Right of First Refusal

[kl9]

Hypothetical: you own land that you know your neighbor would like to purchase one day if given the opportunity. What price would you charge them in order for them to receive a right of first refusal on your property, if you even would? Honest opinions please


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[b116757]

I would never consider entering into such a contract with a neighbor for the sale of my property. I believe that these contracts are normally used with lease tenants giving them the option to buy if the property is sold. My family and wife’s family tend to hand down property for generations we both own property that has been in our respective families for well over 100 years. Now if I could enter into this sort of contract with some of my neighbors for me to have first dibs on their property I’d be all over that. I’m now curious what the going rate for such a contract is myself.

 

[kl9]

I would never consider entering into such a contract with a neighbor for the sale of my property. I believe that these contracts are normally used with lease tenants giving them the option to buy if the property is sold. My family and wife’s family tend to hand down property for generations we both own property that has been in our respective families for well over 100 years. Now if I could enter into this sort of contract with some of my neighbors for me to have first dibs on their property I’d be all over that. I’m now curious what the going rate for such a contract is myself.

Ok, so what would you be willing to pay in order to receive that RoFR on your neighbors land?


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[b116757]

Well I don’t know I offered $240,000 but he wouldn’t sell. I’d probably be willing to go $10,000 just to have first crack at it when it does sell but I would need verbiage in the contract that it has to be sold in the event of the original owners death and can’t be handed down to his heirs. I would also have the contract written so that my name isn’t on it but the owner of my said property has this right of first refusal so even if I pass my heirs inherit the contract.

 

[roosterstraw]

I’m confused on the question...are you asking if we would sell a right of first refusal contract? I wouldn’t sell it for anything, I would just give them the first opportunity to buy it for whatever price you want for the property. No realtor fees, no waiting. It’s a win-win for you.

 

[kl9]

I’m confused on the question...are you asking if we would sell a right of first refusal contract? I wouldn’t sell it for anything, I would just give them the first opportunity to buy it for whatever price you want for the property. No realtor fees, no waiting. It’s a win-win for you.

If someone approached you and wanted a RoFR on your land, what price would you charge them for that right ?


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[Teeder]

"My family and wife’s family tend to hand down property for generations we both own property that has been in our respective families for well over 100 years. "

I hope the ability to do that will remain. Dems want to tax the crap out of stuff like that as capital gains in an effort to end family farms.
I wonder if it could be put in a trust to shield it?

Sorry for any thread drift.

 

[kl9]

Well I don’t know I offered $240,000 but he wouldn’t sell. I’d probably be willing to go $10,000 just to have first crack at it when it does sell but I would need verbiage in the contract that it has to be sold in the event of the original owners death and can’t be handed down to his heirs. I would also have the contract written so that my name isn’t on it but the owner of my said property has this right of first refusal so even if I pass my heirs inherit the contract.

I was thinking $10-15k for an 80 acre piece


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[b116757]

If you not interested in selling at this time but new you would at some point. I could see selling a contract like this for some quick cash now with no real financial downside when you do sell in the future.

 

[b116757]

Teeder

We will probably putting the property in a trust for that reason

 

[roosterstraw]

If someone approached you and wanted a RoFR on your land, what price would you charge them for that right ?


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I wouldn’t charge them anything. Nor would I ever pay for a contract like that.

 

[Mortenson]

How is the sale price determined should someone exercise the right?

 

[kl9]

How is the sale price determined should someone exercise the right?

It’s determined based off of a 3rd party’s offer to the seller


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[b116757]

I wouldn’t charge them anything. Nor would I ever pay for a contract like that.

I own the other three 1/4 sections and there are two other property owners that hold 80 each of that mile section I’d be willing to pay something to ensure I have first crack at buying them. I’d love to own that entire mile section in one continuous parcel. Not everyone is interested in buying their neighbors property I get that. One looks at property differently when you fully expect your children, grandchildren and great grandchildren to still own the same ground. We are thinning pine plantations my grandfather planted 65 years ago.

 

[Howboutthemdawgs]

I have a neighbor lady I offered well over asking price last month in a formal offer but she just wasn’t ready to sell and she admitted it didn’t make sense because they never use but there is sentimental attachment. I asked her to please consider me when the time comes but I didn’t offer any financial considerations for that right. She said she definitely would but that’s not worth anything. Maybe I should have offered something but honestly I’m always keeping my eye out for something else so I didn’t want to pay money for that right I may never use.

 

[b116757]

I have a neighbor lady I offered well over asking price last month in a formal offer but she just wasn’t ready to sell and she admitted it didn’t make sense because they never use but there is sentimental attachment. I asked her to please consider me when the time comes but I didn’t offer any financial considerations for that right. She said she definitely would but that’s not worth anything. Maybe I should have offered something but honestly I’m always keeping my eye out for something else so I didn’t want to pay money for that right I may never use.

Absolutely understand your situation and reasoning.

 

[roosterstraw]

I own the other three 1/4 sections and there are two other property owners that hold 80 each of that mile section I’d be willing to pay something to ensure I have first crack at buying them. I’d love to own that entire mile section in one continuous parcel. Not everyone is interested in buying their neighbors property I get that. One looks at property differently when you fully expect your children, grandchildren and great grandchildren to still own the same ground. We are thinning pine plantations my grandfather planted 65 years ago.

That makes sense. I guess it’s just how bad do you want it. When I purchased my property I got a rofr on a piece the owner wanted to keep for the time being. Well a few years later he offered to sell that me that piece and I couldn’t refuse it fast enough. He priced it so high it was ridiculous even though the contract stated “fair market value”. I just can’t see paying money for a contract like that then them asking a crazy high price for it giving you no choice but to turn it down. The you are out of that money.

 

[Howboutthemdawgs]

I own the other three 1/4 sections and there are two other property owners that hold 80 each of that mile section I’d be willing to pay something to ensure I have first crack at buying them. I’d love to own that entire mile section in one continuous parcel. Not everyone is interested in buying their neighbors property I get that. One looks at property differently when you fully expect your children, grandchildren and great grandchildren to still own the same ground. We are thinning pine plantations my grandfather planted 65 years ago.

With land getting parceled off at an alarming rate it’s great to see you put in the effort to piece back together larger tracts. I cringe everytime I see a listing that says “willing to subdivide”. That’s the reason I was willing to pay more than market value because it would mean a lot to me to put together a larger tract for me and my family.

 

[Mortenson]

How about 5k or 7.5k for starters? Plus it's going to take some legal fees obviously and I'd want some pretty long horizon time frames and possibly language requiring an appraisal or an average of appraisals. I don't have any experience with them, but they seem potentially iffy to me.

 

[Bill]

I asked my neighbor about buying part of his place years ago. Almost got it but he wasn’t ready.

I just kept reminding him over the years that I was interested. Closed on it last fall and it never hit the open market.

I don’t think I’d pay for a rofr. Friendly reminders are free.