Long story short, as the title states I am looking to make an offer on a piece of property (8 acres) nearby my home in North Texas with the primary purpose of running my business from there (used equipment sales) but also maybe eventually having a homestead carved out for my family down the road where we may build a house. The timing may not be the best but I am at the point where I have to find a place to run my business that's not my current home property (1.5 acres).

Right now this parcel is the cheapest I have seen around ($73.5k/acre compared to about $100k an acre comps) but I am having a hard time paying over $500k for 8 acres. We met with the sellers who showed us around the place a couple of weeks ago and they have been there 40 years. They mentioned that the land had been on and off the market the last 9 months to a year with the latest listing being about 80 days or so.

My question is, what kind of leverage do I have in the current market and what is the lowest I should offer without shutting down negotiations with too low a bid. I was considering $480,000.

Note, I will be making the offer contract myself so no buyers agent fee (I will be using proper title company to avoid any issues).

Thank you for your feedback.

82% of asking price on a property that's been on the market is reasonable. You can always come up just realize the longer you negotiate, the more chance of another offer coming in.

If it's not too late, don't tell them that you live close. Just tell them you need a place for your business, but the price has to work.

Do the sellers have a realtor?

Thanks for your insight. Yes they do have a realtor, in fact she messaged me this morning to see if we were interested in making an offer. Makes me wonder if they are antsy to get it moved. The owners have the other half of the property with their current home under contract and are needing to be moved out by August 1st so they are looking for their new place in Arkansas.

Yes they do. She reached out this morning wanting to know if we would like to make an offer and also offered to help with the contract if we need it.

So they're asking is $588k and you want to offer $480k? Also, how are you financing the deal?

Find a realtor who will deal straight with you and provide you comps. If they won't run comps for you or get sketchy when you ask for that, find a new one who will.

That realtor will likely be motivated to have them accept your offer if you don't have representation, as she will likely get to keep the full 6% commission (or whatever she agreed to with seller). She won't have to share it with a buyer's agent.
Maybe it's not the highest price she could get for the seller, but there is often a conflict of interest in real estate transactions.

Been a while since I used my RE license, but where does a non-Realtor find closed sale prices on properties within a few miles that are legit? I always used MLS and it was not available for DIY.

See if they'll do owner finance. That's how I bought my first raw land. You can offer them a decent interest rate and they won't have to worry about capital gains taxes, unless their doing a 1031 exchange. Getting mailbox money is always nice.

I also used Texas Veterans Land Board for everything up to 10 acres, if you're a veteran.

CS78 said:

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82% of asking price on a property that's been on the market is reasonable. You can always come up just realize the longer you negotiate, the more chance of another offer coming in.

If it's not too late, don't tell them that you live close. Just tell them you need a place for your business, but the price has to work.

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I appreciate the insight. Do you think I should start lower?

Martin Q. Blank said:

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So they're asking is $588k and you want to offer $480k? Also, how are you financing the deal?

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Yes that's correct. I will be putting 20% down and then likely a 25 year term with a bank.

Bonfire97 said:

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Find a realtor who will deal straight with you and provide you comps. If they won't run comps for you or get sketchy when you ask for that, find a new one who will.

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I am sure they exist (the guys from Red pear seem like solid professionals from what I've seen) but I have learned they are far and few in between to the point where I'd rather just do the offer myself and let that incentivize the seller since they save 3%.

I've talked to a handful of realtors and they all just put me on their automated MLS email list when a property comes available or price changes in my criteria, all of which I've already seen on Zillow, realtor, etc

Yesterday said:

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You don't need a realtor. You can grab comps yourself. I'd offer lower than the 480. They won't shut anything down. They'll either say no or counter. Either way you'll know and can offer a higher price if they say no.

If their realtor is going to help then I'd expect to pay her a %. I'd offer lower knowing she's going to get the full % commission.

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Does she automatically get the full 6%? I guess I had assumed she would only get 3% and then the seller saves the other 3%. I was thinking this is an incentive for the seller to sell for less.

Think I can offer less than 80% without offending? I don't want to lose the opportunity. I will say, there are several properties nearby, granted they are asking $30k more per acre, that have been sitting even longer like 6-12 months and counting so things seem to be slow which should help me out.

bqce said:

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See if they'll do owner finance. That's how I bought my first raw land. You can offer them a decent interest rate and they won't have to worry about capital gains taxes, unless their doing a 1031 exchange. Getting mailbox money is always nice.

I also used Texas Veterans Land Board for everything up to 10 acres, if you're a veteran.

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I had thought about that but had not said anything. Actually, when the sellers who have been there 40 years showed us around the property, they did mention that they owner financed from the original seller they bought it from all those years ago. I like the idea, but not sure about the potential pitfalls of owner financing or how to guard against them. They may just be looking to be done with it since they are moving out of state.

As for the veteran land board loan, I am a veteran but was under the impression that I could only get a loan for up to $125k on land and I would need more like $380k or so. Do you have a good contact for this? May be worth looking into again.

Check the fema flood plain map to confirm it's not in the floodplain. Easy to do by just entering the address. Even if you know the property so still need to check the fema map.
Talk to neighbors to get comps in the area. Make the offer you're comfortable with and see if they accept or counter. I agree that a good realtor in that area would be a great resource and don't be shy about asking the sellers realtor for nearby SOLD COMPS RECENTLY. If she recommends the price to the seller and potential buyers, she should have the most recent comp sales. I bought a prime tract last year by telling the sellers both of the nearby comp sales prices and offering them that amount per acre. They countered only about 4 percent higher and I agreed.

Figure out how to make it work financially if it's what you really want. I did this at age 35 on my first big tract by cashing in retirement accounts and paying the penalty. Has worked out spectacularly.

Sometimes just knowing the land has been sold is enough for folks to do an owner finance. I'm not sure what pitfalls you might be looking out for as a buyer.

And other than the website: https://www.glo.texas.gov/veterans/loans-veterans I have no other information. The land I originally bought was broken up into parcels. I bought 10 acres through TVLB and had the owner finance the rest. It was a weird setup but it worked great for me. Over 35 years, that land appreciated 2000%.

I applaud your effort to get into the land business.

Mas89 said:

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Check the fema flood plain map to confirm it's not in the floodplain. Easy to do by just entering the address. Even if you know the property so still need to check the fema map.
Talk to neighbors to get comps in the area. Make the offer you're comfortable with and see if they accept or counter. I agree that a good realtor in that area would be a great resource and don't be shy about asking the sellers realtor for nearby SOLD COMPS RECENTLY. If she recommends the price to the seller and potential buyers, she should have the most recent comp sales. I bought a prime tract last year by telling the sellers both of the nearby comp sales prices and offering them that amount per acre. They countered only about 4 percent higher and I agreed.

Figure out how to make it work financially if it's what you really want. I did this at age 35 on my first big tract by cashing in retirement accounts and paying the penalty. Has worked out spectacularly.

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Thanks for the good advice and for the success story. I did check FEMA and we are clear there.

I'm a little hesitant to ask for comps from the sellers agent since they are listed about $30k less an acre but may be worth a try.

bqce said:

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Sometimes just knowing the land has been sold is enough for folks to do an owner finance. I'm not sure what pitfalls you might be looking out for as a buyer.

And other than the website: https://www.glo.texas.gov/veterans/loans-veterans I have no other information. The land I originally bought was broken up into parcels. I bought 10 acres through TVLB and had the owner finance the rest. It was a weird setup but it worked great for me. Over 35 years, that land appreciated 2000%.

I applaud your effort to get into the land business.

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Well I guess I'm not exactly sure of the pitfalls either other than maybe there not being as much structure or as many protections for a finance deal like there might be with a bank or credit union due to regulations. That may just be in my head though.

What percent rate and term would you suggest for owner financing? For comparison, I have been talking to a bank that has said around 7.75% for a 25 year term with 20% down.

Aggie118 said:

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Yesterday said:

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You don't need a realtor. You can grab comps yourself. I'd offer lower than the 480. They won't shut anything down. They'll either say no or counter. Either way you'll know and can offer a higher price if they say no.

If their realtor is going to help then I'd expect to pay her a %. I'd offer lower knowing she's going to get the full % commission.

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Does she automatically get the full 6%? I guess I had assumed she would only get 3% and then the seller saves the other 3%. I was thinking this is an incentive for the seller to sell for less.

Think I can offer less than 80% without offending? I don't want to lose the opportunity. I will say, there are several properties nearby, granted they are asking $30k more per acre, that have been sitting even longer like 6-12 months and counting so things seem to be slow which should help me out.

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I don't know what the seller agreed to pay for agents commission but if there is no agent on your end to split then their agent keeps it.

I have bought several properties by going straight to the listing agent and telling them I do not have an agent and happy for them to represent both sides. In each scenario I got a great deal. In one scenario( our current house) we won out over 10 other offers two of which were higher. I don't know if the agent rebated some of their commission to make our offer the best but we got the house and the others using agents didn't.

I would offer less than what you want to pay worst thing they can say is no. Never worry about offending anyone when making an offer. Money is money. They will take what they're comfortable taking even if you offered them lower several times.

I'd offer them something in that range. It's beneficial to them because of capital gains tax and they could get the land back if you default and then they could sell it again. I've offered owner finance on a couple of properties and would do it again gladly. It's definitely a win/win. Good luck - you won't be sorry.

And don't listen to Yesterday. He knows nothing.

I'm just seeing your post. Attorney/Broker based out of North Texas. I'm very familiar with real estate in the North Texas area. I can't pm you. Let me know if you would like to further discuss your transaction.

Yesterday said:

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Aggie118 said:

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Yesterday said:

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You don't need a realtor. You can grab comps yourself. I'd offer lower than the 480. They won't shut anything down. They'll either say no or counter. Either way you'll know and can offer a higher price if they say no.

If their realtor is going to help then I'd expect to pay her a %. I'd offer lower knowing she's going to get the full % commission.

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Does she automatically get the full 6%? I guess I had assumed she would only get 3% and then the seller saves the other 3%. I was thinking this is an incentive for the seller to sell for less.

Think I can offer less than 80% without offending? I don't want to lose the opportunity. I will say, there are several properties nearby, granted they are asking $30k more per acre, that have been sitting even longer like 6-12 months and counting so things seem to be slow which should help me out.

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I don't know what the seller agreed to pay for agents commission but if there is no agent on your end to split then their agent keeps it.

I have bought several properties by going straight to the listing agent and telling them I do not have an agent and happy for them to represent both sides. In each scenario I got a great deal. In one scenario( our current house) we won out over 10 other offers two of which were higher. I don't know if the agent rebated some of their commission to make our offer the best but we got the house and the others using agents didn't.

I would offer less than what you want to pay worst thing they can say is no. Never worry about offending anyone when making an offer. Money is money. They will take what they're comfortable taking even if you offered them lower several times.

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Thank you for the advice. Not a bad idea to have the listing agent just represent both sides. I could see how that would work to my advantage for sure.

bqce said:

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I'd offer them something in that range. It's beneficial to them because of capital gains tax and they could get the land back if you default and then they could sell it again. I've offered owner finance on a couple of properties and would do it again gladly. It's definitely a win/win. Good luck - you won't be sorry.

And don't listen to Yesterday. He knows nothing.

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Thats a good point on capital gains tax. Maybe I will look into it. Thanks for all of your insight, haha ok something tells me that he knows a thing or two.

My opinion, it's impossible to "represent" both sides. You are looking to buy land and perform certain activities on the land and obtain certain exemptions. Best to have a professional represent you and looking after you in those matters. You likely won't have to pay anything for that representation, and very likely will obtain better terms than you would get if you go it alone or let the listing agent attempt to represent your interests and the seller's interests.

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Let me start by saying, I am not a smart man. But I bought 22 acres of raw land without a realtor so it is possible. I also lowballed by 33% for a year until my offer was accepted. They kept trying to pull me up but I stood firm until they realized no one was going to pay more. The no realtor thing was not that big of a deal. Good luck!

Make sure to look into everything if building business on property. I have no idea where it's at but any of these items can make the site potentially more costly than others at a higher price

- floodplain
- drainage
- detention requirements
- any restrictions in title
- rollback taxes
- power to site and utilities
- city building codes/zoning
- pipeline or other easements
- etc

Get a new alta survey and have someone look over title commitment at minimum

213 Grove said:

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Make sure to look into everything if building business on property. I have no idea where it's at but any of these items can make the site potentially more costly than others at a higher price

- floodplain
- drainage
- detention requirements
- any restrictions in title
- rollback taxes
- power to site and utilities
- city building codes/zoning
- pipeline or other easements
- etc

Get a new alta survey and have someone look over title commitment at minimum

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Read this list several times. Also have a Phase 1 done. If you end up needing a Phase 2 it's probably time to walk away.

Offer them what you want. Nothing is real until you formally submit an an LOI or a contract. If you feel like you're lowballing them just don't be shocked if they either A) don't respond; or B) counter at full ask or some other much higher number.

213 Grove said:

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Make sure to look into everything if building business on property. I have no idea where it's at but any of these items can make the site potentially more costly than others at a higher price

- floodplain
- drainage
- detention requirements
- any restrictions in title
- rollback taxes
- power to site and utilities
- city building codes/zoning
- pipeline or other easements
- etc

Get a new alta survey and have someone look over title commitment at minimum

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Thanks for the response, all good points.

- No Floodplain
- Drainage seems straight forward but can't say for sure. There is a creek along the boundary.

- It does have some deed restrictions, not sure if that is the same as title restrictions. See the deed restrictions below. These were from the original seller who sold to the current seller 40 years ago:

"herein:

- Only one single family dwelling may be erected, placed or be permitted to remain on any tract. All such single family dwellings shall contain a minimum of 900 square feet of living area.

- No structure shall be constructed nearer than 75 feet to any road and 25 feet to any adjoining property line.

- No structure shall be erected, altered, placed or permitted to remain on any single tract other than one (1) single family dwelling, a private garage together with other out buildings incident to such residential user.

- No noxious or offensive trade or activity shall be permitted or carried out on any tract, nor shall anything be done or permitted which may be or became an annoyance or nuisance to the neighborhood.

- Any mobile home shall contain a minimum of 900 square feet of living area and shall be properly underpinned, skirted and anchored to the ground in a good and workmanlike manner. Any existing structure which is moved in shall also contain a minimum of 900 square feet and shall be fully restored within a reasonable time after such structure is initially placed on any tract.

- No sewer system or septic tank system shall be installed on or be used on any tract unless same has been constructed in compliance and conformity with sewage disposal methods approved by the Texas State Department of Health or other appropriate State or County Agency.

- No animals, livestock or poultry of any kind shall be raised, bred or kept on any tract except and only except that dogs, cats or other household pets may be kept for the amusement of the occupants; no more than two (2) horses per acre; no more than two (2) head of cattle per acre; no more than three (3) sheep or goats per acre; no more than three (3) poultry per acre; no swine or bees shall ever be kept."

Are these actually enforceable and by whom? The owner himself when we walked around the property noted that he doesn't think they are enforceable and that they themselves violate them by having bees on the property for ag exemption. He said his son is an attorney and told him that the restrictions are not worth the paper they are written on. The one deed restriction on there that makes me nervous is a blurb that talks about "No noxious trade". This is a property that I will use recreationally, for my business (by appointment only, not a store front), and then maybe one day for a homestead. Would I be able to ask them to remove these deed restrictions, and if so, what would be the process?

Thanks for any insight.

They can be enforced by the other owners of the tracts of the land that was subdivided when the deed restrictions were placed

They would have to sue you

redaszag99 said:

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They can be enforced by the other owners of the tracts of the land that was subdivided when the deed restrictions were placed

They would have to sue you

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Interesting. I wonder if there is standing to enforce them if they have not been enforced for years and multiple neighbors are actively violating them. Also, it would seem like the no bees one would be unenforceable as that is how some are obtaining their ag exemption. Thanks for the response.