Wondering how much work it will be – and how much money you could make – by selling your farmland? Murray Wise is here to help.
We hear this question a lot – “I’m considering selling some farmland, but where should I start?” We also hear, “How much work will it be for me to sell my farmland?” But selling your farm doesn’t need to be a stressful or difficult experience. If you want to make sure that selling your farmland is as simple as it can be, and you want to get the best price possible, we can help.
Here are three simple steps that we often share with our clients to help them make their farmland sale easy.
1. Confirm the land you own and its location. Start by confirming precisely how many acres you own, and where the farmland is located. This may sound obvious, but it’s an important first step that makes a big difference. There are a number of ways to confirm what you own and where. If there is a deed transferring title, the deed will have the legal description(s) of the acreage you own. Alternatively, if you have past real estate tax bills for the acreage, these tax bills will have a Permanent Index Number (PIN) for each parcel that you own in that county. The county uses the PIN to give your parcel a unique identity. In many cases, the tax bill will also list not only the acres that are owned, but also a legal description.
2. Clarify your land ownership. In some cases, this will be very straightforward if there is only one individual who owns the land (and even easier if that owner is you). However, in many instances when there are multiple family members involved, ownership can become complicated. For example, if farmland originally passed down to three siblings, and one of them passed away, did their interest pass to their children? We have seen situations where family members assumed that other family members were owners until the chain of title was searched, and it revealed they were not. We’ve also seen the opposite happen, where an owner’s interest passed to another party, such as a church, charity or hospital, for example. Another important aspect of ownership to clarify is if the land is in a trust. If so, the land may not be able to be sold.
3. If you’re a landlord, check the lease status. For those landowners who are completely detached from the farm, the likely scenario is that the farm is under a verbal year-to-year lease with a farmer that has been farming it for many years (possibly decades). In most states, a landlord is required to provide a farmer tenant with notice no less than four months before the end of the lease term. The majority of farm leases historically run March 1 – February 28. Under that scenario, October 31 is the deadline to notify a farmer that their lease will be terminated for the following year.
There are two other reasons it’s especially important to check the lease status of farmland you want to sell. The first is that a farm will more than likely sell at a discount if it has a lease in place, especially if it is a multi-year lease. Why? Because the farmers who are buyers want to buy the farm and operate it themselves, not be a landlord and have their neighbor farm it. The second reason is that an investor who may be buying a farm likely already has a preferred farmer in the region they work with, so having a lease in place prevents that investor from putting the farmer they work with on the acreage. Along those same lines, if a lease is in place, the buyer is subject to the terms of that lease and they are at the mercy of how good of a deal the seller negotiated. We see this situation a lot under market lease terms where the landlord-tenant relationship has been in place for many years.
Before you make a decision about selling your farmland, start with these three steps.
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If you’re looking for the right partner to help you evaluate selling your farmland, our team has decades of experience in farmland sales and auctions. We create a marketing window that generates maximum visibility to the market and brings buyers to the table. We also provide a defined sale date and closing date, so you know what to expect and when. Murray Wise Associates has a strong track record of exceeding client expectations – with more than $5 billion in land and agribusiness transactions in our 30+ year history.