Buying or selling a farm is a huge decision that comes with great rewards if done right. Compared to residential properties, however, agricultural property transactions can be more complicated. There are additional factors involved that aren’t there when you’re buying or selling residential property.
Here are our top tips for a successful farm purchase or sale:
Buying a farm
- Know what you’re using it for
Before buying a farm, figure out what you want to do with it. Whether it’s for earning an income, for residential use, or for recreational purposes, know exactly what you’ll be using one for. This will help you in searching for the right property and preparing for what you need. Some things to consider include the land’s size, the amenities you’ll be using, and the structures you’ll have to put up.
- Know your water resources
A water source is an essential feature to look for in any farm. You will need it for your animals, irrigation, and processing food.
When looking at farms, look into the available water infrastructures in each one. It would be ideal to have several hydrants in convenient locations around the farm. Don’t forget to have the water tested too. This will help you avoid problems that can affect crop production, animal health, and overall water quality.
Before buying a farm, you must also know about the water rights you’re getting with the property. Water rights give you ownership and authority to use the water sources in a property. In Texas, water rights depend on whether it is surface water or groundwater. Groundwater belongs to the landowners while surface water is owned by the state, but may be used by the landowner with the right permissions.
- Check out the infrastructure
Some farm properties for sale already come with existing infrastructures such as barns, sheds, or other outbuildings. This can help you cut your budget and save you the effort of building them yourself. Other things to look for are available farm equipment and fences. Find out what comes with the sale of the property and weigh their value against the added cost you may have to pay.
- Be aware of the expenses involved
A farm requires plenty of upkeep, whether it’s maintaining the fences or controlling pests and plant diseases. Many farm owners make the mistake of not fully knowing the expenses involved in running a farm before buying one. Familiarize yourself with these costs and research on what you can do to cut down on expenses.
- Make several visits to the site
Make sure you’re buying the right property by visiting it several times before making an offer. Take note of the condition of the structures, check for any flood zones in the area, and see if the property is easily accessible. If the farm needs repairs or if some renovations are in order, then you may be able to negotiate for a lower price.
Selling a farm
- Get your farm appraised
To get the best value for your farm, hire an experienced real estate appraiser who can accurately assess and evaluate agricultural properties in your area. Aside from comparing your farm to similar properties, they must know a great deal about soil conditions, water and irrigation, and the value of equipment and livestock that come with the farm.
- Make a good impression
Selling a farm is just like selling a home. The property needs to be presented well in order to sell quickly and for more.
Making a good impression starts with the listing photos, so make sure to prepare the property before taking the photos and uploading them online. Make your farm look fresh and inviting – clear away the clutter and give the barn and other structures a fresh coat of paint. It’s a good idea to take photos during harvest season or at the height of growing season, when your farm’s productivity is in full display. If you’re raising livestock, showcase them in the best light, as well. It also helps to schedule your photoshoot when the skies are clear since the majority of your shots will be taken outside.
When buyers come to check out the property, your farm needs to be in top condition. Remove any tools or equipment lying around, repair broken gates or fences, and keep your farm clean at all times.
- Be familiar with tax-saving strategies
If you plan to purchase another farm after selling your current one, you may qualify for a 1031 exchange. This tax-saving strategy lets you defer your capital gains tax, allowing you to build your wealth by putting your tax money into new investments instead.
Another tax-saving strategy is setting up a Charitable Remainder Trust, which provides sellers with several tax benefits, as well as an opportunity to make a lifetime income and the chance to leave a lasting legacy to their chosen charity.
Whether you’re buying or selling a farm in North Texas, it’s always best to work with a trusted group of real estate agents like Ranch Partners. Get in touch with the team at 254.433.2561 or 254.631.3200 or email jeffclarktexas(at)gmail(dotted)com to learn more about the farms for sale in North Texas.