Experienced sales reps can help farmers navigate negotiations and offer terms during a real estate transaction
By Kate Ayers
Buying a farm is a significant business decision and investment. Real estate agents can offer their expertise and knowledge to ensure producers understand the ins and outs of property purchase agreements.
A farmer’s first step in this process is finding an agent who suits his or her business and personal needs.
A farm buyer and real estate agent may work together for “many months or perhaps years (so, as a buyer), you want to be comfortable and confident that you are working with someone (who) you can trust and (who) will work on your behalf without question,” said JoAnne Baines and Philip Chabot, sales representatives for Sutton Group – Just Farms Realty Inc. in London, Ont.
A farmer should have open conversations with his or her realtor to ensure this professional is the right fit.
“Whether it’s sitting at the kitchen table, office desk or (the) back of a pickup, it’s best to have honest (discussions) so that the realtor is fully informed of your needs and goals,” Baines and Chabot said.
Some questions farmers may want to ask their realtors include:
- What is his or her experience in the agricultural real estate industry?
- What are the fees involved in a transaction and who pays them?
- Is a due diligence period needed to satisfy any concerns the buyer may have?
In addition to meeting with potential realtors, producers should speak with other members of their farm management team before starting this business venture.
“It is encouraged that, early in the buying process, a (farmer) consults with her accountant to be clear of her tax position when purchasing a farm,” Baines and Chabot said.
“The more confident a buyer can be of her financial borrowing capacity, … the more attractive an offer can be in terms of conditions.
“Not only should your (business) professionals be consulted, (but) so should family members who are involved. Ideally, they should also be present, fully aware and participate in discussions,” Baines and Chabot said.
Realtors who know the area where a farmer is looking to buy can provide expert and informed service.
“In some cases, (farmers) are looking to establish themselves in areas further from their (home) farms and (are) not as familiar with the values of land or the area,” they said. “In any case, it is wise to choose a realtor to work with who is knowledgeable of farming and has experience in the complexities of purchasing farms.
“A realtor will locate properties that may suit (a farmer’s) requirements and (will) keep (him or her) aware of new listings as they become available on the market. A realtor who is connected, experienced and has boots (on) the ground will often know of farms that may be available but (are) not currently listed for sale.”
Other services that sales representatives can provide farmers include researching sales surrounding the farms of interest to help determine whether the asking prices are realistic, and giving an informed opinion of market conditions, Baines and Chabot said.
Realtors can also help prepare and negotiate offers that best represent a farmer’s interests.
While consulting an ag realtor and asking purchase-related questions are important before submitting an offer, farmers should also consider such property details as closing and transactional costs, soil quality, five-year average yields and the condition of the residence and outbuildings (if applicable), Baines and Chabot add.
Overall, an experienced ag realtor can help farmers find the perfect properties for their businesses and help make the purchasing process as seamless as possible.
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