What premium for a neighboring property?

[bjseiler]

I am curious what people are willing to pay as a premium to acquire a neighbors land? By premium I mean let's assume you think the land is worth $5k/acre but there is a decent chance somebody will take it at the neighbor's ask of $7500/acre. Are you buying it? Maybe easier to talk in terms of %. 10% premium? 30%?

 

[H20fwler]

Ground usually comes up for sale about once in a lifetime so chances are rare, also the od chance of getting a tool for a neighbor if you don’t buy it sucks too.
Land next to yours can definitely command a premium, the thing is how much the individual can pay and still have peace of mind. For me 10%-20% would be about all I could stand and not be mad about it.

 

[Bassattackr]

Ground usually comes up for sale about once in a lifetime

THIS.

Hard to say, for me probably 10% - 20% max also without feeling "robbed".

 

[j-bird]

I agree...there is a fair chance you may never get the chance again...so you need to take your best shot, if it is something you REALLY want. I might go as high as 25% depending on the property. I have 40 acres right near the house that I would go that high on just because I don't want neighbors! It has land to be farmed and some other advantages as well, but if someone was to buy it and divide it and I end up with 2 or 3 neighbors near the house and the like. I seriously would consider selling my entire place an moving! As such, I will go a little further to ensure I don't have that problem.

 

[4wanderingeyes]

I over paid for the land I bought by a quite a bit 40%, because I wanted it . Then the next land went for sale the next year, and the guy came to me first with a ridiculous amount, then sold it for far cheaper. I would have jumped at it for the price he sold it for.

 

[PatinPA]

I bought mine for what I thought was a high price but 4 years later, it's easily worth 25-30% more than what I paid. I've had multiple people ask if I'd sell it. I say yes but it's going to cost you stupid money to buy it.

 

[Buckly]

There is a market value to the land. Most people won’t pay much over that to get it so you as a neighbor need to be above that price. I can’t say how much but, just over. 10% seems reasonable. Now, if the place isn’t for sale yet and you as a neighbor are trying to buy it then be prepared to pay considerably more Than market value. 30-40%. Also, I’ve been in a position that 4wanderingeyes has been. The seller wanted way too much. Then sold it later at a much lower price and I wasn’t even considered. Stay engaged is the only way to solve that i guess.

 

[bjseiler]

My neighbors place has been under contract twice in the last 7 years. Both times to large developments that eventually pulled the plug. One was a luxury resort and another a trailer park. Crazy price but in the big picture for those projects, not really a big deal. They were able to lock up the land for a long due diligence and then get out when it wasn’t going to go through. I hope they consider a more realistic offer but who knows. They may wait it out and hope that next one goes through.

 

[homerj1]

There is a market value to the land. Most people won’t pay much over that to get it so you as a neighbor need to be above that price.

That doesn't seem very neighborly.

What if you make a cash offer to the neighbor?

 

[Wind Gypsy]

I've thought about this scenario. From a hunting standpoint I think it's more appealing to have a property elsewhere with an entirely different deer herd than just slightly extending my impact/access with the same deer. It'd definitely be more work to do it that way though.. That perspective changes if a likely new neighbor is going to drastically reduce the desirableness of your current property.

 

[jsasker007]

Land is always going up in value so if you feel you are paying too much now it will be justified later by inflation if you own it long enough. I bought my first house with 80 acres for 43k back in '93. I will never see a deal like that again. I could have paid much more and still be able to sell it for a good profit now due to everything costing more. Judgement call for the OP. I say if you want it, buy it and eventually the value will come up. You will be glad you bought it in my opinion. Good luck

 

[TreeDaddy]

Fellas, dont be greedy

You dont need all the land in the world

You only the land next to yours

bill

 

[Bill]

Depends on how much the total is. 20% over price on 10 acres is not the same as 10% over on 200 acres.

I payed 1850/acre for an 80 I thought was only worth 1650. But it was attached and I didn’t want another neighbor. Today that price is a steal but it’s 10 years later.

 

[TreeDaddy]

Depends on how much the total is. 20% over price on 10 acres is not the same as 10% over on 200 acres.

I payed 1850/acre for an 80 I thought was only worth 1650. But it was attached and I didn’t want another neighbor. Today that price is a steal but it’s 10 years later.

1750/acre for my place in 2005

2550/acre for adjoining parcel 2018

Another adjoining parcel bout to hit market next month and I'm guessing ~4000/acre

bill

 

[Mortenson]

If you can tote the note, buy it. You have to own the land to have control of it. There are rare exceptions, but adjoining land is always worth more than other land. There's an upcoming Class A+ land auction 2 miles away from us. We'd be bidders up to maybe 12K range. It'll probably go for more. We told a neighbor who's also interested that we'd buy his piece that adjoins us for possibly 15K if he'd want to make that "trade". Would do something similar (at much lower prices) for our hunting farm. As mentioned, any given neighboring farm comes up for sale probably less often than once a generation. Wish I knew if land was going up or down, but it's usually a pretty good investment.

 

[4wanderingeyes]

If you like the land, and can swing it, buy it, in a couple years you won’t even know how much you spent anyway.

 

[Buckly]

That doesn't seem very neighborly.

What if you make a cash offer to the neighbor?

I can see where that was a bit confusing. I meant that it’s worth more to you as a neighbor. In my opinion adjoining property shouldn‘t be low balled if you really want it. At least 10% over at least keeps you in the game

 

[yoderjac]

I am curious what people are willing to pay as a premium to acquire a neighbors land? By premium I mean let's assume you think the land is worth $5k/acre but there is a decent chance somebody will take it at the neighbor's ask of $7500/acre. Are you buying it? Maybe easier to talk in terms of %. 10% premium? 30%?

Unless it is being used for business (extending a farming operation or something like that), I would want to buy it at a discount. The seller does not have to market the property or pay a real estate agent fee to sell it. Of course, if you want to buy the land and the neighbor is not intending to sell it, the premium will be related to how bad you want it and willing he is to sell it.

 

[Mortenson]

I would want to buy it at a discount.

I've heard of sweet deals like that, but sounds like a great way to not buy the land.

 

[weekender21]

I’m in a similar situation. We pieced together our current property with three separate transactions over the past four years. We’ve paid just over $1800/acre up to $3400/acre. Now another neighbor wants to part with 12 acres @ $5k/acre. It seems like a lot but land prices have gone up quite a bit in the past 18 months.

Either way, he’s not willing to budge on the price so our options are buy it or watch it sell to someone else. Luckily for us, it’s not officially on the market and the neighbor is being very generous allowing us time to consider the purchase.

Land prices are all over the place but definitely up in most of the country. Land value is “worth” what you’re willing to pay.


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