Land Locked Woods Value

strum456 · May 13, 2013

I am thinking of making an offer on a 100 acre parcel of landlocked woods that boarders our farm. The property is rocky and hilly. The only level, possibly tillable section of it (maybe 10 acres) was stripped. So, nothing really grows in that area. I would use the property mainly for atving, snowmobiling and hunting. The lot is wooded, but I don't think there is much, if any value in the trees at this time, except as a long term investment. The land was heavily logged about 30 years ago. There are no market size trees that I could find.
My question is about the value of this property. According to Westmoreland County tax data, the assessed value is a little over $4,000. Assessed value does not equal market value in this area. As I understand it, the assessed value should be multiplied by the "common level ratio" to determine approximate market value.

Here is a link to the CLR site for PA: Realty Transfer Tax

In Westmoreland County, the CLR is 4.41. If I multiply that by the assessed value of $4000, I get $17,640. My first thought is that doesn't seem like much for 100 acres. But, the parcel is land locked, hilly, rocky and remote. I am interested only because this land boarders our farm, so it is not land locked for us.

Is 17 to 18k a reasonable offer, or am I missing something?

Mineral rights would be another topic for discussion. The current owner has tried unsuccessfully for many years to get gas companies to drill on this land. They have had leases, but no drilling ever occurred to my knowledge. How much would the mineral rights be worth?

/pine · May 13, 2013

If the land "borders" your property and you owned it...it would no longer be landlocked and you could possibly re-sell it with access as an option...

I would contact an attorney with local knowledge about the mineral rights...

strum456 · May 13, 2013

I am not really interested in re-selling the land to make a profit. I just want the land for my use and for the use of future generations. The land is still remote, if I did grant access through my farm. From the road, it would be a long way back to the property in question. I've never measured it, but it's probably 600 yards of field and about 200 yards of woods.

dave1949 · May 13, 2013

Typically, assessments are all over the place and not very consistent. I am not sure taking the assessed value and multiplying it by that factor has a true relationship to the market.

In some places the sale prices of real estate transfers are published and public. Maybe that is true in your area. The tax assessment on properties are public here, so maybe you could look at the assessment on non-land-locked parcels compared to this one, and make a judgement.

Another method is to look ta MLS (multiple listing service) listings on the internet to try to find comparable properties in your area and their asking price. The listing date is often included, so you will know if a property has been on the market a long time--which usually indicates it is over-priced for what it is.

You won't find exact matches, but it gives you an idea. You are probably familiar enough with the area to know why some parcels are priced they way they are.

If you are lucky, you buy it, someone comes to drill and cuts ATV trails for you. :laughing:

Western · May 13, 2013

That's sounds "to cheap", I dont think you could by "desert" in the states for that little, even "land locked". What boarders the other sides?

I would call a local realtor and just plain ask them, they should be current on MLS's, possible "comps" and local market trends and should be able to give you a "ballpark" idea.
I have also been told that "mineral leases" run the gammit from 10 years to 100 years, whatever the contract was, they may drill or may not. Just hope they done "strip mine":laughing:
Good luck, nice way to enlarge your acreage and all in one piece!

Tim13 · May 13, 2013

You can also consult with an agricultural appraiser. They will be able to review land prices in your area based on type of land and type of soil to give you a good idea of the value per acre.

Ken45101 · May 14, 2013

On something like this, a "fair value" is whatever a willing seller will accept from a willing buyer. "Market value" is meaningless.

You may well find that the current owner has an inflated image of what the land is worth. OTOH, he might be happy to get rid of it at any price.

Appraisers for land like this are terribly inaccurate when they can't come up with decent comps. Yours might be the only offer for the next 100 years. OTOH, there may be some recorded access easement for the land and it could be worth more.

You might check the county records to see what was paid for it the last time it sold. That will give you an idea what the current owner might think it's worth.

Other than that, make an offer of what you think it's worth to you and see what happens.

strum456 · May 14, 2013

Western said:
I would call a local realtor and just plain ask them, they should be current on MLS's, possible "comps" and local market trends and should be able to give you a "ballpark" idea.

I talked to a realtor. That is what lead me to using the assessed value and the common level ratio multiplier. He actually has his own number - instead of 4.41, he said it is usually around 6 from his experience. That would be 4000 x 6= 24k.

The realtor explained that the problem with properties like this is that aren't any comps. It is only worth what someone is willing to pay. He also mentioned that financing is extremely difficult to obtain for something like this. That alone may limit me to what I can pay cash.

Someone asked what is surrounding the property on other sides. Woods, an old strip mine, our farm, and another farm.

forgeblast · May 14, 2013

I would also go to landex.com if you know the owners name you can check to see what the gas lease says, and then make an offer based on that. If it was an older lease the terms might not be that favorable.
It might run you more then you think to buy the property, the owner might just wait it out and the royalties would be a couple of thousand a month if a gas pad goes in.

dave1949 · May 14, 2013

$24K is roughly $250/acre. Around here that would be the bottom end for seasonally accessible only by goat trail land three miles past the back of beyond. :laughing:

The lease situation probably has more to do with the price than anything else.

Other than that, like Ken says, offer the least of what it is worth to you and see what shakes out. If the land is really rocky and hilly, and has poor timber now anyways, even in the future it would be a high cost parcel to harvest, which will cut into any income you would get from that.

toppop52 · May 14, 2013

Around here $14,000 per acre if it's remote and not good land, would be about right. I paid $60k per acre for some decent property and still came in under market due to the previous owner's confusion on county abutments.

Ken45101 · May 14, 2013

If the OP just wants it for recreational use, another possibility if the owner doesn't want to sell, would be to offer to lease it for your use. $1000/year would be cheaper for the OP and would be income the owner otherwise wouldn't have. Just a thought.

strum456 · May 14, 2013

toppop52 said:
Around here $14,000 per acre if it's remote and not good land, would be about right. I paid $60k per acre for some decent property and still came in under market due to the previous owner's confusion on county abutments.

A nice parcel of land in this area that would make a good home site brings around $5000 per acre. The larger the parcel, the less per acre they usually bring. In a fancy development, I'm sure it would be more. We are no where close to anything like that. It is not uncommon for land to go for under 1000 / acre around here.

I do know of one example where 10 acres sold for around 7000 / acre. It was a 10 acre field; a perfect home site with a fantastic view. The only property that I know of that might be comparable to the one I am looking at went for taxes (about $2600). Yes, I have all the zeros on that figure. This was a land locked 100 acre parcel that was logged in the same fashion as this one and it did not come with mineral rights.

The values range so wildly, I don't even know where to start.

toppop52 · May 14, 2013

strum456 said:
A nice parcel of land in this area that would make a good home site brings around $5000 per acre. The larger the parcel, the less per acre they usually bring. In a fancy development, I'm sure it would be more. We are no where close to anything like that. It is not uncommon for land to go for under 1000 / acre around here.

I do know of one example where 10 acres sold for around 7000 / acre. It was a 10 acre field; a perfect home site with a fantastic view. The only property that I know of that might be comparable to the one I am looking at went for taxes (about $2600). Yes, I have all the zeros on that figure. This was a land locked 100 acre parcel that was logged in the same fashion as this one and it did not come with mineral rights.

The values range so wildly, I don't even know where to start.

Mine is near the airport and good access to to roads and I have a creek in back, I wasn't trying to compare directly. Still around here there is not much $1000/acre property nowadays.

murphy1244 · May 14, 2013

Did he offer it up for sale or you thinking to make a offer out of the blue?

strum456 · May 14, 2013

The property is not currently on the market. It was recently inherited by the sister of the previous owner. The owners do not live locally and do not use the land.

Western · May 14, 2013

I think I would approach the owner and ask if they have a notion to sell and for what asking price. I dont think I would tell them You are the adjoining landowner until you have a solid $$ number, the price may get much higher if they know you have added incentive.

dave1949 · May 14, 2013

strum456 said:
The property is not currently on the market. It was recently inherited by the sister of the previous owner. The owners do not live locally and do not use the land.

I wonder if there is a way to find out what that parcel was valued at in the estate for probate purposes? From the sister's point of view, that may be what it is worth. I have no idea if probate records are public.

Carl_NH · May 14, 2013

Strum,

If they aren't from the area they might have a different view on the value and may want $50K or hopes of a gas lease eventually. Also they pay tax on the land, and probably got $$ when it was stripped of coal, so someone made some $ at some point.

I would look at this several ways. 1) What is your place worth with an additional 100Ac over what you have now. 2) The trees eventually will be timbered again - may 25-30 years, could be $30-50K there - just depends on your long term to leave that to family/kids. 3) is this property totally landlocked by you alone or are there other potential abutters that could buy it? You said it borders your farm so there may be more than 1-2 interested parties.

At the end of the day more land is always a good thing as a realtor once told me, so I see no down sides to making them a offer that you can live with (I would think $250/ac is a bargain today), but they may want to shop it around and drive up the price too.

Good luck and I would just call them up and ask if they are interested in selling and explain the two valuations you have and see where it goes.