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Tuesday, April 15, 2014
Choosing the Best Farm or Ranch Broker - Part III
A few weeks ago I posted the first two parts of
this article. (Part I and Part II) Then things got busy and
I didn’t have time to post the much anticipated third and final installment,
until today. Now the dramatic conclusion
of, “Choosing the Best Farm and Ranch Broker.”
Okay, maybe choosing the right broker is not all
that dramatic. But pick the wrong one
and you are potentially inviting all kinds of unwanted drama into your
life. So pay attention and keep in mind
these last four things when choosing the professional to help you sell your land:
(1) technology; (2) negotiation skills and experience; (3) knowledge of legal
and tax issues; and (4) knowledge and experience with 1031exchanges.
1. Technology. The farm, ranch and recreational real
estate market has undergone massive technological changes in the past several
years. Today, almost all buyers start their
search for property by looking on the internet.
Your broker has to make sure your property can be found by those
buyers. Just having a website is not
enough. You need to choose a broker that
understands search engine optimization, uses social media effectively and is
able to get your property found among the tens of thousands of other listings
out there. The brokers that understand
and use today’s technology are able to obtain the highest sales prices by
ensuring the highest number of qualified buyers sees your property for
sale.
2. Negotiation
Skills and Experience. Agricultural
properties are increasingly considered to be high-quality investments
attracting wealthy individual and institutional investors. Being able to deal effectively with these
types of buyers is just as important as being able to make a personal
connection with that neighbor down the road thinking about expanding his
operation next year. Your broker needs
to be able to talk the talk regardless of whom he is negotiating with. He needs to be just as comfortable talking
about capitalization rates with bankers as he is talking about last year’s
yield and the weather with your neighbor.
A broker with strong negotiation skills will be able to address any
potential buyer’s concerns, deflect bogus criticisms and close the deal while
making sure you don’t leave any money on the table.
3. Legal and Tax Issues. Every real estate transaction has its fair
share of legal issues and tax consequences.
Your broker needs to be able to identify as many as possible ahead of
time and be able to deal with unforeseen problems as they arise. Whether you need to resolve an encroachment
or lien on the property, or understand complex estate tax issues, your broker
should be able to identify the issue and provide you some assistance. This is not to say that your broker needs to
be an attorney. In fact, since most
brokers are not attorneys, it is probably more important to choose a broker
that doesn’t think he is one. As I said in Part I, a good broker should have a
trusted network of experienced attorneys and accountants he can recommend (as
needed) to help guide you through any estate planning, legal or tax issues that
may arise.
4. 1031 Tax
Deferred Exchanges. The
government do take a bite, but that doesn’t mean you have to feed it
today. 1031 Exchanges can defer the
payment of the taxes due on the sale of your property, if done correctly. Your broker must understand the requirements
and timing involved in a successful 1031 exchange if your are thinking about
doing one. He needs to understand what
qualifies as a replacement property (it’s not just land anymore) and be able to
help you identify one or more eligible properties within the 45-day time limit
for doing so. He should be able to help
you retain a qualified intermediary to conduct the transaction and get the deal
closed within the required time limits (in most cases 180 days from the closing
of the sale on your property). There
plenty of articles out there about the complex nature of 1031 exchanges. At the very minimum, be sure your broker has
read a few. Failure to get it right can
get ugly.
Your land is likely your most
valuable asset. Your broker has a duty
to help you obtain the highest value possible for it. Choosing the right farm or ranch
broker will not only help you obtain a top price for your property but will
facilitate a smooth transaction. Keep
in mind the seven points discussed in this series of articles and you will be well
on your way to choosing the right broker for the job.
Feel free to give me a call if I can help or if you have any questions. 402-657-0515.
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