How do we sell this lot to the neighbors?
June 6, 2016 9:56 PM Subscribe
We have a small vacant lot with neighbors on either side who would like to buy it. How do we navigate this 100% legally, while also encouraging healthy competition and not being assholes? Also, what steps without a realtor?
Two part question:
ONE: My brother and I share a small property in rural Idaho, left to us years ago by our grandmother. We have kept it for a long time, until either of us had a compelling reason to sell it. The need has arisen and we now badly need the proceeds. The value is roughly $30k. We reached out with identical messages on the same day to both adjoining neighbors. They both want it. They seem to not think much of one another, FWIW. It makes sense to let them duke it out and go with the highest bidder, so to speak. Can we? How does this work? We aren't interested in anything legally sketchy and we don't want to be jerks, but we also need the funds.
TWO: Neither of us lives in the state. A couple years ago, we inquired of local realtors how it would work to have them broker a sale. We got a couple of responses along the lines of the value being "so low it wouldn't be worth the standard commission" to them, but they'd do it for several thousand dollars. Obviously if we line up a buyer ourselves we'd like to forgo the realtor. Can this all happen remotely directly with an Idaho title company? If so, what kind of fees should we expect? What does that process look like? (Any issues around my brother and I living in different places?).
More on the value: We have very little to go on, no real close comparisons in the vicinity. Just the known tax assessed value and an understanding that the county aims for those assessments to be within 10% of market value. So, we added 10% and tossed that number out there as a starting point.
Thanks!
Two part question:
ONE: My brother and I share a small property in rural Idaho, left to us years ago by our grandmother. We have kept it for a long time, until either of us had a compelling reason to sell it. The need has arisen and we now badly need the proceeds. The value is roughly $30k. We reached out with identical messages on the same day to both adjoining neighbors. They both want it. They seem to not think much of one another, FWIW. It makes sense to let them duke it out and go with the highest bidder, so to speak. Can we? How does this work? We aren't interested in anything legally sketchy and we don't want to be jerks, but we also need the funds.
TWO: Neither of us lives in the state. A couple years ago, we inquired of local realtors how it would work to have them broker a sale. We got a couple of responses along the lines of the value being "so low it wouldn't be worth the standard commission" to them, but they'd do it for several thousand dollars. Obviously if we line up a buyer ourselves we'd like to forgo the realtor. Can this all happen remotely directly with an Idaho title company? If so, what kind of fees should we expect? What does that process look like? (Any issues around my brother and I living in different places?).
More on the value: We have very little to go on, no real close comparisons in the vicinity. Just the known tax assessed value and an understanding that the county aims for those assessments to be within 10% of market value. So, we added 10% and tossed that number out there as a starting point.
Thanks!
Could you divide it in half and sell one half to each of the neighbors? That would make everyone happy. And yes, find a local lawyer who handles real estate to do it.
posted by mareli at 5:52 AM on June 7, 2016 [1 favorite]
posted by mareli at 5:52 AM on June 7, 2016 [1 favorite]
Sealed bids, highest gets the property. If the highest bid is not high enough, it goes on public sale. Bids could be lodged with your lawyer/accountant/whatever and opened in his (and the neighbours) presence to ensure transparency.
Subdivision will be expensive, require all three parties to work together as presumably the two halves would be too small to be stand-alone lots and would need to be merged into the adjacent lots. Messy, costly and why would you bother?
posted by GeeEmm at 7:08 AM on June 7, 2016 [1 favorite]
Subdivision will be expensive, require all three parties to work together as presumably the two halves would be too small to be stand-alone lots and would need to be merged into the adjacent lots. Messy, costly and why would you bother?
posted by GeeEmm at 7:08 AM on June 7, 2016 [1 favorite]
To get the highest price one of them is willing to pay, the alternative to sealed bids is to do a "Dutch auction". You set a date for the auction to begin, and tell them that on Day 1, the price is, say, $50,000. On Day 2, it's $49,000; on Day 3, it's $48,000, etc. Set the terms as all cash, no financing, no delays, no inspections, property is sold as-is The first person to submit a signed, legally binding offer (on a form you specify) at the price posted on that day, wins. The auction ends if the price reaches whatever your reserve value is without an offer on the table. Basically this process guarantees that you get the highest amount that someone is willing to pay — they will have to figure out what that is and make their offer, because if they wait for a lower price the other one might jump in. This is easier than going back and forth trying to get each to up the other's bid. (And if you want to hurry things up, just specify hours rather than days.)
You can take it further by advertising the auction and opening it up to anyone else, if you don't think that crosses into being a jerk territory.
posted by beagle at 7:44 AM on June 7, 2016
You can take it further by advertising the auction and opening it up to anyone else, if you don't think that crosses into being a jerk territory.
posted by beagle at 7:44 AM on June 7, 2016
Set the terms as all cash, no financing, no delays, no inspections, property is sold as-is
This sounds very smart. Given that They seem to not think much of one another, you'll want this sale to close as quickly and cleanly as possible so you can take the money and run.
posted by John Borrowman at 8:46 AM on June 7, 2016 [1 favorite]
This sounds very smart. Given that They seem to not think much of one another, you'll want this sale to close as quickly and cleanly as possible so you can take the money and run.
posted by John Borrowman at 8:46 AM on June 7, 2016 [1 favorite]
The sealed bid process is the way to go. The phrase you need is "best and highest". As in:
"We have several interested buyers in this property. Please present a sealed bid to us by Date X, and we will be selling to the highest bidder."
It's done all the time, you aren't being assholes in any way. You don't need to tell them they are bidding against each other. But keep in mind, some buyers will not be interested in participating in a best and highest bidding process, so that might make it easier for you.
posted by raisingsand at 9:26 AM on June 7, 2016 [3 favorites]
"We have several interested buyers in this property. Please present a sealed bid to us by Date X, and we will be selling to the highest bidder."
It's done all the time, you aren't being assholes in any way. You don't need to tell them they are bidding against each other. But keep in mind, some buyers will not be interested in participating in a best and highest bidding process, so that might make it easier for you.
posted by raisingsand at 9:26 AM on June 7, 2016 [3 favorites]
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This is likely to be cheaper and faster than going through a real-estate broker/realtor.
As for the potential buyers/neighbors, I suggest being as transparent as possible. Let them know that you are dealing with both of them, and that you plan to go with the high bid. This is less about not being a jerk, and more about making the buyers comfortable about the process. You want them to feel good about the purchase, so that they proceed quickly and you get your money faster. Any hint of shadiness or double-dealing with only make them more cautious.
posted by Anoplura at 1:11 AM on June 7, 2016 [4 favorites]