Real estate transactions are notoriously complicated, but agents are meant to represent and guide you throughout the entire process to ease this burden. When it comes to land transactions, having a true land expert on your team can help bring confidence to the buying or selling experience.
Professional land agents specialize in navigating the nuances of buying and selling more than just a residential home; they carry a deep understanding of micro-markets, agribusiness, and the land. When land is involved, you need the expertise they can provide.
Contents
- What Does a Land Agent Do?
- Land Type Knowledge
- Market and Industry Knowledge
- What the Agents Have To Say
What Does a Land Agent Do?
A good land agent should be well versed in all things land. From ranch land to hunting tracts, soil types to water access, specialized land agents are equipped to provide local market expertise to buyers and sellers, and guide them through the entire transaction process, not just the beginning steps.
Land Type Knowledge
Specialized land agents work with diverse property types, but often have their own niche areas of expertise such as farmland, timberland, recreational land, or ranchland. Having an agent that consistently works with the land type that you’re buying or selling will provide you with true industry expertise.
For example, when purchasing farmland, you should consider the soil type, production of the farm, yield of previous harvests, water rights when applicable, irrigation systems, crop optionality in your area, and much more. Because a land agent that consistently works with farmland is an expert in that land type and the micro-market of the areas that they service, they are well suited to understanding these eccentricities.
Market and Industry Knowledge
Many land agents are experts in micro-markets within the land industry. Depending on a seller’s goals, the land agent will be able to offer professional advice on the best way to list a property, what property improvements could be made to increase the value, and where to list the property.
Transactions that involve land may be more complicated than normal residential transactions. For example, many farmers participate in sale leasebacks. Consider these “red tape” scenarios:
1031 Exchanges
1031 exchanges are a way of using the money from the sale of one property to purchase another property, and in doing so, defer paying the capital gains tax on the initial sale. Unfortunately, there are a lot of rules and regulations to follow when entering into a 1031 exchange transaction.
The fear of paying too much for a property, or not getting enough for a property, is common for buyers and sellers, and adding the time constraints of a 1031 exchange will only heighten the risk of buying a property too quickly, for too much, and without doing your due diligence. A land agent well versed in 1031 exchanges and the land type that you seek can alleviate this fear.
Zoning Laws
There is nothing worse than purchasing a property with a plan in mind, just to find out that there are zoning laws that restrict what you can do with that property. For example, if a parcel is zoned as agricultural land, you may be limited to only using that property for agricultural use.
Water Rights
If you buy a property with the intention of having irrigated production, but you can’t get the water rights secured to actually irrigate your land, then you will lose out on yield, capital, and have to deal with the stress of relying on rainfall.
Some areas, like the Central Valley region in California, require extensive water rights to irrigate your fields. These areas may even have other nuanced regulations that will limit the amount of water that you have access to.
Without an agent that understands the market and the industry, it will be more difficult to cultivate the right buyers for each property.
What the Agents Have To Say
Our land experts, Shelby and Gwin Smith, spent some time answering questions about what land agents do, and why they are different from traditional real estate agents.
Why does being a land agent working in the agricultural sector set you apart from other agents?
“I think what really sets us apart is our background. We were both working in lending before becoming agents. We have underwritten loans, appraised properties, worked closely with closing attorneys, and we have extensive experience throughout the entire transaction process.
“So not only do we have a deeper understanding of the land types and what to look for, but we can see it through to the end. That’s why we have a lot of repeat customers. We provide the expertise, and it isn’t just about closing a transaction as quickly as possible.”
What do you do differently than a real estate agent that sells residential homes or commercial spaces?
“A residential listing has the benefit of multiple comparative sales, and there are not as many nuanced attributes to look at. That industry also has an MLS (Multiple Listing Service), but farmland doesn’t, so in general, they’re easier to value and sell than land.
“Because of the lack of resources available to land brokers, you really do have to become an expert to make it in this business. It is our job to fill in the gaps where the residential industry can rely on data and technology and comp sales.
“So what do we do differently? We become the one true source of information. Luckily, because of our background, we have more sources than many other land agents. Our appraisal business gives us information that others don’t have access to. Essentially, we are the experts, and if we don’t know the answer to something, it is our job to go out and find it. Whether that is by walking the land or doing our own due diligence on market analytics, we will get you the information that you need to make each transaction successful.”
Can you speak a little more on farmland, and what you’re looking for when you evaluate a farm?
“When we walk out onto a row crop farm, we are really looking to verify the details of what the seller has told us about that property, and then seek out other strengths that they may have missed. Additionally, we are looking for the weaknesses that the property might have so that we can suggest property improvements. We want each farm to live up to its greatest potential.
“Here are some specifics: We look at access to the property, internal infrastructure, environmental concerns like water runoff, topography, soils, maintenance of the equipment, the irrigation systems in place, the condition and quality of the farm; nothing gets by us. We are looking at anything and everything that could be a benefit or a drawback, and if it isn’t a benefit, we look for ways to remedy that. We want to leave that property, that listing, better than we found it so both the buyer and the seller are getting the most bang for their buck.”
As far as market and industry knowledge goes, what do you think gives you a step up over other agents?
“One of our biggest strengths is how long we have been in the real estate industry. Because of the type of work that we’ve done for so long, we have our own comparables at this point. We have sold and worked with land in the Delta so extensively and for so long that we have created our own comps.
“We have our own appraisal database. Part of that appraisal process is the comps, but we have accumulated a lot of knowledge and we are able to really offer our customers the support that they need. We know what works, and what crop optionality we have in specific microregions. We know the land.
“We believe that’s what truly makes a land expert stand out: Local expertise in a nationwide industry that often lacks data and technology. If you have the patience and work ethic to really, truly learn an area and become an expert on the land in that area, you can be successful, and you can help your buyers and sellers be successful.”
Final Thoughts
Land agents bring a special set of skills to the table, but most importantly, they are passionate about the land and the industry. They provide buyers and sellers with inside knowledge of the local markets and land industry.
Visit our website to speak with your local land expert today.
