Editor’s Note: This is the fourth in a question-and-answer series with land real estate professionals — land agents, mortgage brokers, auctioneers, attorneys, timberland professionals and more. There’s a lot of information about the national real estate market out there, but it’s tough to find answers to your specific land real estate questions — until now. LANDTHINK believes that a lot of the stress of buying, selling, and owning land can be reduced or eliminated with some simple information from some of the best in the land industry.
Landbuyer Question:
My wife and I are getting ready to make an offer on 30 acres in Alabama. Currently it is 2 plots with a home on 5 acres and an additional 25 acres connected to it.
There are no fences or anything separating the two parcels other than the legal description. We are not sure why it was divided this way in the past. The seller is selling it as one property, but legally it is two.
I am interested to hear some pros and cons from a real estate professional to keep the 2 plots separate as opposed to joining them into a single property. I have tried to research it on the internet, but I haven’t been able to find much information on the topic.
Brad Butler, Owner, Butler Land & Timber Company, Mobile, AL
The most likely scenario was that the 5-acre piece was divided out from the other 25 acres for a home. If the home was a primary residence, then a previous owner had to separate the 5 acres to get a conventional mortgage on the house when it was built. Depending on when the house was built, most mortgage companies would not offer a mortgage on a house with more than 5-10 acres.
Combining the properties into one parcel might lower your total property tax some because you will be able to homestead the whole property and not just the house and 5 acres. It will also be more convenient because there is just one bill from this point forward.
One con I can think of to combining them is that it would be more convenient to sell as separate properties if it remained in 2 parcels. In some counties you can’t divide any property without getting approval from the county officials.
If both parcels have road frontage and you decide to sell the property in the future, it would be beneficial to have the properties already parceled separately.
Do you have a specific land real estate question for one of our professionals? Submit your question and we might choose yours!
This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of LANDTHINK. Use of this content without permission is a violation of federal copyright law. The articles, posts, comments, opinions and information provided by LANDTHINK are for informational and research purposes only and DOES NOT substitute or coincide with the advice of an attorney, accountant, real estate broker or any other licensed real estate professional. LANDTHINK strongly advises visitors and readers to seek their own professional guidance and advice related to buying, investing in or selling real estate.
Yes, it is true – even without homestead – that the property tax is lower in total than with two individual tax assessments. My experience in Florida shows that.
But that is only the tax aspect. It hardly plays a role for resale, which is your business.
Very well stated Brad. My response would be the same as yours.