Last week I posted an article outlining seven things to consider when choosing
the best farm or ranch broker. (Choosing the Best Farm or Ranch Broker,
Feb. 21, 2014). Today I’m going to
look at the first three of them in a little more detail. My goal in writing these articles is to help
you pick the farm or ranch broker that will give you the best chance of getting
the highest price for land when it’s time to sell.
The first three factors I mentioned were whether a broker would: (1) provide
you a free market analysis; (2) help you
decide whether a private sale or auction would be your best option; and (3) use cutting edge technology to market your
property.
1. Free Market Analysis. You
can’t rely on gossip and rumors about how much land is going for when you
decide to sell. You need a reliable
analysis of your land and the current market to determine how much its
worth. This is not an appraisal and it
won’t be accepted by a bank asking for one.
But a quality Market Analysis prepared by a knowledgeable broker will
give you a good idea of what your property can be sold for in the current
market, and it shouldn’t cost you a thing.
A market analysis (sometime called a competitive market analysis or “CMA”) is
be based on a thorough inspection of your property, soil and production data,
and other property-specific factors. It
should also take into consideration current market trends (up or down) and
other properties with similar characteristics recently sold and currently on
the market.
A good broker should be willing to give you a free market analysis because
he is going to do one regardless of whether you ask for it or not. He needs to know what the market is
indicating your land is worth so it can be priced accordingly. Price it too high and the land won’t
sell. In fact, it could sit on the
market for so long that buyers start to think there must be something wrong
with it. Eventually, the price may have
to be dropped below the land’s true value just to find a buyer willing to take
on this perceived risk. On the other
hand, price it too low and ... well that’s not good.
Pick a broker that understands the importance of a market analysis and is
willing to provide you one for free before you list your property for sale with
him.
2. Private Sale or Auction. There
are pros and cons to private treaty sales and auctions. Your personal and financial needs, current
market trends and your lands unique characteristics will all need to be
considered in determining which method is best for you when it’s time to sell
your farm or ranch.
Do you need to sell right away? Is
there a lot of demand for properties like yours? An auction may be the way to go. If so, are you going to do a reserve auction
or an absolute auction? Is there
something in between? Maybe the sale of
your land is going to require multiple complex contingencies, or you want to be
heavily involved in negotiating the final sale terms. A private sale may be best for you.
There are numerous other
considerations. Be sure to pick a broker that understands the
pros and cons of private sales and auctions, has experience with both, and is
willing to take the time to sit down, explain things and help you choose the
best method for selling your land.
3. Technology. It is no
longer enough to run an ad in the paper and put the word out to the neighbors
that your land is for sale. To get the
full value for your land it needs to be seen by the highest number of qualified
buyers as possible. The most effective
way to do that is to use technology.
Your broker needs to have a good web site that can be found on
Google. He needs to be on Facebook,
LinkedIn and Google+. He should have an email marketing campaign
featuring your land. He needs to put
your listing on the national sites like Land Watch, Land and Farm, Lands of
America and others. Even if you're not active on the internet and social networks, your broker needs to
be. Check to be sure he is.
Don’t get me wrong, technology is
important in today’s farm and ranch real estate market, but it alone is not
enough. Ads in the paper, talking with
the neighbors and direct mail campaigns can still help to find good buyers. Be sure your broker uses all the tools in the
shed.
Next week I’ll write in more detail about the last four factors you should
consider before hiring a broker to help sell your land when it’s time.
-John B. Morrow
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