraisal. Good call on getting it reappraised. Typically, lenders can only use appraisals that they order. So, while another appraiser might offer a different opinion, when it comes to financing, it won't be worth less than the paper it's printed on. Also, look up the term Highest and Best Use. Ask the lender what the highest and best use was on the last appraisal. Argue that since it's legally permissible to have a motocross track there, and it's already there, the highest and best use might actually be a motocross track. But again, that might be hard to argue if it was never ran as a business. But that's probably the best way to contest the last appraisal. |
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Typically, lenders can only use appraisals that they order. So, while another appraiser might offer a different opinion, when it comes to financing, it won't be worth less than the paper it's printed on. Also, look up the term Highest and Best Use. Ask the lender what the highest and best use was on the last appraisal. Argue that since it's legally permissible to have a motocross track there, and it's already there, the highest and best use might actually be a motocross track. But again, that might be hard to argue if it was never ran as a business. But that's probably the best way to contest the last appraisal. Quoted:
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Are you using the tax rolls for value? Talk to a few "home town" banks in your area and find out which appraisers they use then go and speak to them and see what they say about improvements, etc. I was using the tax appraisal. Good call on getting it reappraised. Typically, lenders can only use appraisals that they order. So, while another appraiser might offer a different opinion, when it comes to financing, it won't be worth less than the paper it's printed on. Also, look up the term Highest and Best Use. Ask the lender what the highest and best use was on the last appraisal. Argue that since it's legally permissible to have a motocross track there, and it's already there, the highest and best use might actually be a motocross track. But again, that might be hard to argue if it was never ran as a business. But that's probably the best way to contest the last appraisal. It used to be a business until I bought it for personal use. I really appreciate the advice. ETA: I bought it from the original owners for cash and did a ton on rework on the earthworks so there was no appraisal and I've dumped a ton of money into it post purchase. |