I have 2 lots, should I split and sell them seperate?

Asked by Jason Cehelnik, 60123 Sat Jul 21, 2007

The first lot includes a house valued at 195,000. The attatched 2nd lot is big enough to build another house. The 2nd lot is valued at 40,000-60,000. I need to sell fast, what should I do?

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6
Paul Slaybau…, Agent, Scottsdale, AZ
Sat Jul 21, 2007
BEST ANSWER
One question that needs answering before you determine which way to go, will the divided lots be comparable to neighboring properties? If they are on the smallish side, you risk taking the big positive of an oversized property and turning it into two negatives. Other factors to consider: Is buildable land readily available (increasing the competition and difficulty to sell)? Would you lose a view or any other positive selling point if the lot was developed? Talk to a good local agent who is familiar with such factors.
Web Reference:  http://RayandPaul.com
2 votes
Ray, , Sarasota, FL
Sat Jul 21, 2007
sell the home with the lot, at 195k and keep the other lot, unless it is too tight for the first home to sell. You can always give them the choice, of picking up the undeveloped lot, for say, 40k. Or keep both, take out an eqity line of credit, that is tax deductable, and rent the home, and deduct that, and depreciate it, over 27.5 years....
1 vote
Anka Koprivec, , Elgin, IL
Wed Apr 6, 2011
Jason,

There are few possible solutions for your problem. I would offer both house and empty lot separately for sale, but in house remarks section I will include MLS number of the empty lot and say few words about it, as well as mention possible deal or discount if the buyer wants to buy both . In my opinion, house should be easier to sale then the lot, and since I don't know what is your situation and why you need to sell fast, or where is the property in question located, I can not be of greater help to you.
However, you can contact me if you need more assistance. Good lack.
0 votes
Greg Zaccagni, , Illinois
Fri Jul 25, 2008
Paul brings up an excellent point. Do the amounts you quote for value of both lots take into consideration the value if seperate or some division of their current combined value. Another isues he mentions is whether the smaller parcel conforms to building codes. Is there still enough room to build a home comperable to others in the neighborhood on the remaining land after taking all setback requirements into consideration? Also it doesn't sound like you have actually begun the process of sperating the parcel. You will want to investigage the cost of surveying the land and preparing documents for your city to review for approval. As you also mention wanting to sell fast, you may also wish to ask them how long takes to have the proposed partion approved.

Good luck with your decison
Web Reference:  http://www.GregZaccagni.com
0 votes
Shane, , South Elgin, IL
Thu Jul 24, 2008
Jason...contact me and let me know if you still need assistance. I will stop by and give you a few scenarios that will allow you to make a decision best based on your situation. Don't worry I won't solicit you because I am a Real Estate agent. I'm happy to help!
0 votes
Keith Sorem, Agent, Glendale, CA
Sat Jul 21, 2007
Jason
Thank you for asking your questions.
If I were consulting with you these are my questions:
1. Why do you want to sell? Why do you need to sell quickly? Define "quickly". When do you need to have your money?
2. How much do you want/need to net from the sale? (in other words, do you need to sell both?). After the current mortgage and closing costs are paid, what will be remaining?
3. What do you plan to do with the money? Purchase another home? Pay off debts?
4. Is selling your best option? Are there other options? What if the property does not sell?

The above questions would provide a Realtor with some perspective on your situation. The only reason people sell is to accomplish a goal. So a good Realtor will want to find out what you want to achieve, and based on the current market conditions present you with options.

In most circumstances when you need to sell quickly you will net less, because you will probably sell at a discount. Assuming that you have an average market (meaning a buyer'smarket), when you calculate how much cash you will have after paying off the mortgage, closing costs, etc, you need to know what that number is. One of the characteristics of real estate is that it is not inexpensive to sell. Normal closing costs are around 8%. So just make sure you are clear on what you will net.

The next thing is the "house valued at $195K". Appraised value is different from fair market value. Fair market value is different from the price a buyer will pay, who knows your market, in the TIME FRAME that you have to sell. I would have a REALTOR estimate a range of value based on the time you have to sell, compared to the average market time. If homes normally take four months to sell, and you need to sell in 30 days, how much will you have to discount off the price to sell quickly? If you are paying a mortgage, property taxes, and insurance (known as "carrying costs), take these into account when computing your net proceeds after the sale.

Often in real estate, the benefit of selling is a close call. People sell in order to accomplish something else. Sometimes once the seller gets a clear idea of the actual net profit, the decision to sell is not as appealing as other alternatives, which might include re-financing, renting out the property, and do not forget the tax consequences of your decisions.

Summary - consult with at least three Realtors, your tax professional, and perhaps a home loan consultant. Measure the cost and benefit to selling, and other alternatives. For example, the second lot valued at $40-$60K..that is a big rang of value. You need a more precise estimate...

I hope that this is helpful. Feel free to post additional details so we can help you further if you wish.
Keith
0 votes
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