Selling an asset that is likely the most valuable you own or a close second leads sellers to want to maximize when they are trying to sell their ranch or land. Each property has a range that the land will likely sell in. As a ranch broker that represents the seller good ones want to be near the top of the range for their client. There are things to know when preparing to sell your land or ranch.
First thing to do is look at your property from the buyers standpoint. Is there old equipment piling up? Decaying hay bales that obviously are not going to be fed to livestock? Noxious weeds present? You want your property to put it’s best foot forward. Clean it up and organize the property and equipment. A buyer that comes on the property and sees everything clean and organized is going to make the assumption that the land is well taken care of. Same goes with outbuildings and corrals. A fresh coat of paint is mostly sweat equity. If a roof needs repair it might cost something up front but will likely reap financial reward either on buyer paying a higher price or a buyer not being able to use it to negotiate a lower price.
Pictures, pictures, pictures! Most ranches here in Montana are selling not for agricultural prices but for more recreational value. If you are preparing to sell your land you are wanting to sell fro recreational value. The best way to establish the recreational value is to have pictures of views, sunset and especially fish and game. Nothing makes a buyer reach for his checkbook faster than big fish or numerous pictures of harvested big game. Especially pictures that establish that every year you will be able to shoot a bull or buck off the property.
Maximize your revenues and cut back on all non recurring expenses. The more profitable you can show the business the upper end of the range you are going to be able to sell the land for. Non recurring expenses are ones that you don’t have every year. If you have these on the P&L you can point out they are non recurring but most buyers will argue that they are necessary and are part of the calculation.
Clean and repair the house to where it shows well. It doesn’t have to be a mansion but it needs to show that someone can live there. It may end up being nothing more than a caretakers home or a rental property but it should be clean and livable.
Know the history of the place and make your agent aware of the history. Many buyers are interested in knowing what happened in the past and what brought the land to where it is now. Have all documents in order such as water rights, mineral rights, carrying capacity and crop yields. It just shows you property in a good light if all documents are ready and prepared for.
Sellers should have a conversation with their CPA or Tax Attorney so they know their basis and what capital gains they will owe. If the homestead has not been separated out and can discuss whether you can establish the property as a homestead to shield some of your capital gains. Are you considering a 1031 tax exchange and rolling the sale into another asset? These are things that should be discussed ahead of time to hopefully minimize tax burden legally.
There are many things to consider when preparing to sell your land. This is one of the reasons you should have a good Advisor that is on the same side of the table as you. Ideally, you need a couple of years to prepare a piece of land or ranch for sale. If you are starting to consider selling your land or ranch please feel free to reach out and let’s discuss your specific situation. Our Advisors have hundreds of years of combined experiences and many are ranch owners themselves. Contact us today and let’s talk land. We love doing that!
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!