Neighbour wants to buy the land that they encroached

[Frank Jiang]

Good that they didn't play the card of adverse possession. Hopefully it will not come up.

Basically it is an encroachment. My neighbour's fence/short wall was built on our lot and it formed their backyard. The area is about 500 sqft. They have a really small backyard after expanding the house last year. The new house probably worth $2.5M. They offer to buy additional 1000-1500 sqft land from us. We have 30K sqft lot on hillside and the encroachment is at the rare part of the lot and not really usable for us. But it is all flat and critical to the value of their new house.

How should I price the land? Does anyone have suggestion on things to watch out for when doing the adjustment of the boundary? I am in Los Angeles County, CA.

[Mark Reynolds]

Originally posted by @Frank Jiang:

Thank you all for the response. The neighbour is trying to be really nice and offer to pay all the fees and handle the process. The extra backyard should add at least 50K - 100K value to their property. Well, he might think differently.

Now the question is how should I find out the value of the land. Would a experience local realtor know how to appraise it? I am thinking of hire two or three realtors give me a detailed appraisal and average them to get a fair value. I am not an realtor, don't know if they have some killing weapon to come up with the value of a land in my situation.

Or it's more of the perceived value of the neighbour. And it's a selected piece of land that can add most value to their property

The opinion of appraisers or realtors is irrelevant. Bottom line-- except to the encroaching neighbor the property has no value. Trying to value it based on your perception of how much value it adds to his property is pointless (unless you have the ability to read his mind).

Lets turn this on its head. How much does it hurt the value of your land to give this parcel up? As you previously described, the loss of value on your parcel is minimal so why should he pay more than what it costs you?

If you want to talk about "what the land is worth" in the abstract the answer is "zero"

I have no idea why people have a hard time understanding this (you are not alone) THERE IS NO VALUE IN REAL ESTATE except as some user creates that value by being willing to pay for it. Given the state of affairs the opinion of experts (appraisers, assessors, accountants, lawyers, etc.) is useless-- there is only one expert, the one guy for whom it has any value at all. GO HAVE A CONVERSATION with that guy-- it is in his best interest to find a number you can both work with.

The problem is that Americans know nothing about how to negotiate. We've had fixed prices in the stores for so long that we think everything has a fixed price and negotiation is trying to get a bargain on/off of that price. Negotiation is about finding a place where both sides can be happy-- maybe even where both sides are better off than they started.

Is there anything you would like the neighbor to do differently? Plan shrubs around his AC equipment? Let you walk across his property to get to the mailbox? Cut down the tree that blocks you view of the bay? Stop thinking of price solely in terms of dollars.