The Business of Selling Farm and Ranch Land
The ranch and farmland niche is unique and relatively exclusive. Brokers in this corner of the business face a unique set of challenges and have to adapt accordingly.
From days on the market and crop production statistics to marketing a property, the business of selling farm and ranch land is wholly different than the traditional residential transaction. Take, for instance, the precautions real estate professionals might need to take to ensure their safety.
Allison Worrell co-owns Worrell Land Services LLC in Jacksonville, Ill., with her husband, Luke. When showing a property, she keeps a machete in her vehicle so that she’s prepared.
“I’m so afraid of snakes, and I don’t know what I will find in the hills and forests,” she says.
But the differences don’t stop there. Dealing in farmland and ranch land often involves serving several clients at once, navigating complex emotions, and helping people understand exactly what they have on their hands.
Creating a Full-Service Farmland Brokerage
For this reason, the business she and her husband run is multifaceted. In addition to helping clients buy and sell farmland, timberland and recreational parcels, they also offer farm management, land appraisal and auction services.
Luke serves as president of the national REALTORS® Land Institute, a commercial affiliate of the National Association of REALTORS®, and works as the managing broker of the business. He’s earned NAR’s Accredited Land Consultant designation and is an accredited farm manager as well.
The business of agricultural land is layered, and often many family members are involved in a transaction, Luke says. Farms are often inherited, having been in families for generations, and sometimes, those who inherited the land don’t quite know what they’ve acquired.
“Philosophically, they don’t know how to keep the farm,” Allison says, which is why the business offers farm management services—to make life easier for their clients.
The majority of their clients are sibling sets who have inherited the farmland. Sometimes, the Worrells deal with five or more siblings or other heirs who are left the farm, which can complicate matters.
“There’s a lot of sentimental feelings and a lot more family history that plays a role in selling agricultural land,” Luke says.
Some might want to keep the land in the family, while others want their fair share of its value when it’s sold.
In one case, Luke handled a situation involving 12 family members. Five wanted to sell. Luke had to work with 12 different personalities, facilitate several conversations and try to help all parties involved come to an agreement.
The Day-to-Day Selling Farm and Ranch Land
Comps and property research look a little different when a farm is involved, especially when it’s one that garners an income and supports a family. The Worrells conduct all kinds of research on statistics like crop production statistics, drainage and easement issues, and what kind of game exists for hunting.
The same is true when selling a ranch. Brokers have to have a wealth of complex knowledge on hand to properly help their clients, says Dan Murphy, ALC, founder and owner of M4 Ranches in Lake City, Colo. Some of the data he has to provide includes how to measure or gain access to soil temperatures and water absorption rates, convey ranch production rates, identify the recreational values of a forest that might be growing between agricultural land on the property, and know the ins and outs of wildlife conservation and water rights.
Many rules like hunting licensing and regulations, for instance, change from state to state and county to county, Murphy says, which can complicate matters when, say, a ranch is located at the border where three states meet.
Strategy varies from one property to the next as well. Getting a farm ready to sell might mean hauling off an old, rusted-through tractor or checking to see if a mobile home can be carted away from the property—both situations Luke Worrell has navigated.
Farm-sale brokers are also showing more than a couple of thousand square feet of house as well. When several hundred acres are involved, they have to get creative.
“It’s one thing to show someone a 1,200-square-foot home compared to a 200-acre hunting property. You can’t just drive by it,” Luke says. “You put on boots and bring your machete and drone.”
They use drones to show clients the entire spread of a farm and all-terrain vehicles to travel with clients around a farm to see all the nooks and crannies of specific areas.
For Murphy, getting to a property is sometimes easier by air than it is by car, which is why he recently earned his pilot’s license and owns two small airplanes. But even that isn’t always enough.
Terrain varies in the 500-mile radius within which he typically works. Selling ranches in Wyoming, Colorado and New Mexico, he’s dealing with multiple terrain types and weather issues. With that in mind, he maintains access to a helicopter, various boat types, a Sno-Cat tracking vehicle, all-terrain vehicles and snowmobiles.
And then, there’s the Continental Divide—a long, continuous mountain range—that Murphy might have to cross several times to show one ranch.
Marketing and Listing
Murphy says that marketing a single ranch can cost thousands of dollars upfront.
“When you take on a listing, you write checks the minute you list it,” he says.
While a single-home property, even one with a few acres of land, might have several interested buyers, a ranch or farm requires a specific kind of buyer who doesn’t necessarily come along often.
Ranch and farm owners typically know how to—or have the means to—manage and tend to several acres of land. They understand what it means to be able to keep up the space; tend to the animals if there are any; plant, raise and harvest crops; and deal with weather conditions that might cause drought. In truth, there aren’t many people in modern society with this particular skill set.
When listing a ranch, it’s important to bring every prospective buyer to the table, which means marketing to audiences near and far and capturing every detail that makes the property special.
It’s about getting out the information and advertising it at its best level. Sometimes editing a video for a particular ranch can take months because they are trying to capture seasons.
“You pull out all the stops because it’s not a small transaction,” Murphy says. “You have to have the equipment to get people to the location. There’s a lot of presentation to this type of a deal.”
Luke Worrell might not do as much outward marketing, but he spends a lot of time on the road meeting with clients, assessing land values, calling prospects, and dealing with land auctions.
Even with the best marketing efforts, farms and ranches might sit for months or years before a transaction is completed.
Selling a farm can take up to three years with all the logistics and family nuances, but most of the listings are completed within four months from the time it comes onto the market to closing day. The Worrells’ clients run the gamut, including investors, first-time farm buyers, and locals.
It can take from three months to three years to sell a ranch. Parcels are usually massive, with large price points, and are often unique when it comes to terrain and features, which means every property won’t suit every ranch-interested buyer. Matching a ranch to a buyer is a lot like putting a puzzle together.
Though the differences in ranch and farmland sales vary greatly from that of the traditional residential sale, one characteristic remains the same: the relationship aspect of the business. Murphy believes 90% of what they do as ranch and farm real estate agents is relationship-based. Likewise, the Worrells are often dealing with generations of families and emotionally charged transactions. The people skills required for real estate are just as important, even when hundreds of acres are involved.
Source: National Association of REALTORS®