Featured in Land Investor Magazine Volume 5
By Jeff Boswell, Partner/Broker Associate – Republic Ranches, LLC & Greg Fay, Founder/Broker – Fay Ranches
While most people know that a lot of work will go into preparing your house for sale in the residential real estate world, it is an often neglected aspect of preparing a ranch for sale. Homeowners will paint kitchens a different color, change countertops, and even refinish floors in anticipation of getting the best offer they can. A similar strategy should be used to prepare a farm or ranch for sale.
You must consider any homes or lodges that are on the property. As with an urban residence, appearances are of the utmost importance, so you need to have the ranch home in the best possible shape and condition. Ensuring the exterior and the yard are clean and spending time on landscaping are all essential elements, as most ranch tours begin at the ranch house. You don’t get do-overs with first impressions (this goes for the ranch entrance as well). Being sure the home is clean, and any obvious trouble spots are taken care of before putting it on the market is critical. Finding a mouse in the toilet (or even a dropping on a bed), a raccoon in the closet (it has happened), or an overall dusty home will not bode well for the tone of the remainder of the tour. We recommend that our clients ensure that any secondary buildings are also clean and organized. This includes everything from barns for equipment to deer blinds. The cost and effort of cleaning up these places are minimal, and it will make an impression on a client viewing the ranch. If secondary buildings appear as well-maintained, a client will assume the rest of the ranch has been well taken care of.
One often hears the term curb appeal in the urban real estate environment. In the farm and ranch environment, we like to use the term “pasture appeal,” and this is an equally important concept. While most of the ranches we sell consist of native rangeland utilized by wildlife and livestock, a good many are operating farms or have hay meadows, food plots, quail strips, etc. These are areas that are mechanically altered to improve the productivity of the property, and these parcels should also be tended to so they appear well-maintained.
All roads should be mowed and graded, and any trash, fallen trees, overgrown vegetation in the roadways, and other eyesores removed. Clients will spend most of their time on the roads when viewing a ranch, and maintenance will go a long way towards showing the client that the property is cared for and worth the asking price.
If feeders are used, they should have corn or protein in them. If not, it will appear that the seller has not been attentive to the property, which will lower the value in a buyer’s mind. Lakes and ponds that can be filled with water should be filled up. Any feed pens should be maintained so they are in presentable shape.
If possible, grazing practices should be adjusted before marketing to maintain as much quality forage as possible on the range for showing purposes. As part of this, any internal gates that can be left open for tours should be left open. A buyer would rather stop at a scenic viewing location than to open a gate.
Trash dumps should be adequately maintained (surrounding areas should be policed for blown trash and varmint trash trails) and emptied or burned after removing. Hazardous items and any old appliances, vehicles, etc. should be disposed of properly. If the property has any current or historical sites related to agricultural or industrial type activity that may have items to be addressed, they should be dealt with appropriately. Any existing oil and gas drilling or production areas should be properly maintained and clean.
Preparation should go beyond the “groundwork” and should also include some “background” work. An often overlooked aspect of preparing a ranch for sale is cleaning up any title issues. If you did not have a first-rate broker representing you when you purchased the property, there is a chance that exceptions to title insurance coverage that can be cleaned up are still on there. While these can often be fixed during the due diligence stage of a contract, there is a risk that extensive exceptions on a title commitment will cause a buyer to have unnecessary concerns about the property.
Farms and ranches that have been in the same ownership for generations may have title issues that the current generation is not even aware of, ranging from old easements, long lost cousins still on the title, lack of insurable access, boundary line agreements (or need for), right of first refusal agreements, and more. Having the title run and ordering a survey can go a long way towards getting these type of issues dealt with, or at least understood, so that marketing is accurate and, once under contract, the deal has a higher likelihood of closing.
Knowing how much of the mineral estate a seller owns before selling the ranch is another step that we believe can be critical, especially in or near areas with mineral activity. If this aspect has not been confirmed, it may be worth having a certified landman or attorney run the mineral ownership, so you know what you have for mineral/royalty ownership, executive rights, etc. so you can market the property and negotiate with some certainty. A vital element of the mineral estate is the amount of surface control a buyer will have. If the property is held by production under a current lease and the seller receives royalties and plans to convey some of that, the recent history of those royalty payments should be understood.
Without getting into an extended legal discussion requiring an attorney, a mineral developer producer typically has certain rights regarding the reasonable use of the surface to develop the minerals, so understanding any existing surface-related protections by deed, current lease provisions, and ownership of executive rights to convey are of paramount importance to most buyers and will impact value.
Properties that operate under permits for wildlife management, permitted water pumping, etc. should make sure that all permits and reporting requirements are in order and up to date. Similarly, if a property is operating under special or agricultural valuation for ad valorem tax purposes, it is crucial to make sure any outstanding issues related to that valuation are addressed.
It is also helpful to make sure any potential impacts from planned infrastructure projects such as pipelines, transmission lines, highways, or even planned activities by neighbors (like solar or wind development) are understood before marketing so these can be properly managed. Working with visible neighbors to keep their properties tidy is also helpful, and if they have any blinds on fence lines, it is always a good idea to see if they will move them back further on to their own property (which they should be doing anyway).
Another major issue that can blow up a sale is determining what is going to stay on the ranch after the sale. At the very least, a good list of what will not stay with the ranch should be known to your broker so that he or she can point it out. If there is fine furniture or artwork that is not going to stay, it may be wise to have it removed prior to a showing, or you may hit an unforeseen stumbling block that can stop a sale. Even decisions about smaller things like blinds and feeders need to happen up front. I often tell my agents that if they haven’t had to buy a new blind, they have not been in the business very long.
Preparing a farm, ranch, or other rural property for sale is a key element in presenting the property to the market and ultimately achieving an appropriate value for the property. This preparation involves both on the ground work to improve buildings and “pasture appeal,” and background work to make sure the property is accurately presented to prospective buyers. All of these efforts are critical and can go a long way towards selling your property at the best possible price.
