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timberland agent

A Day In The Life Of A Timberland Agent

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One of the reasons consulting forestry, and now land focused real estate brokerage, has been so appealing to me is that the job is not monotonous. Each day presents new challenges and, while experience helps navigate those challenges, timberland agents are constantly learning and coming across new things. It is hard to describe a typical day because each one is unique. There are certain characteristics that make timberland brokerage a unique specialty.

I worked as consulting forester early in my career before transitioning into land agency. These early experiences prepared me for the more technical aspects of timberland brokerage. Brokers need a strong knowledge to help them allocate value among the component parts of properties. The value in timberland can be thought of as comprising two major components: the underlying or bare land and the timber growing on the land (there may also be improvement value). The agent must be able to quantify the timber portion separately from the bare land in order to form an accurate purchase or selling price.

timberland agent in forest

The first step in this process is accurately describing the timber on the property. This usually starts with a current forest stand map that details the acreages associated with each unique stand. A forest stand is an area of similar species composition and age. We prepare for the initial tract visit with an aerial photograph of the tract, and the first visit involves touring the property to identify the stands and stand boundaries. We then describe those stands in terms of species composition, age, site quality, silvicultural treatments, and any other relevant features. We take this field information back to the office and, using our GIS system, create an accurate and up-to-date stand map with associated acreages.

We then decide if the property requires a full timber inventory (cruise) to accurately value the merchantable timber. Ideally, all merchantable stands of timber will be inventoried prior to a purchase or sell. This gives either the buyer or the seller confidence in the timber value of the asset. If this is not possible, or the party does not want to incur the expense, an experienced forester or broker can provide estimates of the per acre value based on a thorough inspection of the property. Walk through or “ocular” estimates are not as accurate but are significantly lower cost, and may be sufficient depending on the goals of the buyer/seller.

The timber inventory should detail all of the species, forest products, and volumes in each timber category. If the agent is not a forester, they should seek to establish relationships with local consulting foresters in their work area, so that he or she can be engaged to perform timber inventory and appraisal services clients when needed. Pre-merchantable stands, those too young for commercial sale, have value that should be estimated as well. These can be valued if the agent can determine the age, species, and site preparation invested in planted stands or natural stands of timber.

timber forest

Agents specializing in this area of the land business need to have a strong knowledge of timber markets in their work area. They should know the area mills, what products they purchase, how the trees are merchandised (cut up when harvested), and current market pricing of all forest products for the market. In my area of North and South Carolina, I work in five unique timber markets within a 200-mile radius, and the values for the same forest products can vary greatly between each of these markets. If you are going to advise investors on where to purchase land, and help them forecast future timber markets, it is imperative to be networked with consulting foresters, procurement foresters, timber dealers, and mill representatives. These relationships will keep you updated so you can help your clients make good decisions. Armed with a deep understanding of the markets and forest product pricing in the area, a broker can use the timber inventory data to estimate the value of the timber on the property with a reasonable amount of certainty.

Equally important is the ability of the broker to value the underlying land on the timber investment. There are two primary approaches timberland brokers can use to value the land:

  1. Comparable sales. The sales comparison approach is the primary method used for smaller acreages that have less potential for regular (annual) cash flows. The broker should have a strong understanding of recent timberland transactions in their work area with as much detail as possible to estimate the bare land price realized in each sale (the allocation). This allows the agent to make an apples-to-apples comparison of sold tracts to the subject property. Land focused real estate brokers and local rural appraisers can help agents obtain comparable sale information. Professionals are usually willing to share information with other professionals, so be sure you return the favor to those who assist you.
  2. Land Expectation Value (LEV). The Land Expectation Value (LEV) approach involves using discounted cash flow analysis (DCF) to derive the net present value (NPV) of the net income stream produced by a property over time. The LEV approach does require some specific knowledge to complete accurately – primarily a way to project timber growth into the future. Generally, this approach is reserved for larger transactions with many acres and forest stands involved, those likely to generate annual or at least semi-regular cash flows through frequent harvest events. To complete this approach, the analyst will need to understand the client’s investment parameters as well, including likely holding period and required return. Specialized training and knowledge is required to value a property using the LEV approach.

Timberland is a specialty, and this is a very high level overview of the types of task a timberland agent might work on in a given day. The REALTORS Land Institute offers and excellent introductory class, Timberland Real Estate, as part of their LANDU Education Program. I recommend this course as a first step for those who seek expertise in timberland.

Chris Miller, ALCChris Miller, ALC, is a land broker and consulting forester for American Forest Management, Inc. in Charlotte, North Carolina.

Broker Tips For Choosing & Recruiting New Land Agents

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The Value in a Value Proposition

For a land real estate business to be successful, it must be good at recruiting new land agents, both attracting and retaining them. Your priority should be to have a well-defined value proposition. There are two parts to creating a well-defined value proposition for recruiting new land agents.

This first is the financial value to your team or brokerage with total agent splits, etc.

The second part will be defining the resources you provide to potential recruits, for example, in terms of leads from the company websites, technology, print ads, and whatever else it is that sets your brokerage apart. Next, you should also address the more intangible elements of why they should choose to work with you. For example, “We are the best-known land brokerage in the area” or “We have a culture of sharing that welcomes new agents,” etc.

Once you have a well-defined value proposition, it’s time to go find some talented people.

Prospecting Recruits

First things first, call agents that you have worked with in the past. Then, start calling agents that are working in the area(s) you serve. Next, begin thinking about the people you already know who are in ancillary positions that may be able to become good agents. Lenders, county extension agents, insurance agents, and even wildlife biologists are all a natural fit to join the land industry.

Now comes the time to set appointments with potential recruits. In order to have a consistent interview process, we recommend crafting a standard list of questions. This helps to maintain a consistent schedule for you and the new potential recruit, and it gives you the ability to best compare candidates. Besides if you do not have a consistent list, you will spend more time with some than others, missing information which could lead you to overlook some talented people.

Recruiting Top Candidates

Once you begin the recruiting process there are a few factors to consider.

First and foremost is determining if there is a cultural fit. If they don’t want to work from the office and everyone else does, there is a lot of potential for disagreement over the long-term. A lone wolf is not comfortable in an office full of people who share information and best practices.

Next, you’ll want to examine the potential agent’s drive or motivation. If someone is financially motivated, are they willing to do the activities necessary to earn enough business to create the income they desire? If they are only willing to put in the minimum effort and expect championship results, they are doomed to failure. It is your responsibility to set reasonable expectations upfront.

A person that says they like their brokerage but they feel like there must be something else in this business is an ideal candidate to have these conversations with. Ask about their business, how do they currently generate leads for clients? This will give you the opportunity to showcase all the tools and systems that your team offers. At this point, most people can see the value in partnering with you and are ready to come onboard. If not, set a follow up time and keep the dialogue going.

Immediately after the interview, it’s time to set follow up appointments. Consistent communication is the key – just like it is with potential sellers – remember the best agents typically are already working in the field and the decision to move to a new team is not taken lightly.

 

Tim Hadley, ALCAbout the Author: Tim Hadley, ALC, is an agent with Keller Williams Realty in Gladstone, MO. He joined the REALTORS® Land Institute in 2017 and is currently a member of their Future Leaders Committee.

 

kasey mockAbout the Author: Kasey Mock is the Director of KW LAND Division at Keller Williams Realty International. Mock is a member of the REALTORS® Land Institute, serving on their Future Leaders Committee. Make sure to check out his break out session diving further into this topic at the 2018 National Land Conference in Nashville, TN, in March.

 

 

Everything You Need to Know About Bringing in Outside Parties to a Land Transaction

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The sale of property that predominantly consists of land requires an extension to the set of tools you would normally use in a residential listing. Listing land has unique requirements that necessitate additions to the team of professionals involved in a transaction, even prior to marketing the property. In certain circumstances, adding another agent or even another brokerage firm may increase both marketing power and product expertise. Opening title with a title company or attorney’s office aids the Escrow Officer in getting ahead of any title issues. Bringing environmental and biological consultants on board can provide crucial advice when working on developable acreage with sensitive habitats. Once the property is listed and ready to market, a land planner, economic development agency, and surveyor could inform potential buyers about what is for sale, or what could be produced on the property. Each phase of the process during a successful sale has important and legal ramifications if not completely correctly. Below are details on who the professionals are that we most utilize, when we recommend speaking with them and why.

Who: Surveyor/Engineer

When: At listing

Why: If the property you are selling hasn’t been surveyed, it is advisable to recommend the seller have a survey completed with the corners of the premise marked (for larger properties we like to have them stake the corners with 10′ white PVC pipe). This allows you to convey accurate measurements to perspective purchasers, while having the corners visibly marked so that buyers may visualize the boundary when touring the site.  Additionally, a survey will also bring to light any issues involving encroachments, potentially avoiding costly retrades or cancelled escrows when given the foresight to deal with these problems early in the process.

When marketing transitional land, primarily for residential development, a civil engineer who is familiar with the local zoning code can be engaged to provide a lotting study. Having this study, which shows a hypothetical layout for a residential subdivision in accordance with the minimum development requirements of the zoning code and site constraints, can help support value. Similarly, hypothetical site plans can be developed for nonresidential development sites that show potential layouts and building footprints. An engineer may also be able to provide guidance or connect you with the correct contacts at the municipality to gain an understanding on the ability to access public utilities (water, wastewater, stormwater, natural gas, etc.), along with their distance from the property and whether they have enough capacity to support the proposed use.

Who: Land Use Planner / Architect

When: At listing

Why: Engaging a land planner to provide hypothetical master plan layouts that incorporate a mix of future uses for larger development sites can help prospects understand the breadth of the opportunity, assigning value to the portions of the site allocated to different product types. Additionally, if they are familiar with the local municipality, a knowledgeable land planner should be able to provide a plan that will be well received by both the market and local decision-making bodies.

Similarly, (but more typically for infill development projects) having an architect provide a feasibility study highlighting the applicable development regulations for the site (including maximum square footage or density constraints) and a massing report that shows the maximum building envelope along with architectural renderings of what a potential building may look like. These resources can help purchasers quickly assess the scope of the development opportunity at hand.

Who: Land Use Attorney 

When: Prior to engaging the market

Why: To most local elected officials, nothing is more important than land use. For this reason, when working on a transitional land project it is important for the seller to have advice from counsel that understands local politics and the land use regulatory process. This will help assess the reasonableness and likelihood of success for any offers received that are contingent on development. They can also provide valuable insight during the entitlement process and increase a project’s chances of approval.

Who: Real Estate (Transaction) Attorney

When: Prior to receiving offers

Why: Throughout the sale process, the seller should seek the advice of real estate counsel to ensure they are appropriately mitigating risk. This includes reviewing their current situation prior to receiving offers so that the agent can make Buyers aware of any business terms that are unique to this seller’s specific situation throughout the process of developing an offer. Additionally, working with counsel to review all agreements and due diligence material prior to delivery can mitigate the potential for the seller to expose themselves up to unnecessary liability.

Who: Title Officer/Attorney

When: Prior to or at listing

Why: A title review should be completed as early in the process as possible to ensure marketable title. Confirming how title is vested and addressing any encumbrances (i.e. outstanding liens or deeds of trust, lis pendens, easements, etc.) early in the process can ensure you are dealing with a property’s true decision maker, along with providing time to address any concerns long before you have a buyer at the table.

Who: Water Rights Attorney

When: At listing

Why: For any asset where access to water is currently or potentially a critical component of value, having a water rights attorney provide an opinion on the validity and defensibility of any water rights may be necessary to support any assessment.

Who: Well Driller 

When: At listing

Why: In regions that are dependent on groundwater, it is advisable to discuss the site with a local well driller to determine the feasibility of developing a well at the property, the condition of existing wells (if applicable), and any known issues with the groundwater resources in the area.

Who: Environmental Consultant 

When: Prior to or at listing

Why: Unresolved soil and groundwater contamination can be devastating to the value of a property regardless of the source. Having a consultant provide a desktop report prior to listing the property can help educate you and the seller about any known issues in the area. If there are reasons for concern, an environmental consultant can help develop a strategy to address the concerns and provide certainty to a buyer. If the owner has a previously completed Phase I Environmental Site Assessment (ESA), a report that looks at the current and historic uses of the property to assess if they may have impacted the soil or groundwater beneath the property and could pose a threat to the environment and/or human health) a consultant can review the report and help summarize what was found previously, as well as what additional investigation (if any) may be warranted.

Who: Biological Consultant

When: At listing

Why: The existence of sensitive plant and animal species, or habitats could substantially impact the cost to develop as well as the actual developable acreage of a site. Asking an expert if there are any known species in the area along with any reasons for concern by having an informal site visit completed to look for any indications of sensitive species or habitats will provide increased certainty when engaging the market.

Who: Consulting Forester 

When: At listing

Why: As detailed in the Should I Invest in Timberland Real Estate? post by Clint Flowers, ALC, a fellow RLI member, developing a solid timber management strategy is critical to the successful investment in timberland.  Additionally, if a consulting forester is engaged earlier and familiar with the property, they can help prospective purchasers assess the opportunity and determine if it is the right fit for their investment criteria.

Who: Escrow Officer

When: At listing

Why: Having a trustworthy and capable Escrow Officer as part of your team will help keep a transaction on track. An Escrow Officer can often work with Title in advance of a transaction to address any issues that may need settling prior to getting the property into Escrow. This type of preparation can limit last minute issues and help ensure a smooth transaction from start to finish.

Who: Economic Development Agency (public and/or private) 

When: At listing

Why: For development opportunities and transitional land, economic developers should be made aware of the offering as early as possible. Not only are they a potential source of a buyer, but they can typically provide guidance on incentives, approval processing, and general market expertise. Leveraging their involvement can save time and increase the likelihood of a project getting approved.

Who: Other Brokers/Agents 

When: Prior to listing

Why: Fielding the best team on every deal is fundamental to our success in business. When given the opportunity to work on a project outside of our unique area of geographic or product expertise, a referral is not always possible depending on our relationship with the client. However, partnering with the right team of real estate professionals to provide the expertise you lack will improve your learning curve, expedite the sale process, and (most importantly) ensure you achieve the best possible results for your client. RLI has a vast network of agents across the country with extensive expertise in the various sectors.

Who: Appraiser 

When: Prior to listing

Why: When analyzing a new opportunity, speaking with an appraiser knowledgeable in the market can help establish the most defensible approach to valuing a specific asset along with developing a defensible baseline value. They may also be able to provide verified comparable sales to support your analysis.

As you can see, much of this work is recommended to be completed early in the process. Understanding these aspects of a property and addressing any areas of concern sooner than later can:

  • assist with establishing a defensible asking price of the property;
  • ensure you present a comprehensive offering to the market;
  • help you address buyers questions early and knowledgably, and most importantly;
  • and decrease the level of uncertainty around a property and reduce the likelihood of surprises during escrow that may lead to avoidable delays, price reduction requests, or failed escrows.

While this list has been assembled primarily from the perspective of a listing agent, a buyer’s agent could also benefit from using this as a guide to assist either their clients with due diligence or their own preliminary investigations to determine if a site fits their client’s acquisition criteria. The list is not meant to be comprehensive but, in our experience, it addresses the vendors, consultants, and professionals we engage with most frequently. Establishing a stable base of knowledgeable experts can expand your capabilities and allow you to more effectively guide a client through the process of buying or selling real estate.

This post is part of the 2019 Future Leaders Committee content generation initiative. The initiative is directed at further establishing RLI as “The Voice of Land” in the land real estate industry for land professionals and landowners. For more posts like this, click here. 
About the Author: Matt Davis is a real estate broker with Cushman & Wakefield. He is based in San Diego, CA, and assists clients with the disposition and acquisition of investment grade agricultural and transitional land assets. He is also founding member of the company’s Land Advisory Group and Agribusiness Solutions Team. Matt is a member of RLI and serves on their 2019 Future Leaders Committee.

About the Author: Cynthia Bynum started in Real Estate in 2003 as an investor and acquired her license in the State of Texas in 2009. She was raised on Eagle Mountain Lake and is quite familiar with properties in Parker and Tarrant Counties. Joining Trinity Territory Brokerage firm was the best move for her career. Her specialties range from representing buyers and listing residential properties to commercial, land sales, property management, foreclosures,  and leasing.

Need To Knows About Owning and Managing Ranchland

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There are a few different ways to make money owning and managing ranchland. In this article, we have included a few of the best practices for both absentee owners and managers.

  1. Start with a soil test. You will not be able to apply the correct amount of inputs unless you start with a baseline. Too much fertilizer is a waste of money and the wrong pH in the soil will reduce your bale tonnage by a great amount. All my leases require the renter to apply fertilizer and lime as recommended by the county
  2. Keep records. Keep records of how many bales you get per field that will let you go back and see if your production is improving or declining. You won’t know that you have a problem without records. This is especially important if you have a tenant. Knowing this information will help you verify best practices are being used because a decline in production raises
  3. Paddocks. Installing paddocks can improve the animal carrying capacity of the land by a great deal. If animals are just turned out on open range they eat the best forage and ignore the less palatable plants. At the same time, they trample areas that often lead to erosion or soil compaction. With a system of paddocks, we can control how long our animals are on a particulate, ensuring even grazing while allowing the rest of the land to grow without pressure from animals. This method will ensure the maximum grass growth since growth is stunted for two weeks after it is grazed. Using this system, allows the most recovery time.
  4. Water. Watering is easier in some places than others, but some things are constant. It is rarely the best practice to allow cattle in the pond as it destroys water quality and can be dangerous for the young and weak members of the herd. Ideally, it is good to have tanks or troughs that are spread throughout the property to allow for our rotational grazing system. To do this, the initial cost is higher but the investment is usually recouped in a few years; not to mention the convenience of being able to just move to a different tank if there is a problem with another tank which makes it easier to schedule repairs without forcing us to fix it as an emergency.
  5. Goats. Consider investing in goats the first year you acquire a property that has been neglected. They will eat the Russian thistles and some other weeds first while allowing the grass a season for recovery. They are also very helpful in clearing brushy areas that are too overgrown to get a rotary cutter into. Usually, all that is needed is one growing season but with their very mild manure there is no risk of nitrogen burn so it will reduce the need for purchasing nitrogen pellets or liquid. Then, the area will be in much better condition before we introduce cattle or horses to a new range.

     6. Trees. The other technique that I have seen used for long-term wealth building is hardwood trees. In a system called alley cropping, we establish rows of hardwood trees every 80 feet; walnut and red oak trees make a good example. A simple hot wire can protect them when they are young saplings. Soil scientist tell me that having the trees will not reduce the hay production until year eight to ten when they end up being tall enough that their shade and size will begin to reduce the hay production on the range. There is an offset in most cases, if we follow this plan, the timber value at 30 years is greater than the purchase price of the land. This can be an especially lucrative harvest if its timing aligns with the farm owner’s retirement.

This post is part of the 2019 Future Leaders Committee content generation initiative. The initiative is directed at further establishing RLI as “The Voice of Land” in the land real estate industry for land professionals and landowners. For more posts like this, click here. 

About the Author: Tim Hadley, ALC, is an agent with Keller Williams Realty in Gladstone, MO. He joined the REALTORS® Land Institute in 2017 and is currently a member of their Future Leaders Committee.

 

kasey mock

About the Author: Kasey Mock is the Director of KW LAND Division at Keller Williams Realty International. Mock is a member of the REALTORS® Land Institute now serving on their Future Leaders Committee. Make sure to check out his break out session diving further into this topic at the 2018 National Land Conference in Nashville, TN, in March.

Top Tips for Owning/Managing Agricultural Land

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To get started, we need to show the variances in agricultural land. Several types of land fall within the bounds of “ag land” and we need to simply define these as follows:

LAND TYPES:

  1. Farm – used for growing crops on an annual basis, ie: corn, soybeans, cotton, and wheat.
  2. Ranch – used for grazing of animals for meat production or hay production.
  3. Vineyard – Production of grapes for wine, raisins, or juice.
  4. Orchard – Multiple types, ie: oranges, peaches, lemons, and apples. Also, whole fruit or nut production, ie: pecans, almonds, walnuts, etc.
  5. Timber – Production of timber for uses like lumber and paper.

Agricultural land is used for its ability to produce products that are used in our everyday lives. Timber is cut to produce lumber to build homes as soybeans are grown to produce feed for animals to eat. Without our agricultural production, human life would cease to exist. Keeping our investment, the land, producing at its highest ability, we must manage the variables that we can. Several factors affect production:

  1. Weather
  2. Insects/Disease
  3. Urbanization
  4. Government Regulation and Deregulation
  5. Fertility/Weed suppression
  6. Fallow (idle, neglected)

With all the factors we have to manage, weather is the largest factor, in my opinion, affecting the production of any type of ag land. Snow, droughts, floods, winds, hail, hurricanes, etc. all wreak havoc on properties across the United States. Managing weather is tough, but knowing the limitations of your program and planning for these types of events are crucial in effectively managing land. Feeding cattle before a large snow event or using no-till farming in highly erodible areas are some types of preventive measures growers can take to prepare for adverse weather.

Land also is affected by other natural elements like insects and disease. Insects affect production globally every year from bowl weevils in cotton to pine borers in timber plantations. All insect infestations can be detrimental if not taken care of in a timely matter. Many application methods exist from aerial to ground, but someone with professional experience and licensure should always be involved. Never apply chemicals without looking into the regulations that are in your area. Diseases are common in many ways from rust fungus on wheat to stomach worms in cattle. Also, keep in mind that a professional will be needed when looking into treatments for diseases accompanying ag production.

Urbanization is becoming an increasing concern for ag land that is situated around large cities. Many vineyards are currently dealing with large cities growing and their increased need for water resources. Some are also experiencing travel problems with large equipment as well as growing land prices because of land transitioning from ag use to commercial use. These are pertinent problems that have to be managed because of the direct financial impact they can cause to your bottom line. Managing this factor is tough and can sometimes cause relocation, or can result in change of crops with associated equipment. In the cattle business, it can cause problems with transportation, feeding, fly control, and keeping animals in pastures out of neighborhood yards. A land manager needs to carefully plan years in advance for this is something that we, as growers, can’t stop.

 

Government de/regulation is always something to consider because of our ever-changing legislation.  Some areas see the banning of chemicals that are crucial in controlling insects and weeds. A constant look at current issues, as well as reading and staying close to your legislator, will be the best way to stay ahead of the curve on these issues.

Fertility and weed suppression are another problem that we see in our ag land properties. Poor management of crucial micro/macro nutrients in farmland are detrimental to a farm in continuing production. Another example is weed and grass control in an orchard. Tall grass and weeds use water and without proper control can cause production loss. Management of fertility and weeds is always a factor that can contribute to production loss. However, with the proper professional oversight this can be avoided.

Fallow is a factor that affects ag land in two main areas.  One, continued growth and unmanaged land can cause grounds for breeding of insects and also fuel fire conditions. Insect infestations like we have seen in the south with the aphid epidemic were less in areas where fallow ground was least. Insects need cover to nest and hatch, and large growth can house and help multiply insects for several different crops. When we see the large fires in the west almost all the time, these are well fueled underbrush from mismanaged timber areas. Controlled burning, shredding and plowing can reduce the kindling needed for large scale fires which with proper care your property can be protected from wildfires.  Another thing to remember is there is an equal balance that the manager needs to follow.  Work closely with conservation and extension agencies in your local area to figure out where your equilibrium exists.

Solution

Find a qualified professional, do not go at this alone. You do not use a dentist to do your open-heart surgery, so why would you use advice from an unexperienced land professional, or worse an agent with no experience in land.  The Realtors® Land Institute has a search tool to help you find professionals in your area to help you make these kinds of decisions as well as manage and implement ideas for your specific property. Accredited Land Consultants are just that, they consult based upon years of experience and training from working in the land business. I have numerous clients I help on a weekly basis with finding the right tenant for their farm to helping them find a dirt contractor to build the next bass lake on the ranch. On the ground experience and superior training make the Accredited Land Consultant the perfect professional to rely on.

This post is part of the 2019 Future Leaders Committee content generation initiative. The initiative is directed at further establishing RLI as “The Voice of Land” in the land real estate industry for land professionals and landowners. For more posts like this, click here.  

About the Author

Clayton Pilgrim, ALC, is a licensed real estate agent with Century 21 Harvey Properties in Paris, Texas.  Throughout his career he has been in production agriculture from on the ground operations to large scale management. Pilgrim is involved in private investing in farms, ranches and recreational tracts throughout Texas and Oklahoma. He is a member of the Realtors® Land Institute, an Accredited Land Consultant and on the board of the Future Leaders Committee. He resides in Paris, Texas with his wife, Kristy and daughter, Caroline.

 

land real estate

Land Brokerage Relationships You Need

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Land and decisions about its ownership or stewardship of it, have been a defining factor in the history of the United States. The promise of having a stake in the land brought so many to our shores. LAND, that one asset, is highly diverse, uniquely fixed, and limited in supply… 

RELATIONSHIPS ARE KEY IN LAND BROKERAGE

As you establish yourself as a Land Broker, one of a select group of people who are willing to brave the elements and ford the streams, my best advice to you centers around RELATIONSHIPS. These important associations will help you today and over the years in your career of land brokerage. The depth they will provide to your practice will help you establish yourself as a Land Expert. Build this team and be loyal to them, and demand loyalty back! If you cannot call them when it may be inconvenient to them from time to time, find someone else to work with. As with most businesses, team effort is essential.

There follows a list of members you would do well to identify for your team in the land brokerage business. Try to find three folks you can work with in each category, but be sure to find at least one. These contacts will help you to know your market and the players in it.

LAND APPRAISER. Identify and meet with and interview this important member of your team. Talk with him or her about the average sales prices of lots and acreages. Keep track of this as you continue to keep in touch with this individual and chart it.  This information is all-important as you evaluate land in your market. This information can support that you obtain from your local MLS system (if you have one). Be sure to use the MLS to chart the land currently on the market, too. Also ask your land bankers, they know about deals that didn’t go on the market!

LAND BANK. The land bank is very important in the land business. Here’s why: Down payments and interest rates. Any property over five (5) acres (with or without a home on it) is considered “non-conforming”. Conventional lending services will make a loan on vacant land, however they want 20 to 50% down. On the other hand, the Land Bank asks 15% down on a 20-year program. (This program is based upon demographics, so your market area may not apply.) Note: Most Land Banks have in-house Appraisers. Check with your local Farm Credit and get to know those loan officers. They are a wealth of knowledge.

investment

ATTORNEY. Who can do business without a good attorney these days? Interview as many as you can find who specialize in land transactions. Talk with them about land, what they think about it, what brought them to specialize in land transactions, and how available they can be for you and your clients.

Try to identify at least three (3) attorneys you can work with and recommend to your clients. Remember, a land attorney should be very knowledgeable in subdivision laws, easements, timber contracts, mineral rights, extensive title searches, and land financing. There are definite nuances in the land business and your attorney needs to know about them and be available for consultation, even at night.

CPA/ TAX ACCOUNTANT/FINANCIAL PLANNER.   There may be tax consequences in all land contracts. These professionals can help you identify them and can be a valuable resource to you and your clients especially if they specialize in 1031 Like-Kind Exchange work. They can explain how to figure the “tax basis” in your transactions.

SURVEYOR. A surveyor is a big help in determining the “highest and best use” of a property. Do the same thing with surveyors as you did with other team members. Take the time to interview and select as those you enjoy working with and can recommend to your clients.

Be sure the surveyor is up-to-date on zoning and subdivision laws in your market area. Find at least one who not only is available, but will work with you. That is important. I call my surveyor at night if I need to.

land surveyor

ENVIRONMENTAL PROFESSIONALS. Take the time to get to know your environmental health department professionals. Be sure to meet and spend time with the Health Department Director and Staff. At a minimum, learn from them:

  1. How to set up a septic system
  2. How to fill out septic applications; and
  3. How to understand and fill out well permits.

In addition, 1) learn how to do your own soil analysis, 2) know how to get a water sample if a property has existing well or wells, and 3) get copies of soil maps and system application forms so you will have them handy when needed. In a rural land transaction, the septic permit is all you need to close. Remember, the septic permit may take 2 to 4 (or sometimes more) weeks to obtain, so be sure to start the process as soon as you are under contract.

SOIL SCIENTIST. Soil scientists are an invaluable asset to your team because they can approve sites that a Health Department cannot. They can suggest alternative systems (probably considerably more expensive) and even override a Health Department decision.  Most counties do NOT have a soil scientist on staff, so you will need to do some detective work to find and establish a relationship with at least one. A soil scientist can teach you how to evaluate soil, a lesson well worth learning.

ALC Shadow over dirt

SEPTIC SYSTEM INSTALLER. In the land business, where septic systems are common, what would your team be without at least one reliable septic system installer on board? Identify and interview several and select those you can work with and refer to clients.  From your contacts, learn the different types of systems, their costs and how they are laid out. Go to an installation site and observe for yourself first-hand how the system is installed. Support your own research with a collection of information and brochures from various manufacturers whom your installer can recommend.

WELL DRILLER/CONTRACTOR. A poorly built or maintained well can allow pollutants to enter water directly. The closer the well is to sources of pollution, the more likely the well will become polluted. For instance, if the well casing is cracked and pesticides that are being mixed near the well are spilled, the pesticides can easily leak into the well and pollute your drinking water, so it is essential to take the time to get to know a certified well-driller in your area. A good place to start to look for a well driller is your State Division of Water Quality.  Once you locate reliable resources, and identify those you will want to work with, find out about their pricing structure (most charge by the foot) and get basic knowledge like the typical depth of a well in your area, and now to chlorinate a well.

Your regional DENR Groundwater Section office, county health department or local Cooperative Extension Center can be a valuable source of information on the following topics: New well or spring construction and site selection,  well inspection and maintenance, Certified well drillers, Unused well abandonment, Construction records for existing wells ,Well water testing including— – Advice on appropriate tests to run, – List of certified testing laboratories, – Assistance interpreting test results, – Health risks. Your local Cooperative Extension Center can also provide information on:  Backflow prevention, Water pollution and health risks, Water treatment devices, Groundwater.

COUNTY/CITY PLANNING BOARDS.  Attend meetings of your local board. You will gain invaluable knowledge and insight which you can share with your clients. Get current copies of zoning laws, subdivision laws, zoning maps, flood plain maps, and other information that will be of help to you. Know of plans for the future including zoning changes and annexations, as this will help you anticipate the market. Learn how to establish a new street name and address.

MAPPING STAFF. Get to know the mapping staff in your county. They can help you to identify property, property owners, provide tax maps, topographical (topo) maps, and aerials of property. (Most counties now have GIS systems.) The mapping staff can teach you how to use these tools if you take the time to establish a relationship with them.

REGISTRAR OF DEEDS STAFF. Get to know the folks at the Registrar of Deeds Office. They will help you do your own title search and do the research to discover anything that may affect the title or value of the property including: any type of easement, encumbrances, mineral rights, timber rights, and so forth. Remember: ALWAYS get a copy of the Deed or deeds involved as you do your research. Do not rely on the attorney to do this for you. You are the expert and responsible.

TAX ASSESSMENT OFFICER.  Take time to go to meet the tax assessment officer. Such individuals are helpful in understanding what has sold and trends in sales beyond MLS date.  My agent furnishes me leads from time to time. This member of your team can be an excellent resource and most Realtors do not use them, so you can stand apart if you do.

TIMBER EXPERT. Professional Forestry services can help you as you identify the “highest and best use of the land” and a timber expert is an excellent addition to your team. That person can help you remember which tree is which, learn how to identify prized trees, learn how to “cruise” timber, provide a “certified cruise” and basically learn how the timber market works. You need to know about or how to figure board feet, how a timber contract works, and how to auction timber. TIMBER IS CASH. Your client actually can buy land with a timber contract, cut the timber, and still own the land with no out-of-pocket money. Being able to evaluate timber will help you price land.

timberland real estate

ROAD BUILDER. The construction business has become a more complicated one as environmental and safety rules proliferate and methods and equipment become more sophisticated. The increased complexity of the field makes planning jobs even tougher than before Road construction, grading, concrete work, retaining wall construction and taking preventative measures, which are cheaper than curative ones, can reduce the risks of landslides and increased soil and water erosion. Your road builder can tell you about the importance of aligning a road along a ridge, especially with a south-west aspect, and how it helps to avoid water drainage problems, avoids exposure to excess moisture and frost, and uses sunlight to keep roads dry. Ask him or her about phased construction, such as gradually increasing the width of the track, avoids having to manage large amounts of excavated material and allows for the natural compaction of earthwork by rain.  Road building is a complicated effort and you will want to add a seasoned road builder (or more) to your team. They can let you know the cost of putting in basic access roads to state-specified built roads. This will also help you on a break-up evaluation.

CORPS OF ENGINEERS/SOIL & WATER/ENVIRONMENTAL PROTECTION AGENCIES. All these government agencies are resources for you and may well be involved in any land development project in which you are involved. Get to know them and what services they provide.

LAND CONSERVATORY. Identify the local Land Conservatory decision-makers. They may be aware of purchase programs and incentives that may purchase your listing or a part of it. Tax benefits at the Federal and State level may aid in your sale.

UTILITIES PROVIDERS. Contact the utilities providers in your area including telephone, power and cable. Know who they are, what their service area is, how they work in terms of applications and so forth, what their charges are (if any) for new service, or moving a pole or poles and possibly create a hand-out with this information you can supply to your clients.

utilities

LAND BROKERAGE TOOL KIT

These are must items to help you become a LAND EXPERT if you use them.

  • 300’ tape
  • Surveyor’s flagging tape
  • 4’ surveyor’s stakes
  • Small hand sledgehammer
  • A handful of 10-penny nail (Who is holding the dumb end of the tape?)
  • Machete
  • Really good walking/hiking shoes
  • Beverage container you can wear
  • Insect repellant
  • Professional compass
  • Hand auger
  • Scale ruler
  • Digital camera w/ extra disc
  • GPS locator
  • Calculator
  • Area maps
  • Topographical maps/ aerial maps of subject and adjoining properties
  • Septic/well permits application forms
  • Think about what else you may want to add to this list!

You also may want to contact Ted Turner.  He is the true lover of land. He now is the largest private owner of land in the United States.  He owns over 2,000,000 acres of land.  Does he know something we should know?

Now you are ready.  Happy land brokerage and good luck!

© Lou Jewell, Accredited Land Consultant 2004

Lou Jewell, ALCAbout the Author: Lou Jewell, ALC, has for over twenty-five years has provided expert experience in rural markets in Western Piedmont North Carolina and Southern Virginia. He has over 1,000 successful transactions and has developed over sixty rural subdivisions. A member of the Realtors® Land Institute since 1998, he achieved the prestigious Accredited Land Consultant (ALC) Designation in 2004 and is one of less than 500 ALCs in the United States.

 

 

How and Why To Invest in Farmland

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OVERVIEW: INVEST IN FARMLAND

From the beginning of time, farmers have been an integral part of feeding the public. Many technological changes have impacted the farming industry, from the invention of the plow to more modern advances, such as GPS technology, irrigation, and drought-tolerant seed varieties. Many facets have changed but one has not, the dirt. Investing in land is a “simple” process of purchasing property and creating value through: revenue, appreciation, or tax benefits. Although it sounds that many “simple” investors don’t understand the difficulty in selecting properties that make sense for their investment goals when they invest in farmland, for example investing in farmland for retirement.  Listed below are a few short items to look at before investing in farmland.

FIND A PROFESSIONAL

 

Many investors both large and small make the mistake of not employing a professional that has the knowledge of the industry/market and can care for their money. Many times, throughout my real estate career, investment experience and as a farmer myself, I have seen investors not use the correct professional with knowledge of the land. When looking to diversify with farmland, seek a real estate professional with historical and proven confidence in the area.

Accredited Land Consultant land transaction expert farmland

Typically, land professionals are part of organizations like The Realtors® Land Institute where land is the single most asset class, they deal in. To go further, Accredited Land Consultants are trained and accomplished in the industry, of which only a few hundred agents have acquired the designation worldwide.  I use the quote, “I will not go to a heart doctor to get my hip replaced.” A Realtor® who sells homes in an urban area would not have the specific expertise to know the farm and ranch industry and understand the investment quality of a property. A farm and ranch real estate agent would not know about condominium prices in downtown. Use the Find A Land Consultant tool and look for an ALC Designated agent (see why) to make sure you are using a qualified land professional.

BENEFITS

One of the best benefits known to investors is the ability to have land as a tangible asset when you invest in farmland. This is especially important when a portfolio is heavily invested in the stock market.  Another benefit we see in farmland is the tax deduction in relation to depreciation.  Many farms contain improvements that depreciate such as grain storage, irrigation pivots, shops, barns and etc.  An owner can depreciate some of these assets each year to offset yearly taxes.  Always ask your favorite CPA for more information.

invest in farmland

“The United States has some of the best potential farmland for investment…”

Another great benefit to owning farmland is the ability to lease, farm, or share crop your property, to make money.  The value of farmland has increased over the last several years due to an increase in demand for food and fiber globally.  The United States has some of the best potential farmland for investment because of our democratic government and the infrastructure it possesses; ie, railroads, rivers and highways. Other countries have very fertile soil but have no roads to deliver products to a port, and it makes for a hard harvest.  Also, some foreign countries have great land to grow crops but have a corrupt government and/or the state owns all the ports of exchange.  Not all international investments are bad, they just can be more volatile than the U.S.

SELECTION

When selecting a farm to purchase an investor needs to keep three simple points in their process.  Do I have the capital to make the investment? Do I feel comfortable in a long-term project? Can I leave emotions aside when purchasing/selling?

  1. Knowing your buying potential, aka how much can you spend, is key when purchasing farmland. Some investors move capital into property with no debt and many move some capital and acquire debt through lenders.  Lenders are everywhere and, in my opinion, choose a lender that understands farmland and its characteristics.  There are options for government loans through the USDA and other government entities as well.  Consult your land professional to direct you to lenders that can help.
  2. Farmland investing for the most part is a long-term project. Many investors buy land and hold it for extended periods of time to get the most return.  Many large investors may hold land for as long as 10+ years to see the returns.  The farm economy goes in cycles much like the economy, which as a whole goes up and down.  To see real potential in farmland, one must be ready to hold on through at least 5+ years.
  3. Emotion is always on the table when it comes to tracts of land. Throughout my career I have fallen victim to getting emotional towards a piece of property.  This is a definite thing to remember when it comes to you and your family’s financial future.  Leave emotions at the door.  The phrase, “time is money”, can go both ways. Waiting two years to purchase because it makes more sense financially or selling now because you have a willing buyer, may factor into your decision. Remember, “A Bird in the Hand is Worth Two in the Bush”.

“To see real potential in farmland, one must be ready to hold on through at least 5+ years.”

DIVESTING

After the asset has reached potential or maybe you are ready to buy a new investment, it is time to liquidate. When you invest in farmland, selling the property is as important as the day you purchase. I cannot express the importance using a qualified professional. Visit the Realtors® Land Institute to find a qualified agent when it comes time to sell your investment. The right professional can elevate your sales price, alleviate hassle, and supply you with confidence to the day of closing. When selling farmland, a land professional must qualify buyers and must advertise to the masses. This requires a tailored marketing program and someone with whom has the skill set to vet buyers and make sure qualified candidates can meet or exceed the requirements to get to the closing table.

CONCLUSION

Investing in farmland is very rewarding, if done correctly. The key to remember is to surround yourself with qualified people to help you make decisions. This is your money and your future, happy hunting!

About The Author: Clayton Pilgrim, ALC, is a licensed real estate agent with Century 21 Harvey Properties in Paris, Texas.  Throughout his career he has been in production agriculture from on the ground operations to large scale management.  Pilgrim is involved in private investing in farms, ranches, and recreational tracts throughout East Texas and Southern Oklahoma.  He is a member of the Realtors® Land Institute, an Accredited Land Consultant and on the board of the Future Leaders Committee.  He resides in Paris, Texas, with his wife, Kristy, and daughter, Caroline.

Call The Neighbors And Other Prospecting Tips

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Early in my land career, I learned a valuable lesson. I got a call one day from a broker who works in my market area saying he had a prospect for one of my listings. They toured the property, submitted an offer, and we negotiated to an executed contract. About a week later I was gathering some information for the closing attorney via the property assessor website. It was then that I discovered that the buyer was the landowner immediately adjacent to my listing. The broker that submitted the offer had seen the property marketed online and was friends with the eventual buyer. He made one phone call to his friend and became the buyer’s broker in the deal. By failing to contact that individual myself, I gave up half of my commission – over $100,000.

Before I go on, I want to make it clear that I have no issues cooperating with other brokers. Our land broker community is a small one and pretty tight. I have done plenty of deals that would not have happened without the cooperation of fellow brokers and I welcome their involvement. But in the case above, this buyer was someone I could easily have gone to directly.

It seems like a simple thing – get in touch with the adjacent landowners to gauge their interest in your listing. But I screwed it up. So, maybe by pointing it out, I can help someone out there avoid the same mistake. Certainly, we all have go-to buyers who we contact the moment we have a property that fits in their wheelhouse. But it’s always possible the simplest solution is literally right next door.

Since entering the land brokerage industry 5 years ago, I’ve made a few (a lot of?) other mistakes or simply failed to do some (MANY!) important things. So, I’d like to offer some tips on prospecting to help you get more deals and maintain a more consistent pipeline.

When on the phone, if they will keep talking, let them talk!

When I first started cold calling, many of my calls lasted less than 20 seconds. I would get someone on the phone and ask if they wanted to sell. If they said “no”, conversation over. Move on to the next call. Over time, I realized I was doing it wrong. I began engaging people in conversation – even if I knew they weren’t sellers. I learned about people. I built relationships. And pretty frequently, I got a tip on a family member or friend nearby who owned land as well. By making the phone call less about a “yes” or “no” and more about gathering information, I was able to make my calls more productive and, frankly, more enjoyable. It was also a great way to set myself up for doing what I recommend in the next tip.

When prospects tell you “no”, call them back later

At this very moment, I am working on a rather large deal that is the result of consistently calling back a “no”. I’ve been following up with this guy for over 3 years and he is finally ready to sell. In fact, on my most recent follow up with him, he told me he still wasn’t a seller. Then he contacted me a week later and wanted to move forward. The point here is that people change. Regular follow up is VITAL to make sure you get to them when they are ready. Many things can make a landowner change their mind: a bad crop year, a death in the family, birth of grandkids, or whatever. The answer may be “no” today, but is likely to change to a “yes” at some point in the future. You want to make sure that when “yes” arrives, you are the only person that owner will think of.

Flag down the tractor

This tip falls a bit more under the heading of canvassing than prospecting. But when done well, it leads to more effective prospecting. Have you ever been out looking at land (in my case row crop farms) and seen someone plowing or spreading fertilizer? Next time you do, park your truck on the side of the road and see if you can get his attention. He might be a contractor, or a farmhand, or maybe even the owner himself. But no matter what his role or position, you’re bound to get some great information from him if you simply engage him in conversation. Using this technique, I’ve gotten names, addresses, and even cell phone numbers of quality prospects. It may sound a bit weird or make you uncomfortable, but the tractor driver generally welcomes the company. He likely spends most of his day alone in that tractor cab. Give him the opportunity to talk, ask the right questions, and before you know it you’ll be listing that $10MM property that you got from the guy on the tractor.

There are millions of different tips and tricks to effective prospecting. I’ve written in the past on outsourcing your time and using good software to boost your prospecting efforts. But there is no substitute for getting on the phone or talking in person with people who own property. In my opinion, this is far and away the most directly effective method for listing and selling property. First, call the neighbors. Then, call EVERYBODY ELSE.

This post is part of the 2018 Future Leaders Committee content generation initiative. The initiative is directed at further establishing RLI as “The Voice of Land” in the land real estate industry for land professionals and landowners. For more posts like this, click here.

mcdow, calebAbout the author: Caleb McDow, ALC, is a land specialist and vice president with Crosby & Associates, Inc. in Winter Haven, FL, with a Master of Science in Real Estate (MSRE) and is a licensed private pilot and drone operator. McDow joined the institute in 2014 as a Military Transition Program (MTP) member.  He serves on the Institute’s Future Leaders Committee and regularly blogs on real estate issues. Caleb McDow can be reached at 352-665-6648 or caleb@crosbydirt.com

Checklist for Success

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How many of you are the backbone of your Company’s entire operation? In fact, you are probably your entire operation: a solo agent prospecting for new leads, writing offers, conducting listing appointments and buyer consultations, negotiating contracts, giving sellers marketing updates, ordering surveys, determining utility locations, marketing your listings, handling your social media and overall, handling the entire transaction from listing to closing. In fact, you probably have to make your own coffee and try to manage a database and a family. WHEW, it’s a lot!

Have you ever felt as if you’re juggling too much, perhaps, you’re even struggling to keep up? Ever wished that you were in a position to hire an assistant to support you with the never-ending stream of administrative tasks? Have you determined that you’re not quite ready for that next step but desperately need some help staying organized and efficient? I feel like this is an incredible place to start. Not only will it help you stay organized, it will create a workflow that can be duplicated and passed on. Now is a great time to consider implementing systems and processes that can later be handed off as you grow. In order to do so, you have to write down what has to be done before you can hire someone to do it.

In order to move from a solo agent to a team, you must build systems that will keep your company operational and functioning in a smooth, systematized and efficient manner. In addition, when you finally hit your breaking point and hire an admin, you can share these systems and train your team by simply going over your documented processes. If you’re a real champion and want to grow your business exponentially, I would personally recommend going through the utter discomfort of hiring a business coach. I would recommend someone like Mike Ferry Organization, Tom Hopkins International, or my personal favorite, Icenhower Coaching and Consulting.

A coach can help you organize your business, determine when to hire staff members and how to grow. It is uncomfortable; however, I want to illustrate the type of systems the discomfort introduces. Below you will find Ary Land and Home’s Listing to Contract Checklist. My team and I have developed this over time while working with our coach (Icenhower Coaching and Consulting). See below.

 

Date Completed Date Requested
Admin intro call to sellers – immediately after listing signed
Receive signed listing agreement
Create PROPERTY FILE CHECKLIST
Obtain all signed & completed sellers disclosures
Obtain showing instructions from agent/sellers, Gate Code? Combo?
Verify Aerial is accurate with salesperson
Put seller on MLS listing auto-alert email drip for LAND OR HOME to buy
Put seller on MLS auto-alert drip- MLS status changes 1 MILE RADIUS FROM LAND
Ask Seller for utility companies, call and get sizes of lines in front of prop
Order preliminary title report, HOA Documents & CCRs if HOME
Order Signs? Let Trish know what’s used for sign inventory
Add sellers to admin weekly update call list
Add sellers to agent’s weekly update call list
Ask to Enter listing into MLS as incomplete for agent to proof
Assign lock box to MLS listing
Add client to CRM database
Add new listing to Team Scoreboard
Submit listing contract/disclosures in to DotLoop for compliance
Get MLS listing edits/approval from Agent
Upload MLS Client Detail Report to property file
Email MLS Client Detail Report to all team members
Add/Enhance Listing on LandWatch LOA and LandBrokerMLS
Calendar Listing Expiration Date
Prepare property flyer
Create “Just Listed” Facebook & social media posts
“Just Listed” mailers/flyers created & ordered
Add clients as friends on Facebook/Social Media
Claim listing on Zillow/Trulia & set up reporting
Sign up at property
Flyers delivered to property
LISTING GOES LIVE ON MLS  
Send Thank You/Gift Card to Person who Referred Listing
“Just Listed” email to neighborhood & SOI
“Just Listed” posted on Facebook & social media
Call to sellers for PRICE REDUCTION APPOINTMENT?
Weekly Activity Report Call to sellers
Email Activity Report to sellers
ONCE OFFER(S) RECEIVED  
Prepare summary(s) of key offer terms to present to sellers
ONCE OFFER ACCEPTED – Start Property File Checklist  

 

*Please note that you need to go through the checklist, there are some things that will not apply to your situation.

Can you picture yourself using this checklist? Can you imagine what it would be like to know that all of your files are “where they need to be?” Fundamental organization and structure is essential.

The main goal in writing this Blog is to help novice agents understand that developing routines and establishing work flows is essential to running a successful real estate company. Even though you may feel like you are too far gone, YOU CAN turn chaos into order and whip things into shape. These processes will 1) make your life as an agent easier and less stressful, and 2) create and maintain seamless systems that can be duplicated to keep the business running so that you can focus on growing your business.

With that said, I urge you to sit down and go over the above Listing to Contract Checklist and make it yours. Don’t stop there, make a Contract to Close Checklist, a Seller Closing Checklist, and a Buyer Closing Checklist and just keep going. Don’t make the checklists just to make them, make sure you implement them and go over them weekly. Make a checklist of what needs to be done on every file and eventually you will be able to hire someone that can make sure the items are checked off for you. I know it will be painful and you will grow to the extent of pain you can handle!

On another note, if you are looking to hire someone and you are not sure exactly what they are supposed to do, keep reading. Below is a sample Listing Manager’s job description.

  • Oversee all aspects of Seller’s transactions from initial contact to executed purchase agreement.
  • Prepare all listing materials: pre-listing presentation, Listing Agreement, sellers’ disclosures, comparative market analysis, pull online property profile, research old multiple listing service (MLS) listings and etc.
  • Consult & coordinate with Seller’s all property photos, surveys, repairs, cleaning, signage, lockbox, access requirements & marketing activities.
  • Obtain all necessary signatures on listing agreement, disclosures and other necessary documentation
  • Take property phone calls and monitor Agent emails.
  • Coordinate Buyer showings & obtain feedback.
  • Provide proactive weekly feedback to sellers regarding all showings and marketing activities.
  • Coordinate all agent meetings and remind Agent of important dates.
  • Input all listing information into MLS and marketing websites and update as needed.
  • Submit all necessary documentation to office broker for file compliance.
  • Input all necessary information into client database and transaction management systems

Again, when I got into real estate, I knew how to sell Farms. I did not understand how to run a business. None of this comes natural to me, however; it has changed the way our business operates. In fact, I no longer say “only I can do it” or “no one will do it as good as me.” That is a scarcity mindset and you have to realize that if you are saying that right now, it’s because “how to do it is not written down,” as our great leader, Gary Keller, would say. It took me a long time to realize this and if it weren’t for Kasey Mock taking the time to explain how important a business foundation is, I sure wouldn’t be where I am at today. With that said, my challenge to you is to start to document the things you do and create checklists to make sure they are done on every file. Make it a priority! Call me if I can help!

This post is part of the 2018 Future Leaders Committee content generation initiative. The initiative is directed at further establishing RLI as “The Voice of Land” in the land real estate industry for land professionals and landowners. For more posts like this, click here. 

Drew AryAbout the Author: Drew Ary, ALC, is an agent with Keller Williams Advantage. Drew has a vast knowledge of raw land, land with improvements, and farm and ranch properties. Above all, he has a passion for selling land and farm and ranch properties by bringing buyers and sellers together through honesty and integrity. Drew spent 10 years in the real estate auction world with roles as a Closing Coordinator, Project Manager, and a large portion as the Director of Farm & Ranch Sales. Drew moved to traditional real estate with Keller Williams Advantage at the beginning of 2017.

Gathering and Verifying Comparable Sales for Rural Land

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As a rural land appraiser, comparable sales are the “life blood” of my business. Of the three common methods for appraising – cost, income, and market data – I tend to use the market data approach the most often both as an appraiser and as a real estate broker. This method allows me to gather reliable and verified comparable sales which are both vital for pricing and appraising properties.  Here are a few ideas on how to do this in your rural land markets:

Sources for Comparable Sales

Networking with Market Participants

Talking with local market participants has proven to be the best way I have found to locate sales. Whether you are at the local restaurant eating lunch or at an agricultural trade show, you should always keep your “ears to the ground” for recent land sales. You may hear these sales in conversations with farmers, foresters, buyers, sellers, bankers or other individuals.  When you hear mention of a sale that you do not have in your database, be sure to listen closely and ask questions if the timing is right always being courteous of others’ time and privacy. If someone seems as if they don’t want to talk about the sale, respect that and try to do further research elsewhere such as utilizing probate records or having conversations with other brokers or appraisers involved.

Company Sales

My best sales are by far the ones where one of our company’s representatives (myself or another broker) is involved.  These internal transactions can almost always ensure that great data will be gathered to verify a sale considering that we should have all of the maps, closing statements, contact information and other necessary data readily available.

Multiple Listing System (MLS)

MLS is a great tool to utilize in your search for comparable sales in more populated areas (considering I appraise and sell land in rural south Alabama, I do not have the opportunity to utilize it often).  Further detail verification of the transaction and property will be necessary since MLS’s are geared towards Residential Real Estate but it’s an excellent “starting point,” if available.

Other Appraisers and Brokers

It is imperative to keep a good working relationship with appraisers and brokers in your market area if you want good data on comparable sales. I have made many great friendships by sharing and receiving comparable sales with other appraisers. I met several of these appraisers at various American Society of Farm Managers and Rural Appraisers (ASFMRA) events. After meeting other appraisers in my area, I always try to follow up by phone call or email to remind them to let me know if I can ever help them with comparable sales in my area. Many of these appraisers have sent work to me when they were either too busy or had a conflict of interest. “Friendly Competition” in the appraisal world is something that we must continue to work towards.

Verifying Comparable Sales

It is always best to speak with someone directly related to the transaction to verify a comparable sale. Of course, if you live in a “disclosure state” you can find items like: purchaser, seller, closing date, legal description and purchase price on the deed at the local probate office. However, in most cases there are other items that make up the purchase price that must be researched further. When verifying comparable sales, I almost always start at the probate office to verify that the sale actually closed, print a copy of the deed so that I have it for my records, and look up the property on the county tax map to verify its location. I will then try to contact someone directly involved with the transaction to determine items such as: improvements located on the sale and their contributory value, timber value, long term leases and their contributory value, equipment or livestock included with the purchase, just to name a few. I find it is most beneficial to speak with buyers, sellers, and agents involved with the transaction. More times than not there will be two sides to the story which you must reconcile to determine the true makeup of the items involved with the sale.

Comparable sales research is something that will make you a better real estate broker or appraiser. I believe you never can know “too much” about your local land market. Knowing your market will help you competitively price land which is ultimately helps it sell quicker, this “hands on” approach of digging through sales will likely introduce you to valuable market participants with great lead potential that you otherwise might not have met in your everyday professional life.

This post is part of the 2018 Future Leaders Committee content generation initiative. The initiative is directed at further establishing RLI as “The Voice of Land” in the land real estate industry for land professionals and landowners. For more posts like this, click here.

About the author: Calvin Perryman, ALC, is an Associate Broker and Appraiser with Great Southern Land. Calvin is an active member of RLI, serving on the 2018 Future Leaders Committee and as the 2018 President of the RLI Alabama Chapter. He graduated from Auburn University with a Bachelor Degree in Agricultural Business and Economics in May of 2011. Shortly after graduating from Auburn he obtained his real estate license and has been in the real estate business since 2011.