BIRMINGHAM, Ala. (DTN) -- The preferred way to buy, or sell, rural property is as diverse as the market. In some cases, auctions work best. Many sellers prefer to list property, some actively seek investors for lease-back arrangements, others negotiate private one-to-one sales.
How does the seller or the buyer know a price is fair? What sales methods work best? Are there secrets of the trade? Our sales veterans weigh in on what they see as critical to setting and getting a good price.
-- Collect all available information on a farm. Consider things like whether irrigation is available and crop and yield history.
-- Get boots on the ground before buying. Be especially aware of how land drains, access points and easements.
-- Property offered in multiple parcels attracts more bidders, because more adjoining landowners are affected by the sale.
-- Make sure property is mapped and clearly identified. Aerial views are expected these days. Many sales companies have a drone and include aerial video as part of their sales packages.
-- A market analysis should be part of the discussion early for sellers and buyers. Sales comps should be no more than three years old, as the land market was completely different four to five seasons back.
-- Cleaning up land may or may not be worth the effort on the part of a seller. Many sellers market as is. It's important, however, to make sure roads through the property are accessible for potential buyers.
-- Absolute auctions, where the highest bidder buys the property, may seem scary. In a highly competitive environment, however, many in the business feel they actually bring a higher final sales price.
-- Reserves should not be thought of as an asking price in an auction. Rather, consider them a point below asking price that will protect the seller from financial disaster.
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-- Auctioneers wish you wouldn't talk price before a sale. The best prices come when the seller quietly puts a property up for auction and never talks price or expectations. That includes talking to the tenant first. Tell the tenant what you want to sell for, and that information will be common knowledge -- along with the tenant's opinion on the price.
-- Market no more than 60 days. Some auctioneers don't want to market for more than 30 days, because the cycle of buyers will change in that time span.
-- Know the neighborhood. Look around and think about who lives and farms nearby. If the land is in an area with lots of multigenerational farm families, that is a big plus. If it's in an area where there's been a lot of turnover, or acreage is going unfarmed, ask why.
-- Quality is about soil, but it's also about water, tiling and even weather patterns. Anything that potentially helps increase yields adds value.
-- Farmland that brings the best price is easy to farm -- that means large, contiguous blocks, easy access and not oddly shaped. Think squares and rectangles.
-- When to sell? Every area is different. But, ask yourself if you'd buy a farm under 2 feet of snow that you couldn't really tour? Also, consider if the land is being rented what type of arrangement you are willing to accept with regards to sharing the rent. Certain points during the growing season make this a more difficult negotiation.
-- If you want a leaseback deal, you may have to sacrifice some on price. Be very clear with regards to length of lease and land-management plans.
Average land prices referred to in this series are from the USDA's Land Values 2017 Summary. Land experts and sources contributing to this seven-part series included:
USDA Land Values 2017 Summary: bit.ly/2fQKlBs
Purdue University: ag.purdue.edu/commercialag
Dream Dirt Farm and Ranch Real Estate: www.dreamdirt.com
Murray Wise Associates: www.murraywiseassociates.com
Glaub Farm Management: www.glaubfm.com
Pickens Auctions: www.pickensauctions.com
Kurtz Auction and Realty Co.: www.kurtzauction.com
Mossy Oak Properties: www.mossyoakproperties.com
Victoria Myers can be reached at firstname.lastname@example.org
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