Midwest Minute – March 13, 2023 - "Only in the Country"

There appears to be different rules applied by buyers and sellers when farmland is being sold than any other type of property we handle as real estate brokers.

Let me give you a few examples from my personal experience.

I’m sitting in our conference room with the selling couple, discussing offer documents generated by a tender.

There are seven bids in front of us, but the seller instructs me to put the highest one aside.

“I will never sell to that son of a *****.?It was a wet spring one year, and I got my tractor and drills stuck.?He was seeding right across the road with his big four-wheel drive rig, and he wouldn’t unhook to pull me out.?I guess he figured his time was worth more than mine!”

I listed a quarter of land for sale for a widow who, after renting it to a neighbour for ten years, wanted the equity out of it so she could help her two children with the costs of their university education.?

The former brother-in-law comes into the office and immediately starts yelling at me, saying this was family land, and his late brother would have wanted him to have it.?Furthermore, he wasn’t going to offer market value and in no uncertain terms, I was to tell my client he deserved to get it for a significant discount.

I pulled a copy of the title out of the file, looked him in the eye, and said “I don’t see your name on this, so I guess you will just have to compete for the property with everybody else!”

He bid less than half of the highest offer, and understandably, she decided to sell to someone else.?

About once per week I will get a phone call from an absentee owner, whose ancestors farmed the land he or she inherited.

The tenant has now stated they would like to buy it, but the owner doesn’t know what the property is worth, and can I help?

Many times, the tenant has made a verbal offer significantly below market value.?Of course, they want a deal.?Who doesn’t??

They tell the seller how good they have taken care of the land out of respect to the family.??

The seller feels guilty about selling in the first place, having grown up with the stories of how their parents and grandparents struggled to pay for it.?

To many urban owners, the number being offered is so large as to be intimidating.?Furthermore, it will make them instant millionaires.?

My advice??Each party should get an independent written valuation from an appraiser or broker specializing in agricultural property, share their report with the other party, then sit down and discuss a fair sale price.

If a “family and friends” discount is applied, so be it.?At least, everyone goes into the deal with eyes wide open.?

But of course, people being who they are, usually don’t want to spend pennies to earn dollars.

In one recent case, the out of province owner jumped at the tenant’s offer without getting any professional advice, and in my estimation left at least $300,000 on the table, maybe more, given the competition for quality grain land in that district.?

I wonder what her children would say if they knew mom had made a six-figure gift to someone they don’t even know? For really that is the bottom line, the tenant’s net worth increased at the expense of someone who was blissfully ignorant of the land’s real value.

In another case, the tenant didn’t step up with a fair offer until the seller told him I was contracted to take it to the open market on his behalf if he didn’t come close to market value.?

He quickly changed his tune, as we both knew he would likely not see that location come available again in his lifetime.

Adults making informed decisions I have no problem with.

People striving to take advantage of another gets my blood boiling.

Vern McClelland is an associate broker with RE/MAX of Lloydminster and an active partner in his family’s livestock operation.?Comments on this article are welcome either by emailing [email protected] ?or calling (306) 821-0611.