The world is filled with uncertainty and that is why people hire advisors. A good ranch broker is an advisor. When hiring a ranch broker you are trusting that they will put your best interests first and foremost and are willing to be on your side of the negotiating table. Many times they aren’t just representing your one generation of work but multiple generations of taking risks and working from sunup to sunset. Whether you are buying or selling there are a few things that you should consider in hiring a ranch broker.
There are a number of traits that you want a trusted advisor to possess. Of course, you want trust and if you don’t have that then move on. You don’t want a yes man. Yes men are not only detrimental to your wealth but are irritating. If you like to surround yourself with yes men you will lose money in ranching. Here are the important traits I recommend in hiring a ranch broker.
Experience doesn’t always boil down to how many transactions have they done or how many years they will tell you they have been in the business. Have they been a rancher? Do they know water and mineral rights? Carrying capacity? Wildlife and fisheries enhancement? Noxious weeds? 1031 Exchanges? There are a thousand variables and some of them deal with running a ranch and some of them deal with the business end. Look for someone that has good business sense but knows about ranching. A good advisor here can put millions in your or your heir’s pockets.
Education comes from school and being in the trenches. The business end means you would like someone that understands the finances and financials of running a business. The knowledge I have from having both an undergraduate and MBA has helped immeasurably when to put together with the on the ground education of running a business. The second part of education is the school of hard knocks. Does your ranch broker have experience in running a ranch or is he just some guy that likes to hunt and fish? In any industry, there is always a range of profitability and I want an advisor that knows the difference and helps identify the characteristics of a ranch that puts me in the top part of that range.
Deal-making is an art and not a science. Good ranch brokers are creative problem solvers. There will be issues. No ranch or ranch deal is perfect. There are always issues to work through. A good ranch broker has an uncanny sixth sense to see potential problems and knows how to unearth potential land mines. They keep cool under pressure and don’t take things personally. If they are good, their focus is on the client and doing what they need to do to keep the deal moving along.
Like I said before there are always issues with any ranch deal. Easements, water or mineral rights, access, government leases are just a few of the many issues buyers and sellers will deal within the West. Hiring a ranch broker can help you identify, understand and resolve these issues. All have the potential to be deal-breakers and all can accentuate the value of a property. A good ranch broker can explain these issues and help you identify which are deal-breakers and which are a good thing. A couple of quick examples. Rich guy buys a ranch and builds a big house for the trophy wife. Wife likes to garden in her bikini. Didn’t think the easement for the old neighboring rancher to drive through the property to go check his cows was that big a deal until he started checking his cows five times a day. The second example was a client buying 800 acres that landlocked 8000 public acres. He effectively owned ten times his acreage he purchased.
Knowing Ranch Values
A good ranch broker has a network of tools and contacts to help him know what land is worth. Ranches are not like homes where you can just look up what the neighboring ranch sold for very easily. Appraisers, attorneys, conservation organizations, other agents, landowners, software, tax rolls are all things that a good ranch broker will use and be able to call on to help determine the value of a property. Like any asset, a ranches value has a range and each contains their own unique characteristic. While there is no perfect system to determine a value by hiring a ranch broker that is capable he can help you determine a pretty tight range.
This goes somewhat with the business knowledge but having a good ranch broker that can help you understand tax help on buying or selling a ranch is a real value. While a ranch broker is not an accountant they usually have seen or been a part of some really smart transactions. Ranches should be good tax write-offs if done in the right way. There are also 1031 exchanges and if living on the property you can protect appreciation of homestead in many circumstances. None of us like to pay more than we have to in taxes and as a valued ranch broker I always like to at least let clients know some of the things I have seen that protects some of that hard-earned money.
Hiring a ranch broker that can help you navigate what may be one of the more complicated yet rewarding business decisions you make is an important decision. It always amazes me when people just look on the internet at properties and then just call the listing agent. You want a trusted advisor on your side of the table that is protecting your interests. If you are starting the journey of buying or selling a Western ranch please feel free to reach out. I love to talk land. EVRanchLand has a network of brokers throughout the Western US with over 100 years of combined ranch brokerage experience.
Buzz Tatom is an Advisor/REALTOR® for Engel & Voelkers in Montana. He specializes in farms and ranches. A ranch owner himself he knows the complications that a buyer or seller will go through and is able to help navigate the complicated process. Give Buzz a call or fill out his contact form and put him to work finding you the right property so you can start building memories with friends and family!