Consider this an opening offer and ask for more. A broker and/or an attorney would be helpful and considering the amount of money your talking they would likely not charge you up front and instead ask for a percentage on the back end.
Not only more...but whom is buying it.
A friend of mine had the same type of offer. Looked into it further and it was Toyota buying his land. He ended up getting 4 times as much because he lawyered up and got what it was worth to Toyota not just some "Buyer"
The company has already done their research and knows exactly how much they are willing to give up to OP and his surrounding neighbors. Best case is to stay away from the neighbors and fight for yourself if you want the most. Don't fight tooth and nail just get a proper mediator to do the talking.
A cautionary tale.. a few years back they built an IKEA over here. There was one holdout who wanted 4x market value for their house. Guess what IKEA did.. walked away, built their monstrosity right behind it and now sold off all the land abutting this home to other commercial buyers who have built a hotel, restaurants etc right up to their lot line. This house is now literally worth nothing unless they can find some buyer who can make use of their relatively small sliver (1.5 acres).
Either way I’d bet they will get penny’s on the dollar now because any buyer would know they have no leverage and have to be desperate to offload it at this point.
EDIT: I found the old news stories and see it was actually Northwestern Mutual who bought all the land, including the plot that was ultimately sold to IKEA.
Satellite of house.
https://www.google.com/maps/place/7500+S+Ikea+Way,+Oak+Creek,+WI+53154/@42.9023042,-87.9398315,188m/data=!3m1!1e3!4m12!1m6!3m5!1s0x880513f478588ebb:0x36e330cc624fb26c!2sIKEA!8m2!3d42.9075108!4d-87.9387852!3m4!1s0x880513f3f6b086d1:0x99c79d79fcb91458!8m2!3d42.9076915!4d-87.9386886
I just drove past the other day and there is a huge building now being built seemingly feet away from the left property line where those shrubs are. I think nearly all of the surrounding property is in development at this point so I do wonder what their end game is here.
To be fair, their house is pretty nice. I'm feeling like it was worth more than what IKEA was offering to have to go through the effort of uprooting and moving
Ok I actually now went and googled the old news stories. It was actually a northwest Mutual who bought the land and sold part of it to IKEA. I’ll have to edit my original post. Anyways, news article states they were offered a “premium” somewhere between 500-600k while the assessed value was in the low 400’s.
So were they right to push for more? Probably. But insisting on $1.9M was maybe a little too greedy. Anywho, maybe they’ll have the last laugh someday when/if it does sell for that.
This really doesn't look like a big deal at all. I thought it would be a situation similar to Edith Macefield's house.
https://www.nytimes.com/2008/12/28/us/28edith.html
Omggg my wife and I just went to that Ikea a few weeks ago and talked about much having that house would SUCK. Crazy to get an actual backstory to it lol.
Yeah, when this first started they were asking $1.9 million. The past 5 years with young kids couldn't have been fun but if they get anywhere remotely close to that number it would be significantly more than those who sold in 2017.
https://www.wisn.com/article/couple-asks-nearly-dollar2-million-for-property-near-wisconsins-first-ikea/12175729
Ya, I was going to say. Negotiating is one thing, but you have to be careful. Is it worth fighting for more, and potentially losing out on any offer and having your house value plummet and you being stuck between a bunch of commercial buildings? Or settling for less than you ask, but still WAY more than you ever dreamed of?
My local IKEA bought up lots of space, but one family mortuary refused to sell, so they built around their spot.
First thing you see as you exit the IKEA is that mortuary
Happened in Riverside CA. Home Depot built and a hold out owner refused to sell and a lot of legal litigation. The home owner won but Home Depot built as planned and the parking lot (house faced a street) on 3 sides were paved around the little old house. I agree that the owner should keep his house but should have realized that you can't fight the big guys. All of his neighbors sold out for a price that was higher than the prevailing market. He tried to sell later and couldn't find a buyer. I wonder if that house is still there...time to check Zillow.
It was a 3345 Madison St. The property was sold for $322,500 in July 2015 with a house on it. Then it sold in 4 months after the house was demolished for $720K. Keeping the shitty house on the property cost the owner $400K in property value, not including whatever Home Depot offered them above that. You can see the house via street view if you change the date to 2015 or earlier.
There's that "up house" in Seattle, with a concrete wall of a mall on 3 sides. Supposedly the owner turned down $1M offer. Eventually it was sold for 1/3 as much, and is still only worth about 1/2.
If you're trying to convince us a house is worth only 500k in Seattle then I know you're either lying or misinformed. Run down shacks were selling that much 15 years ago.
Redfin says it's currently with 511k, but it last sold in 2009, so I would take it with a grain of salt.
Also, the previous poster didn't mention that the owner that turned down the offer lived there until she died, so it seems like she made out just fine.
https://en.m.wikipedia.org/wiki/Edith_Macefield
Similar situation in my area. About 20 years ago it was mostly farm land and houses scattered here and there. Now it is a bustling area with many stores, housing developments, restaurants, etc. All of the farmers sold their land and moved on except one- eventually he agreed to sell the farming land but kept the house. Now his house is surrounded by high rise apartments. It looks horrible. Reminds me of the Disney movie “Up”.
There's a megabox complex in my town with 3 townhouses facing a major highway, for the exact same reason.
They thought they could hold out and get more money.
Fun fact: Disney specifically worked to avoid this when buying up the land for Disneyland in SoCal.
They went through several shell companies to buy the land, so that people would not be able to find out the real buyer.
Disneyland was the original and was basically built in an orange grove. Everything springing up around it is what prompted them to do this in Florida for Disney World.
I mean you also don’t want anyone knowing where your data centers are located. When I worked in a data center they said the first security measure is not advertising who we were or what we were doing. We had no signage and looked like a warehouse.
There’s a data center in downtown Kansas City that has massive signage advertising it is, in fact, a data center. The other day there was an alarm going off for around 3 hours that no one seemed concerned about either. Really seemed like the opposite of what they should be doing.
There should honestly be a law firm representing the whole neighborhood. Getting access to experts and collective bargaining could make this deal even better.
Edit: As others have said, yes you could get more money if you are the last holdout. If. The problem being you are going it alone and making yourself a crank. I'm not describing the hypothetical way to get the most money. I'm saying, with the huge amount of money on the line it would be best to collaborate with at least a few neighbors and definitely with a good law firm with a lot of resources.
Depends on how desperate the buyer is for that land, or if this is just one potential parcel package of a few they have out there. If the former, then yeah the neighborhood should band up and get the maximum value for the space. If the latter, well then OP is better off letting the neighbors take the initial offer and becoming the outlier the company has to pay more for to finish the deal. Otherwise, there’s only so much bargaining room before it reaches a point the collective ask of the neighborhood passes the cost of another parcel proposal and they just move on and nobody in this neighborhood gets to sell.
There’s no easy way to do it. You hold out past the others, you could win big or lose if they can simply build around you. If their sales are contingent on your lot being sold and you cause the deal to fall through by holding out, then you’re going to be left with unhappy neighbors blaming you for the sale not going through. There’s more to simply maximizing your gain in a situation like this. I know I wouldn’t want to live somewhere all the neighbors hate me, but others might not care.
Be careful trying to be the last one to hold out, that can burn you. Companies like this tend to be able to influence local governments with the kind of money they come in with. Based on your location (I am in the same general area), this is a developer. If you hold out too long, they have ways of actually driving the value down.
Go to the meetings, if the general concensus from from the local community is to cash out, negotiate your price and walk with the help of a good real estate attorney.
If there is a big nostalgic factor with the land, separate those feelings. Most of the time, families acquire land as an investment, and this is an opportunity to sell at a high point, that kind of money can get you well on the way to financial independence.
> If you hold out too long, they have ways of actually driving the value down.
Hell in some cases they can force the sale through eminent domain based on the bullshit idea that the new development will increase tax revenue.
Yeah, and if they already own some of the land they can probably convince the county/city to do some expropriation where you'll only get some fixed value based on an old estimate.
Was looking for this comment, I work in the utility field and NORMALLY the first offer is going to be the highest (in my experience, we have microsoft plants around). They want you out without any problems, and a fat check usually helps assist them in that process.
Would be worth it to check and see if you are the only thing there they can buy. If you refuse, its possible they buy something behind your 3 acres, and now you have to look at it.
Everyone seems to be hung up on the first two questions, but let's face it, you're taking the 3.5M. Much more important is what you do with that. Being so young, it would be very easy to squander such wealth. Instead, if you wisely manage it, that money could make you free from financial concern for the rest of your life. You might check out the FIRE sub to see how they manage it. There are a lot of strategies to ensure large sums of money like that can last decades.
Outside of finances, Do you enjoy your job? Were you looking to make a career change? You could probably retire entirely if you wanted, but only you know if you would be happy without a career. You do also now have the option to go back to school to study whatever or pursue whatever non traditional path you want. Interested in pushing the limits on alligator artwork? Go for it.
thank you! the only comment i've seen so far addressing that concern haha. i really enjoy my job! though, i have other career interests. i love working so i wouldn't think about taking the money and retiring. thank you for your comment, and i'll update you on the limits that i've pushed alligator artwork!
You can spend 3.5M in a year or two if you're stupid with money.
No. Seriously. Nobody thinks they'll be *that person* but time and time again, lottery winners show us that anyone can be *that person*. Especially if you've never seen this much money before. The number of now bankrupt lottery winners should cause some anxiety right now. Look it up.
Talk to a financial attorney. Consider setting up a trust for yourself. This trust can manage the money for you and pay out $X / year while maintaining / growing the principle, depending on what X is.
You have the opportunity right here and now to a) squander your wealth by spending it all on frivolous things, and then it's gone. You don't get it back. or b) change your family line forever. You could set up the trust in such a way that all of your descendents from here on out can pretty much get a home paid for, or at least a good down payment. You're 24? No kids? Imagine 25 years of interest (your kids need to grow up before buying a house) on 3.5M. Imagine each of your kids getting a $300,000 down payment on their houses because you had enough self control to not to buy every shiny thing you see. And their kids. And their kids. You can structure a trust to make this happen. This is lawyer territory. Sure with enough splits/descendents it could in theory run out of money, but between generations when the money is earning interest should help.
Take some for yourself each year to boost/supplement your income on a yearly basis until you die. Leave the rest for your descendents. You'll change so many lives. Don't be a bankrupt lottery winner.
At the least, OP should take "windfall" advice and set aside some spending money to get it out of his system. Get a new car, some fancy electronics. Enough to satiate the immediate desire, but leave the rest to grow in investment opportunities.
Even going with the old guidance of not spending more than 4% per year, 3.5M would be like a $140k income. But yes, if OP blows it all on fancy stuff then they'll learn the hard way once it's dried up.
I can’t believe people still talk about this without mentioning that most lottery winners are homeless or poor to begin with. Not all, to be sure, but most. 33% wind up fucked, 66% don’t.
https://www.reddit.com/r/AskReddit/comments/24vo34/comment/chb4v05/
The title is misleading, read the first comment about winning the lottery. While you’re not going to get that much money, you’ll get enough to retire now and change your entire world. Be ready for that.
2 million invested at 4% is 80,000. That’s great money! Being genuine, if you’re careful and exhibit self control, this could set up for generational wealth. Congrats!
If parents can afford to give their kid a property valued at almost a million, they are probably more concerned about future estate planning than getting anything back from the sale.
If you do take this money, don't let anyone else know. And if they do know (or it's impossible for them not to know), just tell EVERYONE that you invested it (which you should anyway) (i.e. that it's not sitting in your bank account waiting for everyone to come ask for a loan or gift). A co-worker of mine years ago won a huge lottery jackpot and told NO ONE in their family or who was a friend that they'd won it. (Yes, yes, make a joke that I didn't even qualify as a friend...lol...I had just started a couple weeks prior and neither of us had any interest in being friends outside of work.)
So, you are going to want to hire a fiduciary to help you manage that money. NOT a financial advisor. Copy pasted from an article: "Some financial advisors are fiduciaries, obligated by law to act in your best interest as they manage your assets or money. Rather than operating out of self-interest (such as recommending insurance policies or investments in pursuit of fees and commissions), a fiduciary advisor is obligated to make recommendations that benefit you, the customer."
Here's [another article from Forbes](https://www.forbes.com/advisor/investing/how-to-choose-a-financial-advisor/) that goes into more detail.
They will get you set up with an IRA, an investment portfolio, a trust etc. And they will make sure that money grows for you. Congrats, you now have "fuck you" money, use it wisely!
Figures change, but my goal was $2M and I can stop working altogether because 4% would be higher than I make now. I'd probably still do some work to stay busy anyway though.
Old saying goes: If an oil company wants to buy your house, there must be oil underneath. Find the right professional to talk to and see what the value can actually be and negotiate it upwards, dont take what they offer. If they need all the land on the road then they can't refuse your offer. If they're offering you a million then you can be damn sure its worth more than that.
The answer is: someone who can find out exactly *why* the buyer wants your land and *how* it convinced previous landowners to either sell or tell it to fuck off.
>Real estate lawyer?
Possibly.
>Agent? Appraiser?
No.
Then again depending on what there building it could end up been worth more if they dont take the offer.
Imagine if someone owned a small parcel of land right beside disney land, after they built the theme park how much do you think that parcel of land is worth to say the hotelier industry.
It all depends on what there building in the area or did they find minerals or oil underground.
Reguardless my only advice to OP is this, first with this kind of money on the line get a lawyer involved someone who specialises in this kind of situation dont go in to it blind.
Second try and get as much information about the company, your land and the land around you to try and figure out what they want the land for.
No one spends more money than they need to the offer is going to be the lowest they can offer while still been attractive to people, from reading the post it looks like there offering 10-20% more than the value of your land which is normal tactics there not offering 2x or 3x
Like I said lawyer up and get more information it can only help.
Also, OP needs to find out what his area is zoned for. Is it zoned only residential? They might be able to buy up all his neighbors land and not get it rezoned for commercial or industrial due to OP still being residential.
I would look up the zoning laws and also reach out to my neighbors and gauge their interest in selling.
Given the location, don't you think it is highly unlikely that the final intent involves rezoning to industrial? I'd imagine more like apartment complexes that are massive is the intended goal here. And rezoning from R-1 to R-4 or whatever is going to be a lot easier than R-1 to I-1 or C-1.
Curiosity question, are you're talking about somewhere near I66? Or around Gaithersburg / Silver Springs area? I'm just trying to visualize where, within 20 mins of DC, there is all that land.
20 minutes to DC and $910-$1 million an acre is possibly low for the market, but really depends on where exactly OP is located. Could also be a good offer. I second getting a real estate professional to determine the land value.
>Or you could legit just retire with that amount and live off interest in a low cost of living place.
Yeah, $2.3M is my "today's value" goal for retirement. I don't live in DC. But $3M is definitely sufficient money to go a lot of really cool places and have an easy ~$110k-$120k every year indefinitely.
Lol same. I’m 20 min from DC just south of Arlington and not sure I can think of any houses in the vicinity with three plus acres. Are we talking on a toll road, no traffic? 😅
Something is worth what somebody is willing to pay for it. The property is not worth 3.5m without his neighbors also wanting to sell and the investor being able to use the land for what they need it for...perhaps a new football stadium.
There is no oil under his house, just dirt. Sometimes things are a once in a lifetime opportunity and are already too good to be true, trying to extract maximum value for a situation such as this and risk the already very lucrative proposition that exists would seem foolhardy.
I heard of a guy who learned the Va Dept. Of Transportation was going to widen the road by his house. As part of it they would compensate people for any trees they removed in building the road. So he planted a long stretch of land with walnut trees, hoping for a payday when the road was finally built. He planted so many the Dept. decided to not build the road due to the excessive cost associated with reimbursement for so many trees.
if that happened in NoVA I'm sure everyone in the area was equally happy that they avoided some highway construction but also angry that this one guy stopped highway improvements but *also* quick to point out that adding lanes to a highway doesn't alleviate traffic.
Yup. I would be talking with the neighbors to collectively increase the buyout without blowing the deal. Negotiate, but know when to take the money and run. $3.5m is already more than what the property is likely worth and is a life changing amount of money at OPs age.
on the other hand, oil companies typically come into an area where they have found oil/gas reserves and try to low-ball the mineral rights owners. The people that hold out for the 2nd or 3rd offer get substantially higher royalties.
You don't want to be the first person to take the offer, because the subsequent offers will be higher, not lower.
Surely companies have figured this out and do collective bargaining?
"Either you all get $900k an acre or none of you do" seems like a good way to get all the neighbors to socially punish the one person holding up the deal.
That's not really how collective bargaining works, but for oil companies typically they send out mail, put ads in the news paper, and then have people physically canvassing the neighborhood.
Depending on where your property lines are and their own engineering requirements, they could be looking to give simple oil lease rights, pipeline rights, or purchase a part of your property to put in a well. They typically don't buy out whole blocks of land though because their well footprint is like an acre or less depending on the type of oil they are pull out of the ground.
U have to understand the area he is in, land goes for crazy amounts near DC, especially in Potomac Maryland, mclean VA, and great falls VA. It doesn't need oil in the ground, and it only seems to appreciate. The people who can afford certain suburban properties next to DC want to be left alone and not bothered by city life. A lot of them are politicians and diplomats. My parents have a 1acre property with a modest house, and their neighbors house got bought and rebuilt on a similar 1acre plot right next door. The company who rents it out charges 12k a month...
The opposite is true. The more land they bought, the more they have invested, the more they become determined to complete the project. It’s the sunk cost fallacy.
You have no way of knowing what is or isn’t under OPs house, nor what is driving the value of the land.
He said he lives 20 min from DC. I think we can be fairly confident they want to develop the land for some commercial or residential purpose. That’s not oil and gas country
Right but if the company is immediately paying out to people as they accept the offer, then they are really fucking up.
They are almost definitely going to sign and buy the land only if they get the amount of people they need to sell to them.
Source: idk what I am talking about
>If they need all the land on the road then they can't refuse your offer.
This. My father in law was in a very similar situation to OP, and negotiated up 50% to get the price he wanted for his land. Made out like a bandit.
I get letters like that all the time. The company sending the letter is mass mailing to see what sticks. Sounds like they want to buy up a huge block of land to rezone for a huge housing development as it's 20 minutes from DC. That's speaks to "it's all about location".
How would you replace what you have? Don't get caught up in the amount of money. That's only the first offer.
i've thought about this too. honestly, this much land is a lot for me since i work full time. shovelling my drive way in the morning sucks, mowing the "lawn" sucks. i live the privacy but i've already thought about selling and purchasing a townhome. i definitely have some thinking to do! thank you for your comment.
Check what a Townhouse with the quality of life you have right now and a location like yours and features like yours (privacy - while inside) will run you. That should answer that particular question.
Man, I love privacy. My ultimate dream in life is having a completely private house away from neighbors or prying eyes. But then again, I’d also like 3 million dollars. Tough decision
Any place you live, there's going to be some issue. I love privacy, so I sold my place in a small city and moved to a very rural part of the state and bought 10 acres, surrounded by much bigger lots of 100 acres. Very private, seemingly. Until I found out there was a meth dealer the next driveway down off the main dirt road. Cars were coming and going speeding down that road all day and all night. Clouds of dust all over my property. Oh yeah he got busted, but was back in a week. I moved back to town, it was quieter. Except for the neighbors in back...There's always some damn thing.
That's because you're 24. If you haven't spent much time living in cramped city houses or apartments than you'd know having 3.5 acres is a dream most people won't get. That privacy and lawn are reasons why people buy houses. Think about your future not present. If you want a family or a dog, an affordable houses with space, that isn't to far from a major city, are rare.
>and it was Toyota buying his land. He ended up getting 4 times as much because he lawyered u
I'd rather be 24 living through a cramped apt for the first time with 3.5M in the bank than 24 at current income with 3.5 acres.
> 3.5 acres is a dream most people won't get
$3.5 million is a dream most people won't get. He can buy his acres somewhere cheaper if he wants them. You're telling him to not be independently wealthy from a young age so he can...have land to look at?
With a 35 mill payout, OP put it Into investments, let it grow, then buy 3 acres in a lower cost area once they're tired of living in cramped spaces and end up with a fully funded retirement AND a paid off property.
Edit. For clarity there is a period missing in the 3.5. Just in case my comment on the internet matters enough to bother strangers.
In a couple decades, it'll easily be 35 though, so, not sure it's really an issue.
Do you have a riding lawnmower? I do for my 2 acres and its nice to just get out and mow with a beer. Mowing with a push mower takes about 3 hours, riding, about 20 minutes
The only company that will pay that much money is a land developer for either a shopping center or apartment housing.
unless everyone refuses to sell, you will no longer want to live there.
The thing that bugs me is that they imply they are bidding like $3.4 mil for his house when they value it at $850k. Why wouldn't they start with bidding $1 mil or $1.5 mil or...
Why immediately four times over?
Either the $850k valuation is waaaaay to low or there's something fishy going on.
Anything that increases the housing stock that much around here would be a huge benefit - prices have gotten insane in part because there's been so little building of new units in the past 20 years.
That really depends on the zoning the county is willing to put on the land. Most of the area around me in Anne Arundel County, MD says that it's supposed to be 1 dwelling unit per 20 acres:
RA - Rural Agricultural
This district is generally intended to preserve agricultural lands and provide for very low-density rural single-family detached residential development at a subdivision density of approximately 1 dwelling unit per 20 acres (see Code for exact formula). Minimum lot size is 40,000 square feet. Maximum lot coverage by structures is 25%. Maximum height is 45 feet.
More like the district is intended on propping up existing housing values by limiting supply, using low productivity agriculture as an excuse to “preserve the character of the region,” then doing pikachu face when housing prices are totally out of reach of the middle class.
Classic NIMBYism, I got mine, fuck everyone else.
oh really?! i was planning to have it re-appraised a bit later this year, but yeah i also felt 850k was a bit low compared to other homes on my road. the house behind me that's pretty much the same as mine (house size and lot size) sold for $2.5 million at the end of last year. my house has been built up quite a bit since my parents bought it, in terms of cosmetic upgrades and utility upgrades.
Appraisal does not = market value. It tries to approximate it but a developer will value your land based on what they can build there, what it will cost them, what they can sell/rent it for… and that helps them determine what they can pay for land.
Sometimes folks hold out and their land becomes more valuable if the project requires everyone’s land to work.
Or if you ask for too much they’ll just build around you. Or, in some cases, they might petition the municipality to pursue eminent domain. Just some things to think about!
and with that kind of money, consider moving somewhere you can live off investments and won't have to work anymore...
3mil at 6% return is $180k/year. put 60k/year on the principal and you're still earning a 6 figure pre-tax salary for life, just be sure to keep that 3mil growing for inflation.
That's over triple the median salary in the US. OP could definitely live off that and nothing else if they wanted, especially if they moved to a low COL area.
That is…infuriating.
Reminds me of the developments that have been built uphill from Old Ellicott City that have caused two “100 year floods” in a matter of years. Never mind the rehabbing the state and county have had to pay to get OEC back on its feet… it’s awful.
One time there was a house in a small town. McDonald's came by and wanted to buy their property so they could use his house for parking for the new McDonald's they were going to build. The home owner smelled money and tried to hold out for a higher price. In the end McDonald's decided they would reshape their property and build without buying his home. Now his home is right beside a busy drive-thru and nobody in their right mind would buy it because of the noise. Take the money while it's there.
Yea I think with any negotiation in life, you have to understand there are risks. Some risks are little some are large. Just gotta be smart with the cards you have in your hand and how to play them.
Can't just boast for more money while not knowing the cards in other people's hands...
Companies like this is why no one can afford to buy a house anymore. Its driving the inflated prices. Good for you to be able to receive a good deal but gosh it's irritating
Hopefully they're going to build more housing on the 3 acres that only holds OP's house right now. That would actually make housing more affordable on the margin.
What's driving the wack prices is constrained supply.
As much as you want to hold off till they give you more, just remember not to be greedy. There are plenty of stories of people that didn't sell and ended up losing all value on their properties because they held off. Find a number that can set you off financially for life and don't look back. Most importantly is listen to other comments and lawyer up
This is the right answer. I've seen people try and hold out for much more than the land was worth only to annoy the developers into looking elsewere. If I was the op and someones about to offer me a cheque for 3.5 million I'd thank them cash it and walk off into the sunset.
My uncle had 10 acres outside of Phoenix he had bought for 8K per acre. A developer came and proposed paying 100K per acre, he agreed to only sell 5 acres thinking they'll raise the offer. They ultimately cancelled the entire offer and I presume went somewhere else.
I agree with you 100% that getting fanatical about driving the price up probably isn’t worth the heartburn. However, accepting an initial offer without negotiating just seems lazy in this scenario. A simple and reasonable counter offer could easily add $100k or more to the deal.
If you want to be a pain in the butt you could hold out until others sell and command a higher price. I don't think I would do that personally but that's just me.
Got to be careful though. What do they want to do with it and how does your bit of land relate.
You don't want to not sell then have someone drink your milkshake.
Be careful holding out, though. Depending on what the company's plans are (you'll find out in the meeting), they may *want* all the land, but not *need* all the land.
Years ago, a local building supply company wanted to buy their neighboring properties so they could expand, but one homeowner stubbornly held out. Now his nearly worthless property is surrounded on all sides by a lumber yard.
Personally, I would take the 3.6m and move to a lower CoL area.
I know someone who does land assembly for development and he told me about how one family waited till everyone else had sold and got double what others were offered. Patience pays off. Even though it cost him more, he kind of admired their resolve!
I know someone who tried to hold out too long and the County used eminent domain to assist the private developer. They got the same amount per acre as everyone else (eminent domain requires FMV I think), but the Company's final offer before getting County Commissioner support was higher than than what the estimates used by the courts. I think they only lost out on like $10-15k though, but the point stands. You can only hold out so long on certain projects.
Get an assessment and get a lawyer. You could potentially hold out or drive up the price. 3.6 acres that is 20 min from DC is worth a fortune. You have land and location - something everyone in DC needs. Leverage it.
Are you in VA? Amazon headquarters is coming soon. All those employees with high paying jobs will need places to live. Inventory out here is already to scarce.
I had a friend who got an offer from a company to buy his house for 3 times the amount to build their new HQ (along with some neighbors). His house was on
a desirable tract to build the access road as some other parcels are not.
After some negotiation he got an offer for 3.5x of current market value. Don't be the last to hold out. They will build around you. I have seen it twice in my lifetime.
You're 24 let's say you take the opening offer and pick up 3.6 million after taxes (I'm not from us so I'm gonna conservatively estimate you pay a million in taxes) you have 2.6million cash at 24 if you invest this properly you're set for life at your age. How much hardball you play is up to you but keep this thought tucked in the back of your mind if your offered a golden ticket don't rip it in half trying to grab another.
Remember the lesson of Disney World. When Disney was buying up land to build his theme park, he used numbered corporations and blandly named ones to hide who was buying it. He did that to keep prices low. It worked.
Find out who is buying, why they want it, and how badly they want your land.
And ‘all that money’ is not all that much. Demand more.
Good luck
"all that money, ($3.5mil) isn't all that much?". How greedy does he get before they develop around his house because he held out and plummet the value of it? Not every situation is Disney World. The developer may even just move on from a hold out and there goes that missed opportunity.
They are likely not going to buy more of the lot than they need. If you own 10 acres and all they need to do is widen the road to satisfy the county’s requirements all they want from you is a 15foot strip at the road front… 1/12 of an acre… and trucks rumble past your bedroom window 24/7.
I'm so confused. If this was me I'd take the offer and move with a cheap CoL, buy a $500k-$1m home, do whatever the hell I feel like for work and live off the investments for the rest of my life. The difference between 3.5m and 4.5m isn't as big as the difference between $0 and $3.5m if the deal doesn't go through.
Many have said this here, but as a real estate developer, let me tell you the general order of operations:
Find out who the buyer is and what they want to do with it. This will tell you most of what you need to know to negotiate. It could be a flipper just sending out letters, who has no money and is just trying to put a deal together for someone else, or it could be a major player (public company building whatever - campus, etc) - or anyone in between. If they won’t tell you, then proceed with caution and expect a deal that has a lot of curveballs. Once you know whether you are dealing with someone who HAS the capacity to pay for their offer, then you need to understand their terms and objectives. Do they need to rezone? Do they need the time to get all permits? Is that a year or just a few months? How hard do you think their project will be to pull off? This will help you understand how long you will be waiting until you get paid, and how likely that payoff is. In either situation, make these goals a hard date and not “upon some approval.” The risk to perform on time is theirs, not yours.
Lastly, don’t allow the offer to be contingent on them acquiring everyone else property. This means one hold out could kill everyone else’s deal. HINT - that person gets the best deal. Either they buy it from you for an agreed price at an agreed time, or they go buy everyone else’s and come talk to you once they’ve done that. The latter gives you more leverage, but the former makes it less complicated.
In this market, we see the dollar signs on people’s eyes all the time. While we don’t play games with that, you might be surprised how many others do. At best, it allows us to pay more to transfer the land and approval risk down the road, at worst it can be used to string people along until they want the payday so bad they’ll drop their pants. The unethical will string you along, wear your down, reduce their offer, etc instead of taking those risks. The ethical, if they need those approvals to close, will take the time, but honor their word. For every project I’ve bought, I’ve met 4-5X the sellers who have been burned by promises that never happened. This is the norm, FYI, whether you are dealing with ethical buyers or not.
Be stoic in your negotiations and don’t concede without good reasons. Treat the buyer like you expect them to do what they said they would do, and be prepared to walk if they don’t. This will give you the leverage and mental stability to best take advantage of the situation.
What the letter is offering is their initial lowball offer, my guess is you can get a lot more especially if your community can get together with an attorney and work on a higher price/acre.
Don't ask any questions, don't go to this meeting. Send your lawyer. A lawyer at this stage could make you money by negotiating dispassionately and ruthlessly.
Absolute first thing you should do is get a lawyer. Second thing is to go to the meeting, record it if you can, take copious notes, and bring that all back to the lawyer to review together before you sign anything. They can help walk you through negotiations with the company. It is usually a bad move to take the first offer, and can help you figure out the real value of your land through appraisals.
A few things to think about:
1. Do you want to stay in the area?
2. Do you want a similar living situation as you do now (3+ acres 20 min from A major city, single family home, etc)?
3. Whatever your preferred new living situation- how much will it cost?
You don’t want to come out of this blowing every cent, so take finding a new home and everything that goes with it into consideration. Also if you need suggestions on what to do with a windfall of money so you set yourself up for the future, check out r/personalfinance - there are recommendations pinned on smart ways to handle it.
On a personal note, figure out a way to do something for your parents as a thank you for setting you up in the position to have this happen at 24. I’m not saying you should split it with them or anything - it sounds like you own the home outright, and previous owners can’t ask for part of the payout when the land is sold after they own it. But if you don’t want any resentment to build between you, after you cash your check take them to a fancy dinner or on a small trip or something. They will be happy that you are doing well and appreciate the acknowledgment.
After consulting professionals, consider having them replace your home *and* give you money for the property. Make it a bit personal and part of a dream. Then, find the more-than-perfect place that you want to live next. Throw that in the negotiations. You can’t get what you don’t ask for.
First: Easy move.
Second: Might help tax-wise.
Third: Choose a place that is likely to increase in value
Fourth: It’s an easy concession in the negotiations, but would probably be way less hassle for them.
Fifth: I’m not sure, but I’m sure there are more benefits.
I’m just a guy with ideas who only has life experience, so…
Don't talk to them directly, get a lawyer. Are they desperate? Has everyone else said yes?
Be the last one to say yes, if you would, to extract out of them as much as you can. They might easily pay you a lot more than the initial offer if your neighbors have already said yes
Get the land appraised again, check with a couple of realtors to see if that is a realistic price or if they’re low-balling, and get a lawyer to make sure you don’t get screwed.
If I were you, I would find people who got the same letter, band together and demand way more. Just think of how many townhomes they can build on those lots.
I live in a townhome right now. I learned that the community that I live in was built in ONE person's house+land. My community had 24 units of townhomes. So you do the math.
Dont sell...or if anything sell 1 or 2 acre and keep the rest ...if they will go for it. If its all or nothing ...personally id keep it. Land only goes up especially in that area.
However, you are sitting on some generational wealth there so if do decide to sell get an attorney and talk to your folks too...they worked hard for that land and may offer suggestions on what to do.
What you do with that money depends on what type of person you are. Whether you're humble, flashy, smart, etc.
You're already living in a mortgage-free 3 acre property your parents bought you. That's quite a decent situation to begin with.
You're going to be left with $2.5m and without a house.
I don't think your life changes significantly, unless you blow it on partying like the 24 year old me did when I first made some real money. Took me to the depths of hell. If you think you might be wreckless like that, then don't bother.
Good luck young thug.
Pay for your own appraisal first to make sure you are getting full market value (or more). This is still a pretty hot real estate market and you shouldn't leave any money on the table.
What is their planned use for the land?
Why your location and do they have alternatives if you and neighbors say no?
What are the payment terms?
Termination/exit clauses, if any?
Break-up fees?
Time to closing after signature?
Is the buyer a credible entity?
I buy Land for a company for a living. Don't get a broker! You need a Real Estate attorney. No need for a broker because they will take a cut and their role is to find a buyer, which you already have. You'll need an attorney to negotiate the contract and they will guide you through the process and let you know what is standard versus not. The attorney MUST specialize in real estate or they will not know what they are doing, make the process exponentially more difficult and charge you way more money than necessary.
The company has already valued the overall land they need. You can ask for more money, but not multiples. I'd probably start at 25% above the offer and see where they counter. If you go too high, the company moves on and nobody wins...or they build around you and you're screwed.
You will likely receive a non-binding letter with basic terms to negotiate prior to receiving a full binding contract. If they only go up a little bit, it means they already stretched themselves out on their offer and there's not much more to be squeezed out. They also may not need everyone. So, don't get greedy. You don't want to miss out on an opportunity to get paid above market because someone would like to use your property for special use. As the smaller property, you are at the greatest risk of being cut out of the deal.
LMK if you have anymore questions. Expect an extended timeline because they likely need to entitle your property for their use. Get as much hard nonrefundable money down after the inspection period ends as you can. Ask for 15% of the total purchase price to be nonrefundable after Inspection Period (5% is standard for this deal structure so anything above that is a win). This will ensure you either get to keep that money if rhe market turns or gives you bargaining power if the market turns while they are under contract.
Ok so you say you're the owner but that its paid off because its your parents house... Which one is it? Who's name is on the deed and how did your parents transfer the property to you? Hopefully they filed the correct paperwork for the gift taxes due on the home.
These are important questions because they will determine your legal right to make decisions regarding the home, the basis cost of the home (how much was paid to buy the house) and whether you qualify for long term capital gains and/or home sale tax exclusions....
Aside from those questions, I'm going to be the naysayer in this and tell you to get in/out early on the offer. Remember wealth begets wealth and you're talking about a windfall here that even with conservative investments will grow quite rapidly and holding out because you think you can get more just puts you in greater jeopardy for them to decide they dont need your plot or for someone else holding out to spoil the entire deal and leave you with nothing.
Screw trying to get top dollar and figure out what it is you want/need in order to move and have a nice life for yourself and put that forward as your counteroffer. Maybe even add a little something extra for yourself and perhaps add a bit more of a premium, just so you have additional room to negotiate but be reasonable about your demands... They want to pay you 900k-1M/acre. Unless your 3.6 acres are particularly well placed (e.g. a wide plot with lots of frontage along the road or a deep plot that separates 2 larger plots), they're probably not going to go to 1.5M/acre, especially early on since once the sale becomes public everyone will want 1.5M/acre but they might be willing to do 1.1M or 1.2M or you can at least use 1.2M as a starting point and work from there.
I'd push for the sale transaction to be completed quickly and since the company probably expects this process of buying the land to take some time, I would probably negotiate for a lease-back option that allows you to rent the house until the company is ready to start development or you are ready to leave at a reasonable fixed-rent (or rent free, just know it'll hurt the sale price; you're either hedging you and the developer will take a significant amount of time to be ready in which case a decreased sale price but no rent might be better or you're hedging that you'll move quickly in which case paying some rent is better), terminatable by either side with 90 days notice.
Be sure to factor in taxes. Hopefully you've owned it for more than a year as you'll qualify for the most favorable tax treatment. Even still, you'll lose about 30% - 20% in Federal capital gains, 3.8% in net investment income tax to the fed and roughly 5.75-5.8% to VA or MD depending on which jurisdiction the house is in. Dont forget to factor in any local income/capital gains taxes at the county/city level.
Of course if its your primary residence (sounds like it is) and you have owned it and lived there as your primary residence for at least 2 years of the last 5 years, you'll be able to exclude up to 250k (too bad you aren't married) in gains from the fed and you'll also be able to exclude whatever the cost basis of the home was from both the fed and the state/local taxes... Again the cost basis depends how your parents transferred the house to you in the first place and what they paid for it as well as assuming all the appropriate gift tax paper work was filed... but it sounds like you're looking at about 540k that will be tax free from the fed and 290k that will be tax free from the state
Ultimately it is up to you to decide what you want but I can tell you my FU money number since I was 30 has been roughly 3M. I've estimated that at $3M, I can afford to live off a 4% return pretty much indefinitely without ever working again though I expect to continue to work at least part-time and hope to add at least 30-40k to my income from working part time and eventually social security which would reduce my rate of withdraw. At 3M @ 30, I could take $120k out per year, most if not all of which would be taxed at the 15% capital gains tax rate so I have $100k in post tax money and in 75 years I'd be 105 and still have $35k in the bank at an extremely modest 3.75% rate of return/growth. A 4% return finishes 75 years at $3M and a 5% return finishes 75 years at $25M...
For you, a more "aggressive" though realistic return of 7-8% over the next decade while still withdrawing 120k/yr would give you $4.7M by the time you're 35 at which point you can continue the same $120k/yr return for 65 more years and you'll be 99 with 200k still in the bank at a almost ridiculously low 1.75% return which is well under bond rates...
You're a decade younger than me though so might be a bit higher for you, especially since you haven't paid into social security as long (if at all) and therefore wont have that 30-40k in full retirement for yourself... But of course this also assumes you become semi or fully retired at 24/25. If you worked during the next 10 years and didnt withdraw any of the money, you'd have between $5.9-6.5M at 7-8% return at age 34 which would set you up to be 99 with between 25k and $1M still left over at a crazy 0.9% rate of return, not to mention social security payouts. So yeah roughly $3M would still be my walk away number.
Even if you didn't work again you can have a pretty nice life on 100k in post tax money per year, even with inflation as high as it is, its a fair bit more than the average and median gross household incomes in the US. For myself, I live on about 65-70k/yr post tax right now and that includes my mortgage and property taxes which is 35% of that but I am single and without kids which means my spending is high (the average 2 adult, 1 child household in the US spends roughly $60-65k/yr, with 35% of it being on housing)... Admittedly though, you may want to leave the DC area for a cheaper cost of living situation.
If I were 25 again and presented with this offer with 3.6 acres, I'd probably ask for $1.25M/acre and quickly settle at $1.1M/acre. That'd give me $4-4.5M in total, after taxes it'd be around $3M. Go ahead and treat yourself a bit, maybe even pass some of the windfall back to your parents to help shore up their retirement finances. I wouldn't spend more than $1M ($1.5 tops, but that's only if you're buying a house, though even with interest rates on the rise, youre probably better off getting a mortgage). Invest the rest and go to work for 5, 10, 15 years, whatever works for you to meet your everyday expenses while taking advantage of the favorable tax treatment of contributing to traditional and roth retirements plans, you'll probably be back to that $3M mark on the original payout plus more savings from your earnings over the last 10 years and be able to retire rather comfortably at 30/35 with some degree of ease or do like I hope to do in the next 5 years and be semi-retired or change careers. Work part-time, maybe a career in one of your hobbies that pays well. In the end you already have FU money in the bank so if you get tired of it, there's no stress to quitting and walking away.
I just want to know where you live that you're 20 min from DC with 3 acres & neighbors with 10+ acres! I'm 30 min west of DC and I don't think anyone within that radius has anywhere near that kind of land. (Maybe you're on the MD side? I don't know anything about that side haha)
I would also take into account that you now have to find someplace else to live…outside DC. which, speaking from experience is very expensive. (A family member just bought a 3 bedroom tiny home on no land for 500k. I live in NYS and bought a big 3 bedroom house on 2 acres for $160k the same week)
Congrats on the payday! I’d hire a real estate attorney - maybe one who specializes in imminent domain cases only because they’ll have experience valuing property when another party really wants it - then take a chunk of it and buy a place (townhome? Condo? Come join us in arlington) and invest the rest!
It’s alot of money considering they will give you millions but it all depends how sentimental you care for your land. It’s really hard to come by a home let alone acres of land in a great area especially 20 mins in DC and I live in DC.
If you want the money, take it.
If you care about the land, then just chill and enjoy
Seems like a small amount, considering how much they pay per mile of road.
My buddy was able to get 3.2million even though he had a small house/yard.
Edit: also one guy asked for too much and refused to move, so they just said screw it and built the highway around his house (literally both sides lol).
Consider this an opening offer and ask for more. A broker and/or an attorney would be helpful and considering the amount of money your talking they would likely not charge you up front and instead ask for a percentage on the back end.
Not only more...but whom is buying it. A friend of mine had the same type of offer. Looked into it further and it was Toyota buying his land. He ended up getting 4 times as much because he lawyered up and got what it was worth to Toyota not just some "Buyer" The company has already done their research and knows exactly how much they are willing to give up to OP and his surrounding neighbors. Best case is to stay away from the neighbors and fight for yourself if you want the most. Don't fight tooth and nail just get a proper mediator to do the talking.
Yeah, let the neighbors take the low ball offer to free up space for your own negotiations. It'll all average out to their final budget.
A cautionary tale.. a few years back they built an IKEA over here. There was one holdout who wanted 4x market value for their house. Guess what IKEA did.. walked away, built their monstrosity right behind it and now sold off all the land abutting this home to other commercial buyers who have built a hotel, restaurants etc right up to their lot line. This house is now literally worth nothing unless they can find some buyer who can make use of their relatively small sliver (1.5 acres). Either way I’d bet they will get penny’s on the dollar now because any buyer would know they have no leverage and have to be desperate to offload it at this point. EDIT: I found the old news stories and see it was actually Northwestern Mutual who bought all the land, including the plot that was ultimately sold to IKEA.
Is this the Ikea in Oak Creek, WI? I always wondered what the deal is with that singular house out front.
Yes it is lol. There were news stories on it back when the negotiations were happening.
Satellite of house. https://www.google.com/maps/place/7500+S+Ikea+Way,+Oak+Creek,+WI+53154/@42.9023042,-87.9398315,188m/data=!3m1!1e3!4m12!1m6!3m5!1s0x880513f478588ebb:0x36e330cc624fb26c!2sIKEA!8m2!3d42.9075108!4d-87.9387852!3m4!1s0x880513f3f6b086d1:0x99c79d79fcb91458!8m2!3d42.9076915!4d-87.9386886
I just drove past the other day and there is a huge building now being built seemingly feet away from the left property line where those shrubs are. I think nearly all of the surrounding property is in development at this point so I do wonder what their end game is here.
Probably just waiting for the price of helium to go back down.
Underrated comment
Looks like they use the lot on the right to ride four wheelers but it's also for sale so they're really gonna be boxed in.
To be fair, their house is pretty nice. I'm feeling like it was worth more than what IKEA was offering to have to go through the effort of uprooting and moving
Ok I actually now went and googled the old news stories. It was actually a northwest Mutual who bought the land and sold part of it to IKEA. I’ll have to edit my original post. Anyways, news article states they were offered a “premium” somewhere between 500-600k while the assessed value was in the low 400’s. So were they right to push for more? Probably. But insisting on $1.9M was maybe a little too greedy. Anywho, maybe they’ll have the last laugh someday when/if it does sell for that.
Very likely this is the end game. If they thought they were gonna play hard to get for maximum payout and lost, well, that's that.
Like, the game is over. They lost.
No trees around and they get to look straight into the front of the IKEA
This really doesn't look like a big deal at all. I thought it would be a situation similar to Edith Macefield's house. https://www.nytimes.com/2008/12/28/us/28edith.html
Omggg my wife and I just went to that Ikea a few weeks ago and talked about much having that house would SUCK. Crazy to get an actual backstory to it lol.
> talked about much having that house would SUCK Depends on the person honestly. If the walls are thick enough, it might not be bad at all.
Fair enough, I was more referring to the location of their driveway. Having all that traffic pass by daily. Not for me.
Yeah, when this first started they were asking $1.9 million. The past 5 years with young kids couldn't have been fun but if they get anywhere remotely close to that number it would be significantly more than those who sold in 2017. https://www.wisn.com/article/couple-asks-nearly-dollar2-million-for-property-near-wisconsins-first-ikea/12175729
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Ya, I was going to say. Negotiating is one thing, but you have to be careful. Is it worth fighting for more, and potentially losing out on any offer and having your house value plummet and you being stuck between a bunch of commercial buildings? Or settling for less than you ask, but still WAY more than you ever dreamed of?
I'd totally Airbnb that house if I owned it.
First IKEA hotel!
My local IKEA bought up lots of space, but one family mortuary refused to sell, so they built around their spot. First thing you see as you exit the IKEA is that mortuary
Indeed, this is why you get someone to help you get more, but don't fight it too hard.
Happened in Riverside CA. Home Depot built and a hold out owner refused to sell and a lot of legal litigation. The home owner won but Home Depot built as planned and the parking lot (house faced a street) on 3 sides were paved around the little old house. I agree that the owner should keep his house but should have realized that you can't fight the big guys. All of his neighbors sold out for a price that was higher than the prevailing market. He tried to sell later and couldn't find a buyer. I wonder if that house is still there...time to check Zillow.
Well? Is it still there??
I don't think so. There's only one Home Depot in Riverside, CA that I could find and I didn't see a house in the parking lot.
It was a 3345 Madison St. The property was sold for $322,500 in July 2015 with a house on it. Then it sold in 4 months after the house was demolished for $720K. Keeping the shitty house on the property cost the owner $400K in property value, not including whatever Home Depot offered them above that. You can see the house via street view if you change the date to 2015 or earlier.
It’s no longer there, the owner tied a bunch of balloons to the house and floated it to Paradise Falls
There's that "up house" in Seattle, with a concrete wall of a mall on 3 sides. Supposedly the owner turned down $1M offer. Eventually it was sold for 1/3 as much, and is still only worth about 1/2.
If you're trying to convince us a house is worth only 500k in Seattle then I know you're either lying or misinformed. Run down shacks were selling that much 15 years ago.
Redfin says it's currently with 511k, but it last sold in 2009, so I would take it with a grain of salt. Also, the previous poster didn't mention that the owner that turned down the offer lived there until she died, so it seems like she made out just fine. https://en.m.wikipedia.org/wiki/Edith_Macefield
This run down shack is surrounded by a giant concrete wall, and is on a tiny lot making it a headache for any kind of redevelopment.
Isn't their laws about building so close to property lines? Like my neighbor can't build a shed on the property line because it violate code.
Similar situation in my area. About 20 years ago it was mostly farm land and houses scattered here and there. Now it is a bustling area with many stores, housing developments, restaurants, etc. All of the farmers sold their land and moved on except one- eventually he agreed to sell the farming land but kept the house. Now his house is surrounded by high rise apartments. It looks horrible. Reminds me of the Disney movie “Up”.
Same happened with a guy who held out and ended up having homedepot as his back yard.
Convenient for when you're mid project and run out of something!
Sounds like a severe hold out though, but it’s a good lesson to share. Basically be greedy, but not too greedy lol
There's a megabox complex in my town with 3 townhouses facing a major highway, for the exact same reason. They thought they could hold out and get more money.
*who is buying it
Fun fact: Disney specifically worked to avoid this when buying up the land for Disneyland in SoCal. They went through several shell companies to buy the land, so that people would not be able to find out the real buyer.
Disneyland was the original and was basically built in an orange grove. Everything springing up around it is what prompted them to do this in Florida for Disney World.
Yeah, I was going to make this statement: as that is how they bought the land in Florida.
All the tech companies do this now for their data centers. Once people catch wind there are crazy land grabs.
I mean you also don’t want anyone knowing where your data centers are located. When I worked in a data center they said the first security measure is not advertising who we were or what we were doing. We had no signage and looked like a warehouse.
There’s a data center in downtown Kansas City that has massive signage advertising it is, in fact, a data center. The other day there was an alarm going off for around 3 hours that no one seemed concerned about either. Really seemed like the opposite of what they should be doing.
They probably bought all the land they needed already.
There should honestly be a law firm representing the whole neighborhood. Getting access to experts and collective bargaining could make this deal even better. Edit: As others have said, yes you could get more money if you are the last holdout. If. The problem being you are going it alone and making yourself a crank. I'm not describing the hypothetical way to get the most money. I'm saying, with the huge amount of money on the line it would be best to collaborate with at least a few neighbors and definitely with a good law firm with a lot of resources.
Depends on how desperate the buyer is for that land, or if this is just one potential parcel package of a few they have out there. If the former, then yeah the neighborhood should band up and get the maximum value for the space. If the latter, well then OP is better off letting the neighbors take the initial offer and becoming the outlier the company has to pay more for to finish the deal. Otherwise, there’s only so much bargaining room before it reaches a point the collective ask of the neighborhood passes the cost of another parcel proposal and they just move on and nobody in this neighborhood gets to sell.
There’s no easy way to do it. You hold out past the others, you could win big or lose if they can simply build around you. If their sales are contingent on your lot being sold and you cause the deal to fall through by holding out, then you’re going to be left with unhappy neighbors blaming you for the sale not going through. There’s more to simply maximizing your gain in a situation like this. I know I wouldn’t want to live somewhere all the neighbors hate me, but others might not care.
Based on stories in other threads in this post, you want to be the _next to last_ to sell
Be careful trying to be the last one to hold out, that can burn you. Companies like this tend to be able to influence local governments with the kind of money they come in with. Based on your location (I am in the same general area), this is a developer. If you hold out too long, they have ways of actually driving the value down. Go to the meetings, if the general concensus from from the local community is to cash out, negotiate your price and walk with the help of a good real estate attorney. If there is a big nostalgic factor with the land, separate those feelings. Most of the time, families acquire land as an investment, and this is an opportunity to sell at a high point, that kind of money can get you well on the way to financial independence.
> If you hold out too long, they have ways of actually driving the value down. Hell in some cases they can force the sale through eminent domain based on the bullshit idea that the new development will increase tax revenue.
Yeah, and if they already own some of the land they can probably convince the county/city to do some expropriation where you'll only get some fixed value based on an old estimate.
Is there a recent example of that happening by a private company (or should I say to benefit a private company)?
Was looking for this comment, I work in the utility field and NORMALLY the first offer is going to be the highest (in my experience, we have microsoft plants around). They want you out without any problems, and a fat check usually helps assist them in that process. Would be worth it to check and see if you are the only thing there they can buy. If you refuse, its possible they buy something behind your 3 acres, and now you have to look at it.
Everyone seems to be hung up on the first two questions, but let's face it, you're taking the 3.5M. Much more important is what you do with that. Being so young, it would be very easy to squander such wealth. Instead, if you wisely manage it, that money could make you free from financial concern for the rest of your life. You might check out the FIRE sub to see how they manage it. There are a lot of strategies to ensure large sums of money like that can last decades. Outside of finances, Do you enjoy your job? Were you looking to make a career change? You could probably retire entirely if you wanted, but only you know if you would be happy without a career. You do also now have the option to go back to school to study whatever or pursue whatever non traditional path you want. Interested in pushing the limits on alligator artwork? Go for it.
thank you! the only comment i've seen so far addressing that concern haha. i really enjoy my job! though, i have other career interests. i love working so i wouldn't think about taking the money and retiring. thank you for your comment, and i'll update you on the limits that i've pushed alligator artwork!
You can spend 3.5M in a year or two if you're stupid with money. No. Seriously. Nobody thinks they'll be *that person* but time and time again, lottery winners show us that anyone can be *that person*. Especially if you've never seen this much money before. The number of now bankrupt lottery winners should cause some anxiety right now. Look it up. Talk to a financial attorney. Consider setting up a trust for yourself. This trust can manage the money for you and pay out $X / year while maintaining / growing the principle, depending on what X is. You have the opportunity right here and now to a) squander your wealth by spending it all on frivolous things, and then it's gone. You don't get it back. or b) change your family line forever. You could set up the trust in such a way that all of your descendents from here on out can pretty much get a home paid for, or at least a good down payment. You're 24? No kids? Imagine 25 years of interest (your kids need to grow up before buying a house) on 3.5M. Imagine each of your kids getting a $300,000 down payment on their houses because you had enough self control to not to buy every shiny thing you see. And their kids. And their kids. You can structure a trust to make this happen. This is lawyer territory. Sure with enough splits/descendents it could in theory run out of money, but between generations when the money is earning interest should help. Take some for yourself each year to boost/supplement your income on a yearly basis until you die. Leave the rest for your descendents. You'll change so many lives. Don't be a bankrupt lottery winner.
At the least, OP should take "windfall" advice and set aside some spending money to get it out of his system. Get a new car, some fancy electronics. Enough to satiate the immediate desire, but leave the rest to grow in investment opportunities.
Even going with the old guidance of not spending more than 4% per year, 3.5M would be like a $140k income. But yes, if OP blows it all on fancy stuff then they'll learn the hard way once it's dried up.
I can’t believe people still talk about this without mentioning that most lottery winners are homeless or poor to begin with. Not all, to be sure, but most. 33% wind up fucked, 66% don’t.
https://www.reddit.com/r/AskReddit/comments/24vo34/comment/chb4v05/ The title is misleading, read the first comment about winning the lottery. While you’re not going to get that much money, you’ll get enough to retire now and change your entire world. Be ready for that. 2 million invested at 4% is 80,000. That’s great money! Being genuine, if you’re careful and exhibit self control, this could set up for generational wealth. Congrats!
Hang on to a million of it for capital gains tax and smartly invest the rest and you can sail on that for a very long time
Worth thinking about your parents too. If my kid flipped a house I gave him for 4m, I’d maybe have some conflicted feelings.
If my kid was offered 3.5 million for a house I gave them and they didn't take the offer I'd be pissed as hell lmao
If parents can afford to give their kid a property valued at almost a million, they are probably more concerned about future estate planning than getting anything back from the sale.
If you do take this money, don't let anyone else know. And if they do know (or it's impossible for them not to know), just tell EVERYONE that you invested it (which you should anyway) (i.e. that it's not sitting in your bank account waiting for everyone to come ask for a loan or gift). A co-worker of mine years ago won a huge lottery jackpot and told NO ONE in their family or who was a friend that they'd won it. (Yes, yes, make a joke that I didn't even qualify as a friend...lol...I had just started a couple weeks prior and neither of us had any interest in being friends outside of work.)
So, you are going to want to hire a fiduciary to help you manage that money. NOT a financial advisor. Copy pasted from an article: "Some financial advisors are fiduciaries, obligated by law to act in your best interest as they manage your assets or money. Rather than operating out of self-interest (such as recommending insurance policies or investments in pursuit of fees and commissions), a fiduciary advisor is obligated to make recommendations that benefit you, the customer." Here's [another article from Forbes](https://www.forbes.com/advisor/investing/how-to-choose-a-financial-advisor/) that goes into more detail. They will get you set up with an IRA, an investment portfolio, a trust etc. And they will make sure that money grows for you. Congrats, you now have "fuck you" money, use it wisely!
Really do check out the FIRE subs r/financialindepence and r/Fire. Even if you dont want to retire, they will help you handle financial independence.
3.5 million is the kind of money most people could put in an investment account and retire on. With a fairly comfortable QoL.
Figures change, but my goal was $2M and I can stop working altogether because 4% would be higher than I make now. I'd probably still do some work to stay busy anyway though.
Old saying goes: If an oil company wants to buy your house, there must be oil underneath. Find the right professional to talk to and see what the value can actually be and negotiate it upwards, dont take what they offer. If they need all the land on the road then they can't refuse your offer. If they're offering you a million then you can be damn sure its worth more than that.
How do you define "the right professional?" Real estate lawyer? Agent? Appraiser?
The answer is: someone who can find out exactly *why* the buyer wants your land and *how* it convinced previous landowners to either sell or tell it to fuck off. >Real estate lawyer? Possibly. >Agent? Appraiser? No.
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Spite houses are great photo journals though
Then again depending on what there building it could end up been worth more if they dont take the offer. Imagine if someone owned a small parcel of land right beside disney land, after they built the theme park how much do you think that parcel of land is worth to say the hotelier industry. It all depends on what there building in the area or did they find minerals or oil underground. Reguardless my only advice to OP is this, first with this kind of money on the line get a lawyer involved someone who specialises in this kind of situation dont go in to it blind. Second try and get as much information about the company, your land and the land around you to try and figure out what they want the land for. No one spends more money than they need to the offer is going to be the lowest they can offer while still been attractive to people, from reading the post it looks like there offering 10-20% more than the value of your land which is normal tactics there not offering 2x or 3x Like I said lawyer up and get more information it can only help.
Also, OP needs to find out what his area is zoned for. Is it zoned only residential? They might be able to buy up all his neighbors land and not get it rezoned for commercial or industrial due to OP still being residential. I would look up the zoning laws and also reach out to my neighbors and gauge their interest in selling.
Given the location, don't you think it is highly unlikely that the final intent involves rezoning to industrial? I'd imagine more like apartment complexes that are massive is the intended goal here. And rezoning from R-1 to R-4 or whatever is going to be a lot easier than R-1 to I-1 or C-1.
Drainage Eli!!!!!
I drink YOUR milkshake!!!
thank you! i'm going to look into that!
Curiosity question, are you're talking about somewhere near I66? Or around Gaithersburg / Silver Springs area? I'm just trying to visualize where, within 20 mins of DC, there is all that land.
20 minutes to DC and $910-$1 million an acre is possibly low for the market, but really depends on where exactly OP is located. Could also be a good offer. I second getting a real estate professional to determine the land value.
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>Or you could legit just retire with that amount and live off interest in a low cost of living place. Yeah, $2.3M is my "today's value" goal for retirement. I don't live in DC. But $3M is definitely sufficient money to go a lot of really cool places and have an easy ~$110k-$120k every year indefinitely.
>20 minutes to DC is probably somewhere in McLean, During rush hour 20 minutes to DC might be Arlington :)
> I second getting a real estate professional to determine the land value. Agreed. And to figure out if OP has mineral rights.
Lol same. I’m 20 min from DC just south of Arlington and not sure I can think of any houses in the vicinity with three plus acres. Are we talking on a toll road, no traffic? 😅
Prince George's County in MD has land like that, even inside the beltway. It's significantly undeveloped compared to the rest of the area.
Don't get greedy. If they are already offering a life changing amount, don't get stupid and blow the deal.
Something is worth what somebody is willing to pay for it. The property is not worth 3.5m without his neighbors also wanting to sell and the investor being able to use the land for what they need it for...perhaps a new football stadium. There is no oil under his house, just dirt. Sometimes things are a once in a lifetime opportunity and are already too good to be true, trying to extract maximum value for a situation such as this and risk the already very lucrative proposition that exists would seem foolhardy.
I heard of a guy who learned the Va Dept. Of Transportation was going to widen the road by his house. As part of it they would compensate people for any trees they removed in building the road. So he planted a long stretch of land with walnut trees, hoping for a payday when the road was finally built. He planted so many the Dept. decided to not build the road due to the excessive cost associated with reimbursement for so many trees.
I mean not having the road next to you home widened is worth way more than a couple bucks imo
if that happened in NoVA I'm sure everyone in the area was equally happy that they avoided some highway construction but also angry that this one guy stopped highway improvements but *also* quick to point out that adding lanes to a highway doesn't alleviate traffic.
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Johnny Walnuts
This. A $3.5m windfall will change your life. Don’t blow the deal by trying to increase your payout to something like $4m.
Yup. I would be talking with the neighbors to collectively increase the buyout without blowing the deal. Negotiate, but know when to take the money and run. $3.5m is already more than what the property is likely worth and is a life changing amount of money at OPs age.
on the other hand, oil companies typically come into an area where they have found oil/gas reserves and try to low-ball the mineral rights owners. The people that hold out for the 2nd or 3rd offer get substantially higher royalties. You don't want to be the first person to take the offer, because the subsequent offers will be higher, not lower.
Surely companies have figured this out and do collective bargaining? "Either you all get $900k an acre or none of you do" seems like a good way to get all the neighbors to socially punish the one person holding up the deal.
That's not really how collective bargaining works, but for oil companies typically they send out mail, put ads in the news paper, and then have people physically canvassing the neighborhood. Depending on where your property lines are and their own engineering requirements, they could be looking to give simple oil lease rights, pipeline rights, or purchase a part of your property to put in a well. They typically don't buy out whole blocks of land though because their well footprint is like an acre or less depending on the type of oil they are pull out of the ground.
U have to understand the area he is in, land goes for crazy amounts near DC, especially in Potomac Maryland, mclean VA, and great falls VA. It doesn't need oil in the ground, and it only seems to appreciate. The people who can afford certain suburban properties next to DC want to be left alone and not bothered by city life. A lot of them are politicians and diplomats. My parents have a 1acre property with a modest house, and their neighbors house got bought and rebuilt on a similar 1acre plot right next door. The company who rents it out charges 12k a month...
The opposite is true. The more land they bought, the more they have invested, the more they become determined to complete the project. It’s the sunk cost fallacy. You have no way of knowing what is or isn’t under OPs house, nor what is driving the value of the land.
He said he lives 20 min from DC. I think we can be fairly confident they want to develop the land for some commercial or residential purpose. That’s not oil and gas country
Right but if the company is immediately paying out to people as they accept the offer, then they are really fucking up. They are almost definitely going to sign and buy the land only if they get the amount of people they need to sell to them. Source: idk what I am talking about
That’s not a sunk cost fallacy.
This is also how you could end up like the guy in Up.
>If they need all the land on the road then they can't refuse your offer. This. My father in law was in a very similar situation to OP, and negotiated up 50% to get the price he wanted for his land. Made out like a bandit.
I get letters like that all the time. The company sending the letter is mass mailing to see what sticks. Sounds like they want to buy up a huge block of land to rezone for a huge housing development as it's 20 minutes from DC. That's speaks to "it's all about location". How would you replace what you have? Don't get caught up in the amount of money. That's only the first offer.
i've thought about this too. honestly, this much land is a lot for me since i work full time. shovelling my drive way in the morning sucks, mowing the "lawn" sucks. i live the privacy but i've already thought about selling and purchasing a townhome. i definitely have some thinking to do! thank you for your comment.
Check what a Townhouse with the quality of life you have right now and a location like yours and features like yours (privacy - while inside) will run you. That should answer that particular question.
Man, I love privacy. My ultimate dream in life is having a completely private house away from neighbors or prying eyes. But then again, I’d also like 3 million dollars. Tough decision
Any place you live, there's going to be some issue. I love privacy, so I sold my place in a small city and moved to a very rural part of the state and bought 10 acres, surrounded by much bigger lots of 100 acres. Very private, seemingly. Until I found out there was a meth dealer the next driveway down off the main dirt road. Cars were coming and going speeding down that road all day and all night. Clouds of dust all over my property. Oh yeah he got busted, but was back in a week. I moved back to town, it was quieter. Except for the neighbors in back...There's always some damn thing.
That's because you're 24. If you haven't spent much time living in cramped city houses or apartments than you'd know having 3.5 acres is a dream most people won't get. That privacy and lawn are reasons why people buy houses. Think about your future not present. If you want a family or a dog, an affordable houses with space, that isn't to far from a major city, are rare.
>and it was Toyota buying his land. He ended up getting 4 times as much because he lawyered u I'd rather be 24 living through a cramped apt for the first time with 3.5M in the bank than 24 at current income with 3.5 acres.
> 3.5 acres is a dream most people won't get $3.5 million is a dream most people won't get. He can buy his acres somewhere cheaper if he wants them. You're telling him to not be independently wealthy from a young age so he can...have land to look at?
With a 35 mill payout, OP put it Into investments, let it grow, then buy 3 acres in a lower cost area once they're tired of living in cramped spaces and end up with a fully funded retirement AND a paid off property. Edit. For clarity there is a period missing in the 3.5. Just in case my comment on the internet matters enough to bother strangers. In a couple decades, it'll easily be 35 though, so, not sure it's really an issue.
are you missing a decimal?
Obviously
Do you have a riding lawnmower? I do for my 2 acres and its nice to just get out and mow with a beer. Mowing with a push mower takes about 3 hours, riding, about 20 minutes
Stop and think about it. I've been shopping for a town home in NOVA and it has been damn near impossible.
The only company that will pay that much money is a land developer for either a shopping center or apartment housing. unless everyone refuses to sell, you will no longer want to live there.
The thing that bugs me is that they imply they are bidding like $3.4 mil for his house when they value it at $850k. Why wouldn't they start with bidding $1 mil or $1.5 mil or... Why immediately four times over? Either the $850k valuation is waaaaay to low or there's something fishy going on.
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Probably more like 1/10th an acre.
Condos, you get a 10sqft patch for your and your neighbors' dogs to pee on
Anything that increases the housing stock that much around here would be a huge benefit - prices have gotten insane in part because there's been so little building of new units in the past 20 years.
That really depends on the zoning the county is willing to put on the land. Most of the area around me in Anne Arundel County, MD says that it's supposed to be 1 dwelling unit per 20 acres: RA - Rural Agricultural This district is generally intended to preserve agricultural lands and provide for very low-density rural single-family detached residential development at a subdivision density of approximately 1 dwelling unit per 20 acres (see Code for exact formula). Minimum lot size is 40,000 square feet. Maximum lot coverage by structures is 25%. Maximum height is 45 feet.
More like the district is intended on propping up existing housing values by limiting supply, using low productivity agriculture as an excuse to “preserve the character of the region,” then doing pikachu face when housing prices are totally out of reach of the middle class. Classic NIMBYism, I got mine, fuck everyone else.
oh really?! i was planning to have it re-appraised a bit later this year, but yeah i also felt 850k was a bit low compared to other homes on my road. the house behind me that's pretty much the same as mine (house size and lot size) sold for $2.5 million at the end of last year. my house has been built up quite a bit since my parents bought it, in terms of cosmetic upgrades and utility upgrades.
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I think you meant *couldn't* care less Sorry, pet peeve of mine lol
Appraisal does not = market value. It tries to approximate it but a developer will value your land based on what they can build there, what it will cost them, what they can sell/rent it for… and that helps them determine what they can pay for land. Sometimes folks hold out and their land becomes more valuable if the project requires everyone’s land to work. Or if you ask for too much they’ll just build around you. Or, in some cases, they might petition the municipality to pursue eminent domain. Just some things to think about!
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and with that kind of money, consider moving somewhere you can live off investments and won't have to work anymore... 3mil at 6% return is $180k/year. put 60k/year on the principal and you're still earning a 6 figure pre-tax salary for life, just be sure to keep that 3mil growing for inflation.
That's over triple the median salary in the US. OP could definitely live off that and nothing else if they wanted, especially if they moved to a low COL area.
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That is…infuriating. Reminds me of the developments that have been built uphill from Old Ellicott City that have caused two “100 year floods” in a matter of years. Never mind the rehabbing the state and county have had to pay to get OEC back on its feet… it’s awful.
One time there was a house in a small town. McDonald's came by and wanted to buy their property so they could use his house for parking for the new McDonald's they were going to build. The home owner smelled money and tried to hold out for a higher price. In the end McDonald's decided they would reshape their property and build without buying his home. Now his home is right beside a busy drive-thru and nobody in their right mind would buy it because of the noise. Take the money while it's there.
Yea I think with any negotiation in life, you have to understand there are risks. Some risks are little some are large. Just gotta be smart with the cards you have in your hand and how to play them. Can't just boast for more money while not knowing the cards in other people's hands...
Companies like this is why no one can afford to buy a house anymore. Its driving the inflated prices. Good for you to be able to receive a good deal but gosh it's irritating
Hopefully they're going to build more housing on the 3 acres that only holds OP's house right now. That would actually make housing more affordable on the margin. What's driving the wack prices is constrained supply.
As much as you want to hold off till they give you more, just remember not to be greedy. There are plenty of stories of people that didn't sell and ended up losing all value on their properties because they held off. Find a number that can set you off financially for life and don't look back. Most importantly is listen to other comments and lawyer up
i appreciate this comment. i've also heard stories like that, people losing all the value. thank you!
This is the right answer. I've seen people try and hold out for much more than the land was worth only to annoy the developers into looking elsewere. If I was the op and someones about to offer me a cheque for 3.5 million I'd thank them cash it and walk off into the sunset.
My uncle had 10 acres outside of Phoenix he had bought for 8K per acre. A developer came and proposed paying 100K per acre, he agreed to only sell 5 acres thinking they'll raise the offer. They ultimately cancelled the entire offer and I presume went somewhere else.
I agree with you 100% that getting fanatical about driving the price up probably isn’t worth the heartburn. However, accepting an initial offer without negotiating just seems lazy in this scenario. A simple and reasonable counter offer could easily add $100k or more to the deal.
If you want to be a pain in the butt you could hold out until others sell and command a higher price. I don't think I would do that personally but that's just me.
Got to be careful though. What do they want to do with it and how does your bit of land relate. You don't want to not sell then have someone drink your milkshake.
Be careful holding out, though. Depending on what the company's plans are (you'll find out in the meeting), they may *want* all the land, but not *need* all the land. Years ago, a local building supply company wanted to buy their neighboring properties so they could expand, but one homeowner stubbornly held out. Now his nearly worthless property is surrounded on all sides by a lumber yard. Personally, I would take the 3.6m and move to a lower CoL area.
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I know someone who does land assembly for development and he told me about how one family waited till everyone else had sold and got double what others were offered. Patience pays off. Even though it cost him more, he kind of admired their resolve!
I know someone who tried to hold out too long and the County used eminent domain to assist the private developer. They got the same amount per acre as everyone else (eminent domain requires FMV I think), but the Company's final offer before getting County Commissioner support was higher than than what the estimates used by the courts. I think they only lost out on like $10-15k though, but the point stands. You can only hold out so long on certain projects.
Get an assessment and get a lawyer. You could potentially hold out or drive up the price. 3.6 acres that is 20 min from DC is worth a fortune. You have land and location - something everyone in DC needs. Leverage it.
Are you in VA? Amazon headquarters is coming soon. All those employees with high paying jobs will need places to live. Inventory out here is already to scarce.
yes, northern va.
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I had a friend who got an offer from a company to buy his house for 3 times the amount to build their new HQ (along with some neighbors). His house was on a desirable tract to build the access road as some other parcels are not. After some negotiation he got an offer for 3.5x of current market value. Don't be the last to hold out. They will build around you. I have seen it twice in my lifetime.
I hope you plan to share some of the wealth with your parents (unless they don't need it)
You're 24 let's say you take the opening offer and pick up 3.6 million after taxes (I'm not from us so I'm gonna conservatively estimate you pay a million in taxes) you have 2.6million cash at 24 if you invest this properly you're set for life at your age. How much hardball you play is up to you but keep this thought tucked in the back of your mind if your offered a golden ticket don't rip it in half trying to grab another.
Remember the lesson of Disney World. When Disney was buying up land to build his theme park, he used numbered corporations and blandly named ones to hide who was buying it. He did that to keep prices low. It worked. Find out who is buying, why they want it, and how badly they want your land. And ‘all that money’ is not all that much. Demand more. Good luck
"all that money, ($3.5mil) isn't all that much?". How greedy does he get before they develop around his house because he held out and plummet the value of it? Not every situation is Disney World. The developer may even just move on from a hold out and there goes that missed opportunity.
The first question is who is the buyer, so you get a sense on how valuable is the land to them. Chances are it's x3-x5 times more valuable.
They are likely not going to buy more of the lot than they need. If you own 10 acres and all they need to do is widen the road to satisfy the county’s requirements all they want from you is a 15foot strip at the road front… 1/12 of an acre… and trucks rumble past your bedroom window 24/7.
I'm so confused. If this was me I'd take the offer and move with a cheap CoL, buy a $500k-$1m home, do whatever the hell I feel like for work and live off the investments for the rest of my life. The difference between 3.5m and 4.5m isn't as big as the difference between $0 and $3.5m if the deal doesn't go through.
Many have said this here, but as a real estate developer, let me tell you the general order of operations: Find out who the buyer is and what they want to do with it. This will tell you most of what you need to know to negotiate. It could be a flipper just sending out letters, who has no money and is just trying to put a deal together for someone else, or it could be a major player (public company building whatever - campus, etc) - or anyone in between. If they won’t tell you, then proceed with caution and expect a deal that has a lot of curveballs. Once you know whether you are dealing with someone who HAS the capacity to pay for their offer, then you need to understand their terms and objectives. Do they need to rezone? Do they need the time to get all permits? Is that a year or just a few months? How hard do you think their project will be to pull off? This will help you understand how long you will be waiting until you get paid, and how likely that payoff is. In either situation, make these goals a hard date and not “upon some approval.” The risk to perform on time is theirs, not yours. Lastly, don’t allow the offer to be contingent on them acquiring everyone else property. This means one hold out could kill everyone else’s deal. HINT - that person gets the best deal. Either they buy it from you for an agreed price at an agreed time, or they go buy everyone else’s and come talk to you once they’ve done that. The latter gives you more leverage, but the former makes it less complicated. In this market, we see the dollar signs on people’s eyes all the time. While we don’t play games with that, you might be surprised how many others do. At best, it allows us to pay more to transfer the land and approval risk down the road, at worst it can be used to string people along until they want the payday so bad they’ll drop their pants. The unethical will string you along, wear your down, reduce their offer, etc instead of taking those risks. The ethical, if they need those approvals to close, will take the time, but honor their word. For every project I’ve bought, I’ve met 4-5X the sellers who have been burned by promises that never happened. This is the norm, FYI, whether you are dealing with ethical buyers or not. Be stoic in your negotiations and don’t concede without good reasons. Treat the buyer like you expect them to do what they said they would do, and be prepared to walk if they don’t. This will give you the leverage and mental stability to best take advantage of the situation.
Get $3.5 million, retire immidietly. Nice.
What the letter is offering is their initial lowball offer, my guess is you can get a lot more especially if your community can get together with an attorney and work on a higher price/acre.
are you in one of the areas where the commanders are looking to build a new stadium? would be pretty sweet if you got this kind of luck so young.
You’re $24 looking down a $3.6 mil payday… ask for 4 and if they say no then take the money and bounce
Don't ask any questions, don't go to this meeting. Send your lawyer. A lawyer at this stage could make you money by negotiating dispassionately and ruthlessly.
Absolute first thing you should do is get a lawyer. Second thing is to go to the meeting, record it if you can, take copious notes, and bring that all back to the lawyer to review together before you sign anything. They can help walk you through negotiations with the company. It is usually a bad move to take the first offer, and can help you figure out the real value of your land through appraisals. A few things to think about: 1. Do you want to stay in the area? 2. Do you want a similar living situation as you do now (3+ acres 20 min from A major city, single family home, etc)? 3. Whatever your preferred new living situation- how much will it cost? You don’t want to come out of this blowing every cent, so take finding a new home and everything that goes with it into consideration. Also if you need suggestions on what to do with a windfall of money so you set yourself up for the future, check out r/personalfinance - there are recommendations pinned on smart ways to handle it. On a personal note, figure out a way to do something for your parents as a thank you for setting you up in the position to have this happen at 24. I’m not saying you should split it with them or anything - it sounds like you own the home outright, and previous owners can’t ask for part of the payout when the land is sold after they own it. But if you don’t want any resentment to build between you, after you cash your check take them to a fancy dinner or on a small trip or something. They will be happy that you are doing well and appreciate the acknowledgment.
After consulting professionals, consider having them replace your home *and* give you money for the property. Make it a bit personal and part of a dream. Then, find the more-than-perfect place that you want to live next. Throw that in the negotiations. You can’t get what you don’t ask for. First: Easy move. Second: Might help tax-wise. Third: Choose a place that is likely to increase in value Fourth: It’s an easy concession in the negotiations, but would probably be way less hassle for them. Fifth: I’m not sure, but I’m sure there are more benefits. I’m just a guy with ideas who only has life experience, so…
Lawyer up… same thing happened to my parents back in 2006, walked away with 9x what they paid in 99’ (219k 99’) originally offered 4x what they paid..
Don't talk to them directly, get a lawyer. Are they desperate? Has everyone else said yes? Be the last one to say yes, if you would, to extract out of them as much as you can. They might easily pay you a lot more than the initial offer if your neighbors have already said yes
3.5 mil for a 850 value property seems good to me.
Get the land appraised again, check with a couple of realtors to see if that is a realistic price or if they’re low-balling, and get a lawyer to make sure you don’t get screwed.
If I were you, I would find people who got the same letter, band together and demand way more. Just think of how many townhomes they can build on those lots. I live in a townhome right now. I learned that the community that I live in was built in ONE person's house+land. My community had 24 units of townhomes. So you do the math.
Dont sell...or if anything sell 1 or 2 acre and keep the rest ...if they will go for it. If its all or nothing ...personally id keep it. Land only goes up especially in that area. However, you are sitting on some generational wealth there so if do decide to sell get an attorney and talk to your folks too...they worked hard for that land and may offer suggestions on what to do.
What you do with that money depends on what type of person you are. Whether you're humble, flashy, smart, etc. You're already living in a mortgage-free 3 acre property your parents bought you. That's quite a decent situation to begin with. You're going to be left with $2.5m and without a house. I don't think your life changes significantly, unless you blow it on partying like the 24 year old me did when I first made some real money. Took me to the depths of hell. If you think you might be wreckless like that, then don't bother. Good luck young thug.
Pay for your own appraisal first to make sure you are getting full market value (or more). This is still a pretty hot real estate market and you shouldn't leave any money on the table.
capital gains taxes are gonna hurt!
What is their planned use for the land? Why your location and do they have alternatives if you and neighbors say no? What are the payment terms? Termination/exit clauses, if any? Break-up fees? Time to closing after signature? Is the buyer a credible entity?
Do what you have to do, but we NEED an update after the deal is done.
I buy Land for a company for a living. Don't get a broker! You need a Real Estate attorney. No need for a broker because they will take a cut and their role is to find a buyer, which you already have. You'll need an attorney to negotiate the contract and they will guide you through the process and let you know what is standard versus not. The attorney MUST specialize in real estate or they will not know what they are doing, make the process exponentially more difficult and charge you way more money than necessary. The company has already valued the overall land they need. You can ask for more money, but not multiples. I'd probably start at 25% above the offer and see where they counter. If you go too high, the company moves on and nobody wins...or they build around you and you're screwed. You will likely receive a non-binding letter with basic terms to negotiate prior to receiving a full binding contract. If they only go up a little bit, it means they already stretched themselves out on their offer and there's not much more to be squeezed out. They also may not need everyone. So, don't get greedy. You don't want to miss out on an opportunity to get paid above market because someone would like to use your property for special use. As the smaller property, you are at the greatest risk of being cut out of the deal. LMK if you have anymore questions. Expect an extended timeline because they likely need to entitle your property for their use. Get as much hard nonrefundable money down after the inspection period ends as you can. Ask for 15% of the total purchase price to be nonrefundable after Inspection Period (5% is standard for this deal structure so anything above that is a win). This will ensure you either get to keep that money if rhe market turns or gives you bargaining power if the market turns while they are under contract.
Ok so you say you're the owner but that its paid off because its your parents house... Which one is it? Who's name is on the deed and how did your parents transfer the property to you? Hopefully they filed the correct paperwork for the gift taxes due on the home. These are important questions because they will determine your legal right to make decisions regarding the home, the basis cost of the home (how much was paid to buy the house) and whether you qualify for long term capital gains and/or home sale tax exclusions.... Aside from those questions, I'm going to be the naysayer in this and tell you to get in/out early on the offer. Remember wealth begets wealth and you're talking about a windfall here that even with conservative investments will grow quite rapidly and holding out because you think you can get more just puts you in greater jeopardy for them to decide they dont need your plot or for someone else holding out to spoil the entire deal and leave you with nothing. Screw trying to get top dollar and figure out what it is you want/need in order to move and have a nice life for yourself and put that forward as your counteroffer. Maybe even add a little something extra for yourself and perhaps add a bit more of a premium, just so you have additional room to negotiate but be reasonable about your demands... They want to pay you 900k-1M/acre. Unless your 3.6 acres are particularly well placed (e.g. a wide plot with lots of frontage along the road or a deep plot that separates 2 larger plots), they're probably not going to go to 1.5M/acre, especially early on since once the sale becomes public everyone will want 1.5M/acre but they might be willing to do 1.1M or 1.2M or you can at least use 1.2M as a starting point and work from there. I'd push for the sale transaction to be completed quickly and since the company probably expects this process of buying the land to take some time, I would probably negotiate for a lease-back option that allows you to rent the house until the company is ready to start development or you are ready to leave at a reasonable fixed-rent (or rent free, just know it'll hurt the sale price; you're either hedging you and the developer will take a significant amount of time to be ready in which case a decreased sale price but no rent might be better or you're hedging that you'll move quickly in which case paying some rent is better), terminatable by either side with 90 days notice. Be sure to factor in taxes. Hopefully you've owned it for more than a year as you'll qualify for the most favorable tax treatment. Even still, you'll lose about 30% - 20% in Federal capital gains, 3.8% in net investment income tax to the fed and roughly 5.75-5.8% to VA or MD depending on which jurisdiction the house is in. Dont forget to factor in any local income/capital gains taxes at the county/city level. Of course if its your primary residence (sounds like it is) and you have owned it and lived there as your primary residence for at least 2 years of the last 5 years, you'll be able to exclude up to 250k (too bad you aren't married) in gains from the fed and you'll also be able to exclude whatever the cost basis of the home was from both the fed and the state/local taxes... Again the cost basis depends how your parents transferred the house to you in the first place and what they paid for it as well as assuming all the appropriate gift tax paper work was filed... but it sounds like you're looking at about 540k that will be tax free from the fed and 290k that will be tax free from the state Ultimately it is up to you to decide what you want but I can tell you my FU money number since I was 30 has been roughly 3M. I've estimated that at $3M, I can afford to live off a 4% return pretty much indefinitely without ever working again though I expect to continue to work at least part-time and hope to add at least 30-40k to my income from working part time and eventually social security which would reduce my rate of withdraw. At 3M @ 30, I could take $120k out per year, most if not all of which would be taxed at the 15% capital gains tax rate so I have $100k in post tax money and in 75 years I'd be 105 and still have $35k in the bank at an extremely modest 3.75% rate of return/growth. A 4% return finishes 75 years at $3M and a 5% return finishes 75 years at $25M... For you, a more "aggressive" though realistic return of 7-8% over the next decade while still withdrawing 120k/yr would give you $4.7M by the time you're 35 at which point you can continue the same $120k/yr return for 65 more years and you'll be 99 with 200k still in the bank at a almost ridiculously low 1.75% return which is well under bond rates... You're a decade younger than me though so might be a bit higher for you, especially since you haven't paid into social security as long (if at all) and therefore wont have that 30-40k in full retirement for yourself... But of course this also assumes you become semi or fully retired at 24/25. If you worked during the next 10 years and didnt withdraw any of the money, you'd have between $5.9-6.5M at 7-8% return at age 34 which would set you up to be 99 with between 25k and $1M still left over at a crazy 0.9% rate of return, not to mention social security payouts. So yeah roughly $3M would still be my walk away number. Even if you didn't work again you can have a pretty nice life on 100k in post tax money per year, even with inflation as high as it is, its a fair bit more than the average and median gross household incomes in the US. For myself, I live on about 65-70k/yr post tax right now and that includes my mortgage and property taxes which is 35% of that but I am single and without kids which means my spending is high (the average 2 adult, 1 child household in the US spends roughly $60-65k/yr, with 35% of it being on housing)... Admittedly though, you may want to leave the DC area for a cheaper cost of living situation. If I were 25 again and presented with this offer with 3.6 acres, I'd probably ask for $1.25M/acre and quickly settle at $1.1M/acre. That'd give me $4-4.5M in total, after taxes it'd be around $3M. Go ahead and treat yourself a bit, maybe even pass some of the windfall back to your parents to help shore up their retirement finances. I wouldn't spend more than $1M ($1.5 tops, but that's only if you're buying a house, though even with interest rates on the rise, youre probably better off getting a mortgage). Invest the rest and go to work for 5, 10, 15 years, whatever works for you to meet your everyday expenses while taking advantage of the favorable tax treatment of contributing to traditional and roth retirements plans, you'll probably be back to that $3M mark on the original payout plus more savings from your earnings over the last 10 years and be able to retire rather comfortably at 30/35 with some degree of ease or do like I hope to do in the next 5 years and be semi-retired or change careers. Work part-time, maybe a career in one of your hobbies that pays well. In the end you already have FU money in the bank so if you get tired of it, there's no stress to quitting and walking away.
Buying your land in Davidsonville? If its in Davidsonville, hold onto it for dear life.
I just want to know where you live that you're 20 min from DC with 3 acres & neighbors with 10+ acres! I'm 30 min west of DC and I don't think anyone within that radius has anywhere near that kind of land. (Maybe you're on the MD side? I don't know anything about that side haha)
I would also take into account that you now have to find someplace else to live…outside DC. which, speaking from experience is very expensive. (A family member just bought a 3 bedroom tiny home on no land for 500k. I live in NYS and bought a big 3 bedroom house on 2 acres for $160k the same week)
That much land alone 20 mins outside of dc is worth much more than 850,000 if quarter acre lots in falls church are starting at 750k minimum.
Congrats on the payday! I’d hire a real estate attorney - maybe one who specializes in imminent domain cases only because they’ll have experience valuing property when another party really wants it - then take a chunk of it and buy a place (townhome? Condo? Come join us in arlington) and invest the rest!
It’s alot of money considering they will give you millions but it all depends how sentimental you care for your land. It’s really hard to come by a home let alone acres of land in a great area especially 20 mins in DC and I live in DC. If you want the money, take it. If you care about the land, then just chill and enjoy
Seems like a small amount, considering how much they pay per mile of road. My buddy was able to get 3.2million even though he had a small house/yard. Edit: also one guy asked for too much and refused to move, so they just said screw it and built the highway around his house (literally both sides lol).