I'm preparing myself to negotiate with a landowner. He has paid to do an appraisal. However, it's vacant land, which is very subjective. I know what I'm going to get selling the finished pad, and how much to develop. The land price I can afford is about 1 million below the appraisal. I'm wondering if anyone has encountered that before, and any tips and thoughts on negotiating are welcomed! Thank you!!
Appraisals do not always equate with market value. Also, vacant land is where appraisers often get it wrong, because investors don't buy off of square footage and looking at other comps. They buy based upon a more complex formula of construction costs and end sales.
You're going to have to prepare some serious negotiating techniques. Landowners often had their properties a long time and often are difficult to deal with. Good luck.
My suggestion: Make a detailed case to the seller for why your price is reasonable. Explain to him that you understand that he likely won't accept it at this time, but that should he change his mind, you hope he gets in touch with you.
Follow up every couples months just to check in with him...
In a few months/years, once he sees that there are no other offers, and once he accepts that the appraiser was wrong and you were right, he may give you a call.
Honestly, there's probably not much more you can do right now...
@J Scott good point.. thank you!
Most the lots and land is overpriced. But the sellers have patience. Unless a major housing is coming to the area it sits there. Most owners have the property for a long time or generations. You need to get a bigger view what the planning dept wants to do with the land.