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Selling property out of state recommendations & advice


greynold99's Avatar
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03-09-17, 09:19 AM   #1 (permalink)  
Selling property out of state recommendations & advice

Hi,
I inherited a small property lot when my Mom passed way nearly 40 years ago and had the property re-titled in my name as her sole heir some 10 years ago.
Mom always told me to hold onto it as she believed it would some day be valuable for development in the area. Anyway, as a small lot with no structures; the small home that was on it was torn down quite a while ago so the property taxes are low on a vacant lot. I just kept a hold of it.
I'm thinking now that this is a good time to sell the lot as my children won't want to be burdened with it after I'm gone

So I was hoping someone on the forum who may have been in a similar situation might provide some advice and guidance on how best to approach selling this property.
I contacted a Real Estate agent when I was looking for a reputable attorney to do the deed retitlement and was able to reach out to her again now. Unfortunately, she moved out of that state to practice but is still in real estate and provided the name of friend who is also an agent. I've contacted this person but have not signed any agreement.

Anyway, I'm not in any urgent rush to sell but I just want to know what to look out for. I know once you sign with a specific agent you are fairly confined to their efforts and probably responsible for the commission percentage the agent would get regardless of who sells the lot.
Appreciate any insight you might be able to offer.
greynold99

 
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03-09-17, 10:30 AM   #2 (permalink)  
Selling real estate yourself is doable, but many find what I consider a simple procedure to be mysterious, plus there really is not an incentive for the buyers since they are paying the same regardless.

Selling out of state makes it a little more difficult since you are not there but this is a vacant lot not a home.

Today there are several For Sale by Owner sites that did not exist in the past and if not in a hurry you could give that a try.

When I sold my home I offered to pay the buyers legal expenses and inspections up to a reasonable amount which helped ease the buyers anxiety.

 
marksr's Avatar
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03-09-17, 10:59 AM   #3 (permalink)  
I would think in this day and time being, out of state wouldn't be as difficult as it used to be. When I bought my place 26 yrs ago I flew up, looked at it and agreed to buy it but all the legal stuff was handled thru the mail.

Since it's just a vacant lot the sale process should be fairly simple. Once you sign with a realtor he gets paid his commission no matter who sells it. If I'm not mistaken he can even collect his commission for a certain time period after the contract expires if you sell it yourself. I think he's completely out if you sign with another realtor.

Selling real estate yourself is doable, .......... plus there really is not an incentive for the buyers since they are paying the same regardless
While it is more work, selling property yourself cuts out the middle man and that savings is usually passed on; the buyer gets a lower price and the seller more profit. You still normally need to hire a lawyer to finalize the deal.


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Last edited by marksr; 03-09-17 at 11:17 AM.
 
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03-09-17, 12:03 PM   #4 (permalink)  
How "small" is this lot; and are you close enough to the State where it's located to verify that it remains a legal building lot . . . . or may have been "grandfathered in" because it was once used as a homesite ?

Here in Vermont, a small lot may be 2-5 acres, while in a more congested area, 4000 SF may be small. Having been a Real Estate Broker for a few decades, I've seen local Zoning Ordinances enacted which have rendered once buildable lots now close to worthless as set-backs have been increased along with minimum lot sizes.

This is particularly true of small lots which were created (sub-divided) just following the depression, when municipalities strived to make it possible for all of their residents to construct a home on even the smallest lot that might be broken off of a Relative's parcel.

If you're at a distance, I'd ask a local Realtor to , before listing or setting a price on the Lot's value), to perform a CMA (Competitive Market Analysis) and do the legwork necessary to verify that the Lot remains legally buildable under whatever Zoning Bylaw is in effect, if any; and include in that research a determination of what the highest and best use for the lot might be, so as to command the highest price for you.

Are you familiar with the local Zoning, and could it be that your Mother saw some future value because the Lot was in a Commercial District ?

Along these lines, does the Lot still have onsite potable water and/or sewage disposal hook-ups available, or did it ever ?

 
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03-10-17, 08:19 AM   #5 (permalink)  
Thanks for your replies ...

Thanks everyone and especially to Vermont.

I'm in PA and the property is in North Little Rock, AR. I'm not sure what the current zoning regulations are as all the homes in the plan had been torn down, even the old brick school house that I was able to walk to. Only thing in the area was a commercial lot just north of where our home was, fenced off and used for parking school buses.
I contacted the NLR Planning & Development Office and the Pulaski Co. Tax Assessor to find out if any plans were under consideration and also if I could find out who the adjacent property owners were in the plan.
The replies I got were that no current developments being considered and the Assessor referred me to some online information of the adjacent lots which include the owner's name. Looked like some Commercial firms owned nearby lots and mostly still listed individual property owners.

But this gives me a start for going back to find out the current zoning and if water/sewage connections are still available.
Thanks again,
greynold99

 
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04-03-17, 09:43 AM   #6 (permalink)  
Updates since last post and new question

Hi again,
Discovered a couple of things about City/County government that came as a surprise as I've had to deal with the City Planning & Development Authority, the County Tax Collector and the Tax Assessor's Office - and I still don't have a complete picture. Each office didn't seem to know anything about another offices's area or who you would contact about an issue that wasn't under their specific area.
I found out that the area is a mix of zoning areas, Residential & Commercial. My lots are still zoned Residential but that doesn't mean that I could still get Utility hookups for water, electric & sewage without contacting each Utility company. So I'm not sure about the impact that will have on selling.

One question I did think about, How will the sell proceeds be taxed? As it stands, I probably won't even be able to sell the lots for an amount equal to the property taxes I've paid. I suppose the Arkansas taxing authorities will get their share at time of sale but will I have to declare any of the proceeds as inheritance income or ordinary income from the sale of the property?
Just curious if anyone has been through anything similar and might know.
Thanks,
greynold99

 
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04-03-17, 10:37 AM   #7 (permalink)  
Posted By: greynold99 ". . . will I have to declare any of the proceeds as inheritance income or ordinary income . . ."
You'll be issued an IRS FORM 1099-S, for the amount of the proceeds from the sale of your Real Estate; but how you categorize it will be a matter between you and your Accountant.

But the IRS will have received a copy of the same 1099 Income Amount, and will be interested in how you report it on your Return.

 
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04-05-17, 09:26 AM   #8 (permalink)  
Thanks Vermont,
I thought there'd be some kind of Federal Tax as I know for your Primary Home, if you've lived there for more than 10 years that there's a tax exclusion for any sale profits over the Cost Basis of the home.
The property lot was purchased over 50 years ago and I'm not sure I've ever seen the original sales paperwork - and the home that was on it was torn down 30 years ago.
Assuming I can find the original sales amount, is that what I would use for the Cost Basis for determining whatever Net Profit (taxable amount) from the sale would be or would I use an equivalent Empty Lot value from any recent sales of adjacent lots at today's current value?

At this point, I'm guessing I have more paid into 40 years of Property Taxes than what I can reasonable expect to sell the lot for - Is there any way that can be used to offset Net Profit from Real Estate Sale proceeds?

I've started contacting some Realty Agents in the area, including some Land Speculator Firms that have USPS mailed me in the past about selling the property. Not much interest at this point, but I'm thinking about writing some of the adjacent lot owners to see if they have any interest in acquiring the lot.
Do you think that's a reasonable approach for determining what the best sale price is going to be?
The one Land Speculator firm agent that responded asked 'What I thought I wanted to sell the lot for?' and I responded '... that's why I contact your company as you would know what the current property values are in the area.' Hopefully that was the right reply...
greynold99

 
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04-05-17, 09:41 AM   #9 (permalink)  
Most of your questions should be directed to your Accountant for the best tax treatment.

Regarding what the property is worth, try to secure an Agent who can do a thorough CMA (Competitive Market Analysis) and consider what the Highest and Best Use would be for that parcel, which may not be the obvious . . . . or easiest/fastest to obtain.

You don't want to rush into getting it listed by the most Eager Beaver who quotes you the highest "guesstimate" just because it would be a good place for a sign.

Sorry, but getting your RE Taxes back in the form of a higher sales price is akin to expecting someone to pay you back for the gasoline that you burned in a used car . . . . property taxes are what you pay for the pleasure of having owned a piece of Real Estate; that money is gone !

But again, that's just my opinion. Pose that question to your Accountant . . . . s/he may know of some obscure way to recoup something !

 
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04-05-17, 09:51 AM   #10 (permalink)  
the buyer gets a lower price and the seller more profit
That might be true in theory but in reality sellers are all attempting to get top dollar and FSBO's (For Sale By Owner) are simply cutting out the realtors cut.

Personally, I don't agree with selling as a % of sale, the amount of work is the same regardless of price and you can guess which homes get the most attention, the ones with highest commissions.

 
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04-05-17, 10:34 AM   #11 (permalink)  
You left out where I said 'the savings are usually passed on'

A lot of times sold by owner results in a lower price because it's easier for them to get it sold a lower price as they don't have a realtor doing all the advertising and having all the connections.


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04-13-17, 02:08 PM   #12 (permalink)  
Just an update...

I tried contacting a couple Real Estate Agents in the area and both responded quickly initially.
After waiting a couple of weeks and no further follow up, I got the names & addresses of 4 property owners in the area from the online tax roles:
the one owner has the lots next to mine, there are two firms that own lots in the plan, Real Estate Speculators - one is in the same Block as mine but not adjacent to it, and the other is close in a neighboring Block.
Just provided a brief description with Lot # and my contact/mailing info.
Will let you know if anything develops.
greynold99

 
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04-13-17, 03:56 PM   #13 (permalink)  
Posted By: greynold99 ". . . I tried contacting a couple Real Estate Agents in the area and both responded quickly initially . . ."
That's unfortunate; but then again, you want one who recognizes from the git-go that this isn't going to be a "piece of cake" and whoever lists it will actually have to work to make a Commission.

Doing a CMA (if anyone opts to do one) won't be simple, and might take a couple weeks to get it into your hands; but they should be asking questions along the way. It may be more work than they're prepared to do if the perceived pay-off is limited.

You only need one Agent . . . . but a good Agent.

 
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