They had a spot further down the street maybe a mile but fell through this fall....that property was owned by previous exsisting buisness. News and intention of welcoming center was covered by local news so i have information on what they intend to do . Which the intrested party confirmed. Beyond my place they may have some other areas. But knowung the area i cant imagine one that get seen and passed as frequently as mine.

Also i have no intention to get rich. Simply to put a sizable down payment on new comparable home and lowering my mortgage. Uprooting my life ive created here should be worth that. If not, well ill continue living where i intended to for the rest of my time

And to your point bio, ive always dreamt of moving out of state. But a beautiful home here at 70 to 80k is 150 to 250k elsewhere. I dont get how people do it.

First rule of negotiating, is to let them tell you a number. Do NOT throw out a number, but yes have one in mind. If you give them a number and they were thinking of offering more, you lose out.

Also make sure you know what the comps in the neighborhood are for sold houses and sold land now. Not what their appraiser told you. You can find sold property prices online.

Sounds like you are in a good position -- open to moving if the offer makes it attractive enough, but not feeling a need to move if the offer is not sufficient. Perhaps write out all the steps and expense-per-step for moving, then do the math to make sure you're not shortchanging yourself. Include the cost of closing on a new home. Include any cost associated with your time, such as taking vacation days to look for a new home, pack, move, unpack, etc. Do you have a new home in mind -- how quickly could you find a new house? What sort of mortgage payment would moving to a new place leave you with -- compensate yourself if you're left not as comfortable as you are now.

When sitting down with these people, I'd start the money talk, and start high. Maybe even ridiculously high "I'd move out today for a million dollars, ha ha, but honestly feel that $X+$50K is closer to a reasonable number." X being the number that you really want. Anchor their thoughts on the high side. Don't let them start and anchor you on the low side ("Your home is only worth $61K so how about a generous $65K"). It's much easier for you to come down to "X" than for you to talk them from $61K to "X". That's my thought, for what it's worth.

edited to add: but I could be wrong!

I think with what they have planned for your area, your house is someday going to be worth a great deal less than you have in it/owe on it. If you can get 20% over the appraised value, take the money and run as they are going to destroy any value your house has.

But, as others have said, let them make the first offer - NEVER you!

Educate yourself on Capital Gains tax laws. Four years ago we sold a property for 5x what we paid for it. But guess what- Uncle Sam was standing there with his hand out at income tax time. We knew he would be, so we didn't go crazy spending our profit. But it still hurt to write him a check for $$$$$$$.

Consult your tax preparer. Better to know upfront.

You won't owe any capital gains on the sale of your first home, right?

Don't be greedy and give them a number that is twice the value. They will build what they want to build elsewhere if you appear unwilling to negotiate. It's likely to be nearby and hurt your house value. Let them give you a number and go from there.

If multiple neighbors are involved, I'd try to string it out to be one of the last to meet. If he has all but your one house, you may be able to get a higher price so he can finish his deal, depending on how you are located, etc.

If your Capital Gains is less than $250,000, which yours will be, you will not owe any taxes on the profit. As long as you have lived there for at least two years.

This is our house and property they want. Realisticly in our neighborhood the only spot that works for in coming and out going traffic is us. I feel less worried about possibility of them putting it near. Unless they go for the house on opposite side but again they would only have incoming traffic. And theirs is hidden from street slightly. They have good relationship with mdot so they are expecting to put a drive on the outgoing street. Capital gains is something i will have to look into. Thanks again for everyones input!

You won't have any capital gains.

Hope it all works out for you~! Kathy G in MI

What is a "welcoming center"? A gas station/mini mart?

I understand this is your first home and it looks like it has a nice yard from the aerial view, but given the location of the property in the median of a highway I think it will be difficult to sell in the future. Might this be an opportunity to move your family to an equally nice home with a quieter location nearby if they offer you enough of a premium?

Tell them they can make you a written offer if they want to pursue it and you'll review it. Nothing to be gained by meeting with them before that. Cancel the meeting at the steakhouse (you have a family engagement, whatever).

Thats all great advice and will take everything i to consideration. It is a family home. We bought it from my mother and father in law and why we dont mind the location. Also the welcoming center will be a tourism stop for people coming into the city. Its a tourist driven city in summer. Basically city/shop info etc...pure michigan type stuff. And i agree on the dinner, i just keep thinking how awkward it could be and they would love seeing us squirm im sure.

An appraisal based on what the property is worth to an owner - occupant buyer is not an appropriate appraisal for commercial development property. Forget the appraisal, forget the dinner, and get some help from an experienced negotiator who will work for you. And forget about not being greedy. this isn't about greed or kind heartedness or being nice to your mama. This is about hard-headed business and these peoplewill not pay you any more than they have to.You need someone in your corner. I wish you the very best.

They can't go find a similar property - you have the location they really need, so leverage it. They won't lose money on the deal, but they'll happily give you a tiny sliver of what they are willing to pay, if that's what you ask for.

Get an appraisal on your place as COMMERCIAL ... not a residence. You need a hard-nosed commercial realtor doing the negotiating for you.

OR find an available house you would REALLY like to move into (in a reasonable price bracket but it can be an upgrade from your current house), and tell them that if they can make it happen so you retain your current mortgage payments and get that house you'll do a property swap. Basically they would buy the house and resell it to you in the same transaction where they buy your house ... lots of paper changes hands, but usually very little money. And they pay for the repainting and moving :)

My BIL has done this sort of deal, where a house is prime for commercial conversion, but he usually would start with the "we really want this property for ___. We'll swap you into a similar or slightly better house nearby, pay for the move, and make sure your payments don't go up" offer. Because it was the fastest way to get what he needed.

OTOH, if he was retained as the seller's broker, he was great at getting all that and a douceur as well to pay for the inconvenience. 1-5% of the price of the house in cash pays for a lot of stress relief.

I was thinking about your problem after I posted. Don't tell your neighbors about this. It is probable a zoning adjustment may be required. That's the problem of the developer. It's not your problem. Just be sure the check clears the bank. Don't get caught up in a zoning battle and don't lend your name to it.

When some of your neighbors discover development on their street or in their back yard, it can turn nasty really quickly. If the deal were not to go through, that nastiness could last for many years. Greed, envy and fear will all factor into your neighbor's behavior.

It is also possible the developer needs additional lots for his project. Best to keep you mouth shut and discuss this with no one who isn't in a need to know position.

You need professional help. Get it.

With all due respect to the other posters, I would go to the dinner and just have a conversation with them. Hear them out and see what they have to say. Don't talk too much just listen and ask questions. I think it is a bit early to start hiring attorneys and commercial appraisers, you don't have an offer to evaluate.

I have negotiated a lot of commercial deals and this one just doesn't have the ring of spectacular to me. My gut on this is that they don't have a lot of money to get the deal done and they are going to pitch you something. I would never take you out to dinner to discuss the offer and, honestly, it is a stupid idea. There is no downside for you, and there is a huge downside for them.

In a typical commercial real estate deal, when buying property from a homeowner or small company, an attorney sends a letter with an offer amount that expires in a relatively short time. Never let the attorney reveal the client or the plans for the property. If asked he should say something along the lines of, "I can't tell you what he has planned, he just contacted me to make an offer." You would never let the homeowner name a price because he is going to start thinking he hit the lottery, plus the initial offer sets the bar for negotiations. Even the homeowner's counter will consider the original offer, he will ask for a percentage more.

The way they are doing this, doesn't say to me that they are trying to take advantage of you. I just get a message that they aren't very good at this. Therefore they haven't done it a lot. Certainly, don't hire anyone until you have an offer. They may come back with a $65,000 offer after you spend thousands getting professional help.

ETA: Keep in mind this is about making a good deal for yourself and not about figuring out how much they will pay. Probably 75% of the deals that I have walked away from called me up a couple of months later to see if I was still interested and were crushed when I was not. Think of an amount of money that makes the trouble and expense of moving worthwhile, everything above that amount is icing on the cake.

Why couldn't they be able to find another location, lazy_gardens? The OP's property wasn't even their first choice, since a later post reveals 'They had a spot further down the street maybe a mile but fell through this fall....'.

My thoughts:

-- I wouldn't go to the dinner, certainly not without a real estate attorney. No matter what it feels like, these developers are selling you on an idea, not just buying your property. They want your buy-in to their concept, and if you get too excited about it, you could lose in negotiations. These sorts of meetings can be a lot like somebody trying to sell you a time share. Admit the truth- they're better at it than you.

--- Consider the possibility that if you hold out too long (or for too much) you could be stuck living in a residential property in the middle of a busy district/road- one that is now zoned commercial. That could bring the possibility of devaluing your property, since few want to live in a residence of this sort. Or waiting for another offer from the developer, although don't expect too much. Now they totally have you over a barrel.

--- Remember that these developers have dealt with hundreds, maybe even thousands of property owners just like you. Respond to nothing that isn't in writing, in accepted offer form according to the laws of your state/county. And don't respond, in kind, with anything that isn't cleared by your real estate attorney- also in writing.

Bringing in attorneys is going to cost $$ billed by the incremental hour not as a percentage of the deal's value. Transaction costs may be the difference between staying and moving to a similar house in a quieter, more kid friendly location if OP and family agree that's what they want to do so I wouldn't do it until things get serious (e.g. you have an initial, written offer from the developer). My guess is the developer won't want to make an initial offer, and once they find out an attorney is involved they'll go look for a more "cooperative" owner. Also not clear OP's wife and in laws will be OK handing their family home over to a developer to raze or convert into commercial use?

Or? Once they find out an attorney is advising, they stop asking him to dinner and start putting things in writing. The OP admits to being a bit "green" with negotiations- even with things that should be a given, like cap gains taxes etc. No big deal, and a few hours of a RE attorney's time won't kill, In fact, if it's a reputable one, it will help the OP to avoid any confusion, because of the clarity he/she can provide from the outset.

Remember that these developers have dealt with hundreds, maybe even thousands of property owners just like you.

They have not. I mean ABSOLUTELY HAVE NOT! Rule number one in commercial real estate - never tell the owner the plans. This is not a big secret, everyone knows this. EVERY attorney knows this. When the owner knows the plans then they stop thinking how much the deal is worth to them and start thinking how much the deal is worth to you. Think how different the advice of this thread would be if it were just someone searching for a new home rather than a commercial property. I have even had companies organize an LLC in order to keep owners from finding out who really wanted the property. ABC property management, (actually my favorite is ABC Land and Cattle Company) would like to purchase your home as a a property for lease. ABC happens to be owned entirely by an oil company but why should that matter? If the deal is good for the owner it is good for the owner.

I wouldn't go to the dinner, certainly not without a real estate attorney.

This is the absolute worst thing to do. Having done this many times I can tell you that when the owner gets an attorney involved early I get happy. It means I can get the property cheaper. The worst thing for an experienced developer is a deal that the seller isn't invested in, and the best thing is a deal that the seller is too invested in. Seriously, if you bring an attorney to an early meeting I am going to run your attorney bill through the roof. If I can get that attorney bill up to 5 or 10k then you almost have to take any deal.

Respond to nothing that isn't in writing, in accepted offer form according to the laws of your state/county. And don't respond, in kind, with anything that isn't cleared by your real estate attorney- also in writing.

I am not sure the point of this. Contracts for real property must be in writing to be valid. So respond to whatever the heck you want and maybe ask for assistance before you put anything in writing. The time to get professional help is when you have a good offer in writing. There is nothing wrong with you indicating to them what amount will have you seek professional help and what amount isn't worth your time.

There is nothing wrong with going to a dinner and saying, "moving is a pain, as is looking for a new home and going through the expense and trouble of getting a loan. It is not something I am going to do for a few thousand dollars. If you want to come with a serious offer then I will be happy to consider it."

Probably 2/3 of these deals fall through and the owner is left with all kinds of attorney and appraisal fees for nothing.

bry911- You and I will just have to disagree. Not sure what market you're in, but I deal with developers often, and every single one of them have dealt with hundreds to thousands of homeowners, to get what they want. Maybe you play in a small pool, but mine is a very big sea.

Not sure what market you're in, but I deal with developers often, and every single one of them have dealt with hundreds to thousands of homeowners, to get what they want. Maybe you play in a small pool, but mine is a very big sea.

What you are saying doesn't even make sense, and you disqualify your own appeal to authority. Every developer had to have a first job and then a second job. Anyone can call themselves a developer, there is nothing here to indicate that they are experienced and a lot to indicate that they are not. I know farmers turned developers who do exactly one project and then stop.

Any reputable attorney would tell the OP the same thing I am. Hear them out and when you have an offer then bring it in. For a $61,000 home you don't run out and get an attorney without an offer. Scale matters and you don't treat $90,000 deals like they are $900,000 deals.

bry911- honest question: Are you seriously advising the OP to go without professional advice, given the scenario? Perhaps you are a newbie...

If you are a property owner, just a normal person, and a developer wants to take you to dinner to discuss possible purchase of your home using their appraisal which is based on owner-occupant residence, then you must treat the situation very carefully, very soberly, and you must get good advice. Denigrating this posters situation by scoffingly referring to a "$61,000 transaction" is not helpful and I don't really think it's even nice. This sale could make a great deal of difference in original posters financial situation.

Skip the dinner, hire a commercial RE agent, preferably at a discount since the steps of marketing and finding a buyer is already done. This agent can tell you what the fair market value is for your property. W/O this knowledge, you will either overvalue the property and scare off the buyers or you will leave money on the table. An attorney will not be able to tell you this info.

Tell the developers you are open to entertain offers, and to present an offer in writing to your agent w/in a reasonable amount of time.

Fairly simple process.

Wow - after looking at that aerial picture of you home ... all I can say is that it's a horrible location (not to be unkind). There are several reasons to sell: I don't see the home appreciating with a location like that, and selling it now is a lot easier than later (due to the location). You need someone - a real estate lawyer - to interface with the corporation that wants to but your home.

Still trying to get my head around this welcoming center and what the developers motivations are beyond promoting tourism? That's usually a town tourism board or chamber of commerce not developers. Ah, maybe the welcoming center will have some brochures about tourism to lure people in but will also have real estate agents selling the developer's projects to visitors? That makes the location more valuable.

Perhaps you are a newbie...

I am a licensed CPA, I have a law degree, I am Certified in Business Valuation and as a Master Business Appraiser. I worked in the consulting division of a big 4 accounting firm doing fixed asset acquisition. I ran cash flow analysis and NPV analysis on property purchases. I am the guy that corporations and franchises send to find profitable new locations. In addition, I am a landlord and part time developer who has owned several properties.

honest question: Are you seriously advising the OP to go without professional advice, given the scenario?

Yes and no. Given the current scenario - there is no need for professional advice, because there is no current scenario. He doesn't have a serious offer and from the communications he has had with them he may not even get one. When he has a written offer it will be time to get help. Hiring professional advice at this stage is like hiring an OBGYN to deliver a child before having sex. It might help a little but in the end it will probably cost more than it is worth.

Denigrating this posters situation by scoffingly referring to a "$61,000 transaction"

I don't know who you think did this but I certainly didn't. Scale does matter. I still have a consulting firm, and I mostly work for utility companies. I am not getting on a plane for less than $15,000. When you are looking at a 5% bump on a $900,000 offer then spending the $15,000 might be a good investment on the other hand when the transaction starts at $75,000 it doesn't make any sense.

My PROFESSIONAL take on this.

The developers - You are building a Welcoming center? Where is your cash flow? Off the top of my head this sounds like a bad idea. You would need net after tax cash inflows of $45,156 for ten years to get a positive net present value with even a 12.5% required rate. Can you make enough money to put more than $45,000 cash in the bank every year from a welcoming center?

If you can, offer the owner $85,000 he will take it. If he says no, give him two months before you try again. If he is willing to talk about selling he will eventually take $85,000. If you really want to try to steal it, try $75,000 but is $10,000 really worth the trouble? If time is a factor, bump it up to $100,000 - getting to six figures will probably get the deal done. Is condemnation an option?

The owner - Go to dinner and get a free meal. Let them pitch their idea, just be smart enough to say no. I mean what are you going to give away? If they are going to try to screw you over at dinner the best thing to disabuse them of that idea is to simply refuse to make an offer and tell them once you have an offer you will get it evaluated. Other than that, just enjoy the lobster.

The answer to questions at dinner (1) "I will consider it and get back with you," (2) "If you want to put that in writing I will evaluate it," (3) "yes, I do like the lobster."

Please note: Cancelling the dinner is fine. I don't think it is really that big a deal but again that is the magnitude of the transaction. There is a concern that you will send signals that they can take advantage of. However, it goes both ways and there is just less for the OP to give away. All parties are just a few thousand off the minimum, there is a mortgage and an appraisal and so we can hazard a pretty good guess as to what it will take to get the OP out of his home. But the maximum they are willing to pay is known only to them, the more the OP can learn about how much they want the property, the better off he is.

ncrealestateguy, I agree with you that the OP could use some professional advice. I completely disagree, though, that it should come from a Realtor, in this scenario. Realtors are motivated by commissions, and their fiduciary duty is to to themselves, to get paid. Not the same with a local real estate attorney- fixed costs.

Pay the attorney to find out "how much they want it", and then get great legal advice, which is something missing with most Realtors and something that every home seller/buyer needs

A good commercial agent will know the value of the land, an attorney will not. And a Realtor will not bill the seller until a deal closes. Like Bry911 says, why hire an expensive attorney prior to knowing that the seller is getting a deal done?

You are also incorrect in saying that a Realtor has no fiduciary responsiblity to their client. They most certainly do. RE 101.

902juanita

and their fiduciary duty is to themselves, to get paid.

This statement makes no sense at all ....can you explain to me how this fiduciary duty could be created?

Also, In my area (and it is quite large) Attorneys are not required to close a transaction and I don't know of one that is a member of our MLS so they would not have access to listing/sales data in my area. The sales price of a property is not recorded at the County Assessors office in our 4 county MLS are either. In other words....an Attorney in my area would be of little help in pricing a property.

Realtors are salespeople who work for commissions. They look for reasons for people to buy and sell, which doesn't make them "bad", just perhaps inadequate in this situation. "Fiduciary duty to themselves" was an awkward phase, so perhaps I'll say it a bit clearer: Realtors don't get paid until and unless a transaction happens. In that way, they look out for themselves as much (or more) than their clients.

This is definitely a very specific situation, but the OP would do well to consult with a qualified RE attorney. Maybe not required, but smart. Does anybody believe that the developers are lawyered up?

Not sure of your area, loto, but in my city the RE attorneys have near instant access to any MLS stats they need. Of course, in my area, it isn't required to list the final sales price of any transaction. Hello, Texas...

902juanita,

I have been a real estate Broker for 16 years and have never put my best interest in front of my Clients and your comment is generalizing my profession and also insulting.

I once knew a girl named Juanita and she was very rude and condescending so all people named Juanita must be that way using your logic.

Ah, loto- we all have our own experiences, and honestly haven't meant to insult. I'm actually one on this board who drives people to Realtors very frequently.

In this specific case, though? Is the commission worth the advice? I doubt it. And working with developers is rarely in the arena of a normal transaction. As you know, a Realtor cannot give legal advice, and there's legal considerations in this transaction.

902....you ask "is the commission worth the advice?"

The OP needs to know value

OP's taking a break and I'm sure this is an overwhelming proposition. They are really in an awkward situation. I'm a pragmatist. They bought the family home from inlaws but it will be difficult to sell in the future as a residence because of its location in the median of a four lane highway thanks to their state or county's road builders. It's just a matter of time until a DUI or distracted driver plows through their yard. They might get an offer to take it off their hands (if they want to sell their family home and see it turned into a "welcoming center") but it has a low probability of panning out. We've all seen developers put together grandiose plans only to see the project never materialize or turn out completely different.

OP hasn't told us they are "loaded" so I'm going to assume they aren't millionaires and it would be a financial hardship for them to pay out thousands of dollars for legal advice if the deal has a low chance of proceeding forward. A commercial broker would give them advice on commission contingent with the sale going through but yes the advice will be focused on selling the property not on whether it is the right a good deal for OP's family or not. That's true of any real estate transaction: the seller sets the price and the buyer decides what they want to pay. The realtor does not set prices although they do make recommendations. The decision is the seller/buyer's. OP would have to know what payment he's willing to take in order to move his family. Perhaps a second residential realtor could help them figure out what they would need to buy a different house.

Oh, and since this sounds like a small community, the local developer, lawyers, and realtors may all have intertwined financial conflicts of interest (if not personal conflicts of interest such as being family members or even lascivious and scandalous affairs).

OP is in a tough place but if they want to move to a quieter, more kid-friendly location off the 4 lane road this may be their best chance. It's so overwhelming the easiest answer by far is just to say no we are happy where we are at.

Personally, I would be looking to move but I cant advise you on the best way to go about finding a reasonable commercial lot price as I have no experience with this sort of thing. However, my fear would be that if you said NO to the developers, or if you could not reach a deal, that they would purchase one or two homes next to you. The developer may try to put an entrance AND exit on each side of the property. This would increase traffic and noise for you and surely devalue the property as a home.

Good grief. Any Real Estate Commission will tell you the fiduciary responsibility of a real estate practitioner is to the practitioners client. OP needs a seasoned commercial real estate agent, and if there are legal issues, of course op should consult an attorney. This is a tremendous opportunity for a homeowner to sell property for a purpose that is much more profitable than owner-occupant residence. Cash flow is not sellers problem, it is buyers problem. Many times cities subsidize welcoming centers. It may be that a sports team feels the need for a welcoming Center. That is entirely buyers responsibility, not sellers.

I have this old tool that isn't made any more and is very hard to find. It is "worth" about $500, but even if someone offered me $1,200 for this tool, it would be a bad deal. A modern power tool that would do the same thing runs about $3,000. So even if I sell it for more than double what it is worth, I can't replace it unless I spend more than double that.

Your house is in a terrible location, that has to affect its value. You might get an offer of $90,000 and think it is fantastic only to realize that to get a house that fulfills the same needs is $100,000. The amount you paid for the house is really irrelevant, it is a sunk cost. The most relevant figure is the amount that is required to put you in a better position after the deal is done. That means a new house that meets the same needs this one does that you can get in for around the same monthly payment, after paying moving and transaction expenses in a better area or with a lower mortgage or something else that makes you a bit better off. That amount is the minimum, it establishes the deal threshold. Below that amount - you should say no, and above that amount - you should say yes.

After you have that amount on the table - then start looking at how much more you can get. Commercial Real Estate professionals (whether attorneys or agents) are going to advise you about maximizing the profit on this piece of land, which is useless information until you have a good idea of the minimum amount.

So if you really want help, start with a realtor who will show you options for your new home. While you are at it, why don't you ask their opinion on your situation.

Loto1953, It has been my experience that people who generalize an entire profession or a group of people, do so because they posess those qualities themselves.

My experience is much like yours... Sucessful agents are so, because of referrals. Putting one's self first in a transaction does not generate referrals.

There are multiple ways to handle the OPs dilemma and most of the advice above is sufficient to get him/her steered in the right direction.

I'm coming late to this discussion, but I want to add a little. If the house in question is 'valued' at $XXX in a straight sale, the seller must also consider a lot of other costs. First of all, all closing costs on the sale, the physical cost of the move (don't guess, call movers for estimates), plus the closing costs of buying a new home. All these things add up to a lot of money. So at the very least, the house is worth $XXX+costs.

That may be the value to the seller, but really has no bearing as to the value to a buyer. One will not know unless negotiations begin.

True

old thread; I wonder what happened.