Timber Lake Topic, March 26, 2020
Read the full article from the Ag Insert of the March 26, 2020 issue of the Timber Lake Topic here.
When is a good time to sell land?
The best time to sell Ag land is going to depend on your goals and reasons for selling. That aside, here are some additional things to consider.
Winter/Spring and Fall are all good times for selling land. For cropland, you’ll want to make sure to allow a buyer time to plan for spring planting inputs. This will depend on where you live and the weather conditions that year, which no one can predict these days. Closing can be 30-45 days after the purchase agreements are signed and since possession is at closing, anything past a March sale could be a bit risky. However, sometimes an April sale date can be manageable by offering the buyer the opportunity to put more money down for immediate possession, allowing them to get in the field before closing.
If it’s pastureland you’re selling, then you have a little larger time window to work with in the spring. Most folks put their cows out to pasture in the May/June timeframe, which buys you another month or two for a spring sale.
One advantage to selling in the fall is the ability to obtain better pictures and videos of the property for marketing purposes. If you contact an agent in January for a spring auction, your photos may be pretty white! Photos are certainly not the main thing a buyer looks at when considering a purchase, but they certainly do help with eye appeal on marketing materials. Most brokers have software that can provide aerial maps and soil maps for prospective buyers, if photos aren’t available.
If your property has recreational attributes such as heavily wooded areas or ravines where wildlife thrive, then you might consider a fall sale. Spring won’t be a bad time for properties like this, but sometimes fall can be a better fit as more folks are in that hunting mindset. You may get additional exposure to folks who come to the area for just that purpose who may entertain the idea of purchasing their own place for recreational use.
Even if you have no plans to sell in the near future, one thing you can do now to prepare for down the road is to take photos of your land and store them in an accessible location. A broker is going to visit the land a handful of times when preparing marketing materials and will take quality photos. However, they don’t usually have the opportunity to be there in every season or at the perfect sunset or when the cows are all drinking or the deer are posing. A broker will welcome quality photos from the landowner.
What about political influences? Does that affect the value and timing of a land sale? This is a question I’ve been asked a few times lately, specifically referring to the Coronavirus. And I’ve even gotten a few questions about next fall with the Presidential election. Generally speaking, I haven’t seen that they make a big difference in how the land sells. Most folks who are buying land understand that things like that come and go, and aren’t buying the land based on a rash reaction to highly fluctuating markets. If the stock market is on a downward path due to fear over a viral outbreak, then land may look more appealing for those seeking other avenues to invest their funds. A land investment can also be attractive, even at a 2.5 – 3% return, when compared to alternative options of CD and T-Bond rates at less than 1%. Land has proven to be a very stable investment over time. According to a 2017 report*, farmland has achieved a compounded annual growth rate (CAGR) of more than 5% per year from 1970 – 2015.
The best thing to do if you’re thinking of selling land is to contact an experienced broker and visit with them. Based on your goals and the type of land you wish to sell, they will be able to provide you with some thoughts and suggestions to help maximize your results.
Kristen Gill, Gill Land Company
*Farm Foundation Issue Report: Farmland Ownership: Trends & Future Implications by Bruce J. Sherrick, September 2017.
