Frank J. Buchman
“Recent record rural land sales suggest opportunities for both sellers and buyers of farm, recreational, and other rural land.”
Alex Gyllstrom, marketing director for Whitetail Properties, told “Successful Farming” low property inventories point to land values remaining high.
Rising interest rates this year could suggest reduced demand, but that is only one factor.
“It can be projected that rural land values will stay at the higher end of the market,” Gyllstrom said. “That’s because of current inflation across our economy, as well as volatility in the stock market. This will help maintain or even increase the value that sellers can potentially receive.”
While these factors create a sense of urgency for those looking to sell land, they also present upside for buyers.
“Eventually, we anticipate more inventory becoming available due to current economic factors, creating more buying opportunities,” Gyllstrom said.
The Federal Reserve has rolled out rate hikes incrementally with more projected over the course of 2022 and into 2023. However potential land buyers can benefit from interest rates that are still relatively low, at least at the current time.
“We expect this year’s rural estate market to continue at a strong pace rewarding both sellers and buyers,” Gyllstrom said.
“Land is, and forever will be, a limited resource. The rate of appreciation over time continues to make it a solid and safe investment,” Gyllstrom said. “The mind-set of buyers will continue to factor in the increasing interest rates. But we expect the demand to sustain if rates don’t get too out of whack.”
Gyllstrom made several recommendations for those considering selling or buying rural land.
Sellers can provide “curb appeal.” There is the only once chance to make a good impression. Pick up trash along the road leading to the property, fix fences, hang a gate, and make the driveway attractive. Digging a pristine looking fishing pond or planting shade are long-term improvements that can appeal to land buyers.
Documenting farm value help land sellers increase appeal of their offering. For farm sales, provide soil fertility records, production history, and recent farm improvements that add value to the operation. Prospective buyers also want to know about any tenancy agreements if someone is operating the farm other than the owner.
Leases need to be in writing. If a farmer is renting the crop land, write up a simple contract both parties can sign. When hunting rights are leased, make sure there is a written agreement in place. Sellers can show potential buyers the extra income to be made through leasing out the farming or hunting rights.
A photographic portfolio is helpful for selling property. For hunting land, trail cam photos will show food plots and populations of deer, turkey, and other game animals
Buyers must work with a rural lender. Many of these offer tailored lending options and customized packages for rural properties. That can include a fixed interest rate, low down payment, and fixed monthly payments.
It’s essential for buyers to think longer term. Despite current economic challenges, avoid weighing only the short-term impact of 2022. Land ownership is a longer-term investment. Things could swing one way or another in 2023. But waiting to purchase land many times does not produce more favorable results.
A partnership agreement in a consideration for land buyers. A common way to purchase large hunting property is through partnership agreements, such as a limited liability company. This enables a group of individuals to work together to own property, making it more affordable for each.