Dive into the world of ranch real estate with insights from our seasoned experts. Gain a deep understanding of market trends, property valuations, and investment potential. Our guide is your go-to resource for making informed decisions in the dynamic ranch market.
It’s more fun to look at land than it is to talk about your finances with a lender. So that’s what a lot of first-time ranch buyers do: They believe they can shop around and make An offer before securing a POF. Then, they are disappointed when they discover they will not be granted a showing or a review of an offer until the POF is delivered. How to avoid this mistake: Talk to a certified Land Lender or if paying cash your banker about getting POF for a land loan before you start to seriously shop for a ranch. Also, it can make your bid more competitive because you’ll be able to show sellers that you can back up your offer and close quickly.
Home lenders and land lenders are NOT the same: Mortgage banks and Lenders no longer take on the liability of properties with large acreage. Land lenders like Home Mortgage lenders' interest rates vary from lender to lender, and so do fees such as down payment, closing costs, and discount points.
How to avoid this mistake: Interview with multiple land lenders.
When purchasing a ranch property, having an attorney is highly advisable for several reasons. An attorney can conduct due diligence to identify any potential legal issues with the property, such as zoning restrictions, easements, or environmental concerns. Resolve disputes or complications with the property's title. Attorneys can also advise on estate planning and asset protection strategies, which are crucial for the ranch. Hiring an attorney when buying a ranch property is a prudent decision to safeguard your investment and navigate the complexities of real estate law.
As a first-time farm & ranch buyer, you’re probably accustomed to the monthly cost of homeownership. With land you’ll also be responsible for executing and filing your ag or wildlife reports for property taxes, and additional insurance to cover land liabilities. And don’t forget the cost of maintaining the health of the landscape. It’s recommended that you set aside 1-3 percent of the purchase price of the land annually to cover these additional operating expenses.
Think it's impossible? It's actually not. Once you decide to buy a ranch, start thinking of yourself as a businessperson and investor rather than just a future landowner. In fact, forget that you're the "Buyer" altogether. By looking at the transaction from a purely financial perspective, you'll distance yourself from the emotional aspects of buying the property. While it is important to factor in certain emotional aspects, don't let it cloudy the process. Real estate IS an investment. Don't let emotions distract you from that. This is potential and investment to be handed down for generations.
In a competitive market, sellers will ask for proof of funds. This guide can help strengthen your offer!
Make sure to get a proof of funds letter before we start viewing ranch land.
Make sure you’re financially prepared for landownership. Do you have a lot of debt? Plenty saved for a down payment? What about closing costs? Ask yourself “How much house can I afford?” before you go further. Additionally, know that lenders look closely at your credit score when determining your eligibility for a land loan. Check your credit score and do anything you can to improve it, such as lowering outstanding debt, disputing any errors, and holding off on applying for any other loans or credit cards.
Just like you want to get a property that best suits your needs, you’ll want to find a land ender that best suits you and the plans you have for the ranch. We suggest you consider using a broker to help you find a land lender, you can find a list of land lenders in our vendors list —we are here to help, ask friends and family for referrals, and compare at least three lenders.
A lender will need information from you in order to get you pre-approved and through the home-buying process. Here are a few things to have ready for them:
W-2 forms from the past two years·
Pay stubs from the past 30 days·
Federal tax returns from the past two years·
Proof of other sources of income·
Recent bank statements·
Details on long-term debts such as car or student loans·
ID and Social Security number
*If you’re self-employed, you may have to provide extra proof of your financial stability, including having a higher credit score or large cash reserves and possibly providing business tax returns.
In a competitive market, sellers will ask for proof of funds. This guide can help strengthen your offer!
Make sure to get a proof of funds letter before we start viewing ranch land.
Farm and ranch buyers should strongly consider having the property inspected during the option period for several crucial reasons.
Environmental factors play a significant role in farm and ranch properties. An inspection can identify potential environmental concerns like soil quality, water sources, or contamination risks, which can have a long-term impact on the property's viability for agriculture or ranching purposes. Understanding these factors can help buyers assess the property's suitability for their intended use and plan for any necessary remediation or improvements.
Farm and ranch buyers should also consider specialized inspections, such as well and septic system assessments, which are critical for water supply and waste disposal in rural areas. Evaluating barns, equipment, and other farm and ranch improvements, like irrigation pivots and fencing, is equally important to ensure they are in good working condition and won't require costly repairs or replacements. Lastly, inspections during the option period provide buyers with an opportunity to resolve these issues or walk away from the deal if significant issues are uncovered. In summary, inspecting a farm or ranch property during the option period, including specialized assessments, is a prudent step to assess its physical condition, and environmental aspects, and negotiate effectively, ultimately safeguarding the buyer's investment and long-term plans for the property.
A farm and ranch appraisal differs significantly from a typical home appraisal due to the unique characteristics and complexities of agricultural properties. Firstly, farm and ranch appraisals take into account not only the value of the land and any residential structures but also the productive capacity and income potential of the property. This includes assessing factors like soil quality, irrigation systems, crop yields, and livestock facilities. The appraiser evaluates the property's income generation capabilities, which can include crops, livestock, timber, or other agricultural activities. In contrast, a home appraisal primarily focuses on the market value of the residential structure and its immediate surroundings.
Secondly, farm and ranch appraisals often require a broader range of expertise and specialized knowledge. Appraisers must understand various agricultural practices, zoning regulations, conservation easements, and land use restrictions that may apply to the property. Additionally, they must consider the cyclical nature of agricultural markets and how external factors like commodity prices and weather patterns can impact property value. This complexity results in a more comprehensive and detailed appraisal process compared to the relatively straightforward approach used for home appraisals, which predominantly rely on recent sales of similar homes in the area.
In summary, farm and ranch appraisals are distinct from home appraisals because they encompass not only the physical characteristics of the property but also its income potential and the intricate factors that influence its value within the agricultural sector. Specialized knowledge and a thorough understanding of the agricultural industry are essential for accurate farm and ranch appraisals, making them more complex and detailed compared to standard home appraisals.
Now is the exciting time! When you are ready to write an offer, I will walk you through the contract. It is important to write a fair offer or you can run the risk of the seller not responding or even losing the property to another buyer making an offer. Here are the steps:
HOW TO MAKE A GREAT OFFER?
The closing process finalizes the purchase of your home and makes everything official. Also known as settlement, the closing is when you receive the deed to your ranch.
Prior to closing, you should change all utilities into your name, and complete a final walk-through to check for any outstanding items.
A FEW THINGS TO BRING TO CLOSING
WHAT TO EXPECT
The escrow officer will look over the purchase contract to: identify what payments are owed and by whom; prepare documents for the closing; conduct the closing; make sure taxes, title searches, real estate commissions, and other closing costs are paid; ensure that the buyer's title is recorded; and ensure the seller receives any money due.
YOUR COST
Some of the most common fees include:
AFTER CLOSING
Make sure to keep copies of all closing documents for tax purposes.
Led by the state's leading expert, Lindsey Hollin, our farm and ranch brokerage is characterized by an unwavering dedication to our client's success. With Lindsey at the helm, you can trust that you're working with the most knowledgeable and respected professional in the field, ensuring your farm or ranch transaction is nothing short of exceptional.