The sale of farms, ranches and other rural properties has many ‘working parts.’ Yet there are essentially seven key steps to selling a farm.
Since you won’t want to leave any money on the table, it’s best to do it right once, the first time. Here are those seven steps to selling your farm, ranch, or other rural property.
- Work with an experienced farm Realtor. Make sure this isn’t your agent’s ‘first rodeo’ with farm property. Most farm buyers demand expert representation and as a seller, you should, too. Farm real estate specialists know the market for rural properties, are often connected with farm-friendly lenders, have a ‘stable’ of ready buyers and successfully work through unique ‘bumps in the road’ common to farms and ranches. Examples include familiarity with soil types, water rights, farm zoning, septic systems, plus factors like emblements, or how crops can be treated separately from the land.
- Price properly. Pricing is a key factor in getting your farm sold. This means research and a close examination of truly comparable sold properties. An experienced farm Realtor can help evaluate this data. Also consider that prospective buyers will compare your property with competing farms. Overpricing reduces your buyer pool, thereby extending market time and result in fewer offers. But even if a buyer is eventually found at an above-market price, expect a cautious bank appraiser to potentially nix the deal. That’s because lenders refuse to loan more than what a property is worth. Bottom line: If you price your property over market value, don’t expect it to sell quickly, if at all.
- Clean it up. If your farm is cluttered with junk, buyers will factor this in with a perceived decrease in value, especially if they have to deal with what is left behind. Studies confirm many buyers won’t even step onto a property if they don’t like what they see from the outside. Now is a good time to get rid of what you don’t want to move. Sell, give away or toss what you don’t need. It will help your bottom line in the long run.
- Know your market. As part of proper pricing, your farm or ranch will likely have at least several logical buyer types. This is your market. Knowing your market also helps to ground your expectations on a realistic market time, depending on how large and well financed the logical ‘buyer pool’ is for your property. Part of knowing your market includes having a market strategy. This includes a strategic pricing plan, which your Realtor can develop for you. Strategic pricing takes into account the analysis of showing and offer activity from buyers, prior to any price adjustments.
- Disclose, disclose, disclose. Does your farm have underground storage tanks? Flooding? Has your well run dry? Is your septic system in need of repair? Disclose early and often to avoid problems later. Because the chain of liability is very long for environmental issues, avoiding legal hassles in the first place is the way to go and usually far less expensive.
- Consider your financial options. It’s a good idea to discuss possible real estate tax ramifications of your sale with your accountant or financial advisor. Also consider if you need all cash at closing, or would you prefer to use seller financing to receive a large down payment, then provide yourself with income for the balance of payments due you? Because some rural properties are difficult to finance, you may decide to sell your farm with seller financing to enlarge your ‘buyer pool’ and avoid lender complications, while helping to protect your price by offering buyers the benefit of seller financing. An experienced farm Realtor can help you examine options and best negotiating strategies.
- Review offers carefully. Sometimes the first offer is best. Other times, you’re better off waiting to find a stronger buyer. These scenarios reinforce why an experienced farm specialist Realtor can be so helpful. Your agent can provide perspective based on years of selling similar property. How long has your farm been on the market? How close is the offer to the likely selling price? What is the competition and market for your property? A variety of such factors can help determine if it’s a good time to ‘reel this buyer in’ or keep casting for another one.
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