How to Sell a Farm

The process of selling a farm is a complex and crucial step which takes into account many different aspects from information of the market and readiness of the land through financial and legal aspects. This article is going to present to you the crucial steps to follow in order to facilitate an effective and rewarding farm sale. As a result of executing the following steps, you will be ready to undertake the desired commercially viable transactions in respect to your estate, that is, the sale of the estate will take place without much hassle.

The selling of agricultural land or estate is a complicated process which calls for a tactical approach. Since selling acquired homes is quite different from the selling of agricultural land, there are additional factors to consider such as timing, laws in place, tax issues and even how the property is portrayed. Farms are indivisible holdings whose components may include cropland, animal shelters, farmhouses, and other revenue generating activities such as natural resources. There are practical methods on how best to sell a farm, beginning with putting the right professionals in place and ending with appropriate marketing strategies.

Step 1: Timing Your Sale

The effective timing of selling your farm will determine how well it is received and the price attached to it. Over the years, it has been noted that the selling of farms has been more of a seasonal business compared to selling residential properties. The prime season for putting most farms on sale is between spring and mid-summer, characterized by the most appealing landscape. This is especially true for arable farms since crops are likely to be this season thereby giving prospective buyers the impression of the farm’s productivity potential​.

On the contrary, the sale of even livestock farms and estates may also capitalize on the prevailing weather. For instance, crossbreeding occurs when it is warm outside and most of the livestock are estrous cycling and ready to nibble tasty grasses. Also, concerning estates with sporting or silviculture, such as shooting or tree cutting, these can peak and drop at different times within the hunting or harvesting periods. Making sure that your marketing strategy includes farm images where crops or livestock are all at their best is bound to improve the overall quality of the marketing materials and hence better bidding contracts.

Step 2: Assembling a Professional Team

After resolving the question of 'Should I sell or not?' a series of steps should be taken in proper order- to hire the right specialists, who will assist every stage of the selling process. This implies that one should consider the following: the real estate broker, the attorney and the tax expert. Each one of these professionals has specific competence useful in the course of the sale​.

• Estate Agent: An agent who is a specialist in rural or agricultural property will know the current state of the market, how best to advise you on the price to ask, and how to go about marketing the property for sale including to buyers who may be abroad. In addition, They can make it easier for you to find potential buyers and circle them as well as overseas buyers.

• Lawyer: There is always the need to involve a farm real estate lawyer as engaging in such a transaction will always expose one to legal risks. They will assist in the drafting and editing of contracts, facilitation of title searches, and conducting such transactions.

• Tax Advisor: One should remember that the selling of a farm will also imply some taxation bearing especially on the issue of Capital Gains Tax (CGT) and the Entrepreneurs’ Relief. A tax advisor examines the deal, and assists the taxpayers on how such transactions can be achieved with the least adverse tax consequences​ on income or profits. Most of such concern is for big estates, where residential property and farming shares are interfered with concerning taxation.

Step 3: Choosing the Right Sale Method

How you decide to sell your farm will be crucial in terms of how fast the sale will be completed and what the selling price is. Numerous common methods of selling agricultural land exist, and each of them has its pros and cons:

• Private Treaty: This is the most widely used method of sale and has the added benefit of allowing negotiations over fixed prices in which interested parties can make offers at any given time in the marketing period. This method is more appealing where the property to be disposed of is multifaceted or where several lots are being sold.

• Informal Tender: This is where the seller calls for submissions or tenders for proposals but sets a date for the tenders, after which applicants are free to present tentative offers of their proposals, and the seller is not obliged to accept any of their offers. This reduces pleasure in negotiating in a way, but not cut it out completely.

• Formal Tender: In this mode of sale, the bids are irrevocable and the person who wins the bid has to pay and take down the property. It can speed up the process of selling, but has its own reasons that make it not very often used.

• Auction: This approach can result in a very quick settlement of the farm especially for some types of farms such as the very sought ones. However, it is worth noting that the buyers have to do their homework prior to the auction as the auction raises a binding contract the moment the hammer slams down.

The right method will depend on the particular characteristics of your property, the external environment, and your own priorities of time, aggressiveness, and price.

Step 4: Preparing and Presenting Your Farm

In any business, first impressions are paramount. The way consumers are shown a certain farm can affect the level of interest it attracts from potential investors and its selling price significantly. Most operational farms have some unattractive sections, such as old tools left lying around or barns filled with junk. However, it is wise to clean the premises before showing any properties and make sure that all the fences are fixed and that all the gates are working.

• Curb Appeal: There should be no old equipment lying around, barns should be organized and fenced off, and gates and pathways should be in working order. Such small activities can greatly enhance the impression created.

• Photographs and Marketing Materials: Inventive ways of marketing the farm would be impractical without professional photography that chronicles the farm when the crops are fully grown, and animals have feed. Use of drones or other bird’s eye view makes it easier for potential buyers to understand the layout of the farm better.

Also, ensuring possession of relevant documentation, such as legal documents, cropping history, and financial details, will be helpful in avoiding hold-ups at the negotiation and closing phases​.

Step 5: Maximizing Financial and Tax Benefits

There are many aspects of selling a farm, and tax considerations are one of them because not accounting for them can lead to terrible losses. Out of all the tax issues the sellers face the one which is most troubling is the Capital Gains Tax (CGT) which is charged for profits from selling of properties such as land and buildings​.

• Entrepreneurs Relief (ER): On the other hand, if you have an entitlement to ER, your capital gains tax exposure would be dramatically lowered from the normal 28% to 10%. Nevertheless, that is subject to a number of criteria that need to be satisfied in order to qualify, including that the transaction is a sale of a business rather than merely the liquidation of assets.

• Principal Private Residence Relief (PPRR): In the case that your farm has a family home, which has been your main residence for a period of time, you may be able to claim Principal Private Residence Relief and there won’t be any Capital Gains Tax on this portion of the sale.

In the very early stages of the entire process, it is advisable to consult a tax practitioner in order to help you enjoy the benefits that relate to the sale while lowering the risks associated with it.

Step 6: Marketing Your Farm

Implementing the right marketing strategies is key in getting the ideal buyers. This particular step calls for a mix of the old and the new for maximized audience reach​ :

• Traditional Marketing: This involves putting the property up for sale in real estate sections in agricultural publications, local and national dailies, and within the agent’s contact network.

• Online Marketing: It is no doubt most farms are nowadays sold online which is more advantageous as it provides a wider audience. One can include their property in catalogs of specific farm sites or even general estate sites to fish for prospective buyers across the globe​.

• Social Media and Video Tours: The above strategies have also seen many agents go further to use video streaming services like YouTube, Instagram and LinkedIn to shoot ‘fly-by’ videos of the farms for potential clients who may be interested but physically unable to show up inside the premises. 

The provision of such services as designing and implementing campaigns geared towards particular buyer groups that include local farmers, foreign investors or even buyers satisfied with diversification such as investing in ecos farming or solar energy projects among others, can prove to be very fruitful in enhancing sales performance.

Step 7: Highlighting Natural Capital and Future Potential

These days with respect to the current markets, natural capital is a key point of focus. Natural capital can be defined as the parts of your farm that help less the environment or rather such resources as carbon credits, biodiversity or even woodland restoration projects. Discussing the natural capital of your farm may be of interest to green conscious consumers or even institutional investors in search of sustainable investment opportunities.

• Carbon Credits and Biodiversity: Buyers looking for long term value in farms may also consider the value that farms that participate in carbon sequestration projects or biodiversity initiatives tend to add.

• Renewable Energy Potential: Farms that can support solar, wind or biomass energy production capabilities that are still undeveloped should embrace the approach in their marketing mix. Buyers may have an inclination to seek for farms that have the ability to produce additional income from renewable energy sources.

By highlighting these possibilities, there is a huge hidden value that will be created to the property, which normal buyers may not readily see.

While selling any property can be made easier by hiring a good professional, a farm has unique challenges and hence its sale is complicated. Nevertheless, it can be, even more, promising especially when it comes to their proportional investment. Whether it is determining the best time for the sale, the best mix of people, the best price for the farm, or advertising it, there are numerous pivotal factors that determine the success of out outcome. A farm owner will find it easier to sell his farm and get the most out of the sale by engaging all the steps provided in this guide.

As changes are seen in the agri -business market, the use and demand for environmental attributes of agricultural land such as renewable energy and natural capital are on the rise. These subfields can, in particular, be targeted in your marketing tactics in order to engage a wider scope of the market. Planning ahead and factoring in all the financial, legal, and physical restrictions will, however, simplify the process regardless if the reason is retirement, downscaling or adjusting one's investments. For such situations, there is a remarkable realtor called Lucas Land, who helps his clients sell farms and is competent at every stage.