Gilbert Did Not Buy Cheap Land According to Real Estate Experts

by Simon Lindsay on Foreclosure Crisis

Residents and real estate observers have criticized the city of Gilbert, Arizona, asserting that it did not buy cheap land as it should in relation to its farmland purchase in February 2009. A recent independent appraisal confirms experts' claims that the city overpaid when it acquired undeveloped land two years ago.

According to real property experts, with Gilbert bank foreclosures in high numbers, the land should have been cheaper. City officials were criticized by residents and real estate market observers for paying $300,000 for every acre of the farmland in a purchase that did not make use of appraisal services. In response, officials argued that the difference between the purchase price and the actual market value is acceptable and still within a respectable range.

They also argued that although bank foreclosures in Arizona have made land prices lower than their actual values and that a higher amount had been paid for the land, the long-term benefits of the project will outweigh current concerns. Officials also asserted that the difference between the total cost and the actual market value is lower than it seemed since the city was able to secure savings worth almost $7 million in terms of easements and rights of way.

Residents were reportedly angered by the city's failure to buy cheap land and for allegedly wasting money on the purchase. The city supposedly paid more than $42 million for a piece of land comprised of 142.5 acres. The actual worth, according to some experts, was around $27.4 million. Total expenses have been estimated to be a little over $50 million for a farmland allegedly worth only $41.6 million. Gilbert also reportedly paid more than $7 million to avoid legal battle for land condemnation.

When news of the transaction first came out, realtors reportedly expressed surprise as to why the city is said to be paying premium rates for a piece of land that, at that time, was already suffering from value depreciation mainly because of the thousands of bank foreclosures in the area.

Aside from failing to buy cheap land in a time when real estate properties are at their lowest prices, the transaction was also questioned for not undergoing an appraisal. The land will reportedly be developed into parks in the future.

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