A farm and ranch property generally takes longer to sell because of the price, acreage, land use and/or location. They generally include agricultural exemptions, a well water system, equipment and business operations. Buyers looking to purchase a farm or ranch are more business minded than the typical buyer. In North Texas, our farm and ranch market begins at about 10-acres and up. Sales of farm and ranch properties represent about 1.5% of the total sales in a given year.
Farm and Ranch sellers and buyers must be diligent, understanding the land use, soil composition and minerals, wildlife, and water features. Helicopter tours are common in order to gain a full visual and perspective of the property. The demographics for farm and ranch clients are very different from a typical client, and serving a farm and ranch client goes beyond what a traditional agent or home search website can provide. Farm and Ranch properties are unique, and owners have a keen business sense for cultivating the highest value from the land. Location is also a primary factor driving value.
Farm and Ranch real estate that is put up for auction typically sells at higher prices because of the exceptional market exposure, and it is becoming a growing trend for Farm and Ranch sellers to select an auction as a first means in selling their property. Auctions tend to highlight properties so that more potential buyers see it in all its glory and generate more bidders. Auctions inherently add interest which increases competition. There are generally two types of auctions, those with a “reserve price”(a minimum), and those sold “without a reserve” (no minimum).
There are numerous benefits to a seller when a farm or ranch is put up for auction. First, a plan is designed that works with the sellers’ needs. This plan includes setting an auction date, touring the property in person, interviewing the seller, conducting a market analysis, creating the marketing strategy, research the property itself, and more. Next, the plan goes into the execution phase which consists of photographing the property, creating marketing videos, designing the website layout, creating copy, and writing and publishing the press release. Finally, there’s a flurry of promotion that takes place around the property which entails the website launch, broker visits, private showings, social media and email campaigns, and much, much more.
A common question we get from our farm and ranch clients is how to properly value their property. We carefully assess and value each farm or ranch for its uniqueness. In addition to reviewing comparable farms or ranches, we consider the location, the land use, and carefully evaluate every detail and every facet of the land. It is the details that bring the most value in a farm or ranch property. We fully understand the value of soil composition, minerals, wildlife and water features. Finally, we discuss our findings with you to arrive at the best price. You are always an important part of the valuation process.
How long a farm or ranch takes to sell depends on the current market, the buyer pool, and of course, the dynamics of the auction itself. Every farm or ranch is unique, just as every market is unique. You will be involved at all stages, so you will always know what to expect when selling your farm or ranch at auction. In addition, we will always be on hand to update you on the status of the auction process.
An added benefit of an auction is that they are not subject to a parade of lookers who are just curious about the property. Every buyer is interviewed and pre-qualified prior to the auction. Buyers are required to deposit a minimum cash investment. At the auction, if a property goes under contract, it then follows the normal 30-45 day closing process and begins with an inspection period.
Typical terms for properties under auction are: 10% Buyer’s Premium; Upfront Marketing $7,500; 6% listing agent commission; Title insurance savings because it is paid by buyer ($6,000 on $2.0 million property); survey paid by seller, if necessary.