Wednesday, August 29, 2007

Land Swap Update

Made a counter-offer for the five acres. J believes he shouldn't swap the whole enchilada, and the investor would be getting quite a lot. The hard part in this market is the valuation...if you trade for the land's currently competitive price, it's a different number than its actual worth, since nothing much around here is actually moving. We've found several 5 and above acre pieces for considerably less than what this man is asking, which is top dollar for his area. The only reason we couldn't pursue further with those lots is because the owners had notes on them that required payoffs, or they simply wanted a cash deal rather than a trade.

This most recent investor is a fellow with lots of land, since years ago he took larger acreages and started splitting them up for resale. He makes his money from offering zero down owner financing, and if the buyers at any point can't make the note (no matter how much of it they've paid off to him), they essentially just give him back the property.

A week ago, he had no properties available. Seven days later, he has seven that his buyers handed him back. What that's telling me is that no matter what he believes about the actual monetary worth of the land he's selling, people aren't being able to have it and afford it, too. It reverts back to him and all he has to do is pay the taxes till the next person who comes along decides they want to try the zero down deal, and so it goes.

Since we're having to consider what J's vacant residential lots would be worth not only on today's market, but also an average of its actual worth over the longer term (prices spiked and dropped several times in the past years), he's not willing to take the lowest valuation if the other trader isnt using the same valuation for the acreage. This man is valuing it at what he could get in a year or two, if he left it on the market long enough...because he can afford to....his money comes from the interest on all his present buyers' notes they owe him. But he's wanting to trade at OUR lots' least possible MLS comparison price. He comes out ahead, which is fine either way by us, as long as we're not doing something stupid. So far, J thinks that lowballing it isnt wise, and that his two waterfront lots have a lasting value despite the market vagaries.

And so we keep researching (well, mainly he does :)), and wait to see what the next day brings.

Like today.

I have my final exam today. Must run!

1 comment:

farm mom said...

Wow! Well you've definately been catching up on the posts, huh?! :) It's nice to read about the progress after your absence. I hope your final goes well, and good luck with the land swap!