Researching farmland sales in the area may be beneficial
By Diego Flammini
Producers should consider multiple factors when deciding to put farmland up for sale and should turn to experts for advice.
Sellers should consult their accountants early in the process, said Peter Maloff, broker of RE/MAX Southwestern in Coleman, Alta.
“Sellers should have a good meeting with their accountants and go over everything very thoroughly because there could be capital gain and tax issues depending on the circumstances of the sale,” he told Farms.com. “For example, if someone sells a few parcels of land, they are still GST applicable and it’s the seller’s responsibility to address the GST implications.
“If there’s a homestead on the farm, the seller could sell the land to someone and the home to someone else.”
Producers should be prepared to spend money on property maintenance before a sale.
Like when selling a home, investing in repairs or renovations can help farmland owners see bigger returns on the sale of their farms, Maloff said.
“It’s worthwhile to put extra time to make sure fences are good and barns are in good shape,” he said. “Simple things can add considerable value to the property.”
Researching farmland sales in the area may be beneficial as well.
Having a real estate professional complete a competitive market analysis can give sellers important insights.
A market analysis is different than an appraisal, Maloff said.
“The document will show where the property is going to be advertised, how much commission is going to be charged and maybe three or four comparables to make sure the property isn’t over or underpriced,” he said.
“Someone who is licensed by the Appraisal Institute of Canada does an appraisal.”
Farmers could have to disclose production practices in the sale process.
Many financial institutions representing buyers will send questionnaires asking for specific pieces of environmental information, Maloff said.
“The questionnaire could ask questions like if the farmer has used any pesticides or herbicides and which ones,” he said. “If it’s arable land, you could have to disclose what your crop rotation is and if pasture land is overgrazed. The questionnaire could ask if there are any buried tanks on the property or if there have been any oil leaks.”
Sellers may also want to take the time to ensure adherence to municipal laws and regulations.
Having a land survey done can ensure the necessary information is up to date, Maloff said.
A land survey “can be expensive, but it’s always best if the seller is proactive and provides (the buyer) with the survey,” he said. “If you have a drift fence and someone thinks it’s a property line but it actually isn’t, it could create complications and potentially an upset buyer.”