How do we determine a property's value and clearance?
December 29, 2014 7:27 AM Subscribe
My friend is inheriting a house and some land in Connecticut. There was some confusion about property lines and some chatter re: possible "restrictions" on developing the land, so they got a new property survey. There is a note on it "Rights, restrictions, encumbrances, covenants, easements, etc., as per the record may appear"
Question- 1. How do they know the property is clear (if that is the right word)?
2. How to determine the current market valuation? Start w/ an Appraisal and Home Inspection?
3. Is the survey deductible?
Any other thoughts are welcome.
1. You need a title search. Depending on custom in your area, you either hire a real estate attorney, or contact a title company. Most people get title searches when buying a property new to them, so if your friend asks around, you'll get some recommendations from folks. The other answer by joyceanmachine sums it up nicely. You're not just looking at that specific parcel; you'd want to have vision to the immediate area to see what the land is used for now and if any plans have materialized for the next 5, 10, 25 years.
2. Current market valuation as related to what? Selling, renting, leasing the land out to farm, what? You'd want to get a professional appraisal done of the property and go from there. In residential appraisals, where I am, competitive market conditions come into play, but it may be different in your area. So much of this is time- and location-sensitive. You really need an experienced appraiser to do this work. Do not rely on a real estate agent's CMA (competitive market analysis); agents are not appraisers. And check to see if in your state an appraiser needs to be licensed--read up on the minimum licensing and/or certifications needed to perform appraisals before you hire an appraiser. In my area, for a typical suburban residential appraisal, cash price is about $350-$500.
3. No clue if a survey is deductible. Again, what's the use? If you're planning to turn this into a commercial venture, or to rent it out, maybe. Check with a tax advisor on this.
I'm not a lawyer, but I am very familiar with real estate issues as a licensed salesperson, but I'm not your salesperson.
Best of luck!
posted by FergieBelle at 7:44 AM on December 29, 2014 [1 favorite]
2. Current market valuation as related to what? Selling, renting, leasing the land out to farm, what? You'd want to get a professional appraisal done of the property and go from there. In residential appraisals, where I am, competitive market conditions come into play, but it may be different in your area. So much of this is time- and location-sensitive. You really need an experienced appraiser to do this work. Do not rely on a real estate agent's CMA (competitive market analysis); agents are not appraisers. And check to see if in your state an appraiser needs to be licensed--read up on the minimum licensing and/or certifications needed to perform appraisals before you hire an appraiser. In my area, for a typical suburban residential appraisal, cash price is about $350-$500.
3. No clue if a survey is deductible. Again, what's the use? If you're planning to turn this into a commercial venture, or to rent it out, maybe. Check with a tax advisor on this.
I'm not a lawyer, but I am very familiar with real estate issues as a licensed salesperson, but I'm not your salesperson.
Best of luck!
posted by FergieBelle at 7:44 AM on December 29, 2014 [1 favorite]
If your friends just wants to get a ballpark sense of the value of the home but is planning to keep it, you could probably get away with having a realtor do a CMA or broker price opinion (BPO). If you're looking to sell the property, particularly if you think the land might be developable, then it's definitely worth having a professional appraisal.
posted by Diablevert at 8:31 AM on December 29, 2014
posted by Diablevert at 8:31 AM on December 29, 2014
In that case you definitely need to find a local appraiser who's familiar with the area. I'd find a real estate attorney first to do the title search; they may be able to recommend somebody. Land sales occur more rarely than home sales, and their value is is highly dependant on what use the property can be put to --- you may have x amount of acres, but how much if it is buildable? Are there wetlands, endangered species subject to conservation regulations? What's the zoning like in the area, and how many parcels could the land be divided into? Is there a lot of demand for new construction, or is the market sluggish? Real estate in CT in general has lagged behind the rest of the country in terms of recovering from the housing crash --- prices are still like 15% or 20% below their mid-2000s peak, IIRC. But land is pricy in Connecticut, and if he has a big chunk of it in a desirable area like parts of Fairfield county or the shore towns it could be worth a pretty penny. You need someone who's well familiar with all the local regs and prior sales in that area in order to get a good estimate for something like this . It's worth the couple hundred bucks.
posted by Diablevert at 10:02 AM on December 29, 2014 [2 favorites]
posted by Diablevert at 10:02 AM on December 29, 2014 [2 favorites]
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I am a lawyer, but not your lawyer or your friend's lawyer. In order to figure out what restrictions there are on the land, as well as interpret the note on the survey, your friend should hire a local real estate lawyer who will help your friend order a search that lists the rights, restrictions, encumbrances, covenants, easements and other documents of record, as well as help your friend interpret it and advise your friend on zoning/other sources of restrictions on development.
posted by joyceanmachine at 7:30 AM on December 29, 2014 [4 favorites]