In today’s technologically advanced world, there are so many options and opinions available that people believe selling a farm should be easy. With that being said, many also believe that its possible to avoid paying any commission to an agent or auctioneer by opting for the “Farmland For Sale By Owner” (FFSBO) method. More specifically, this is the process of the seller offering their farm directly to the public and advertising it for sale.
Now, I’m sure it It seems like an effortless process for the seller to create some social media posts, Craigslist ads, and maybe a few local newspaper ads to attract a buyer, receive an offer, close and pocket all of the money. I’ll be honest, some people are successful in doing this; nonetheless, the vast majority are not. In fact, taking on a property that was previously FFSBO can be just a little scary for us depending on how it was conducted!
For example, several years ago DreamDirt was hired on for a pair of farms to sell by auction. These were nice farms in a rather competitive neighborhood. The seller had been offering them for sale for almost seven months without a successful transaction. As we jumped in, we quickly noticed the negative attitude toward the farms and the seller. We were told things like, “Tell them they can keep their farms” or, “Good luck getting what they want for them”. Some of the comments were even less pleasant than that. We soon learned that the sellers had already negotiated with everybody locally that was interested, and eventually upset every single one of them due to their lack of expertise in farm sale strategy. In turn, we had little response from our advertising, so we had to do what good salesmen do: start knocking on doors. Truthfully, we were impressed with the number of people they had already negotiated with. We learned the sellers had sent out a letter to a fairly large audience, run local newspaper ads, posted it to Facebook and even hung copies of the letter they mailed out in local establishments.
In the end, we were able to get things smoothed over with several of the best prospects before the auction and have a successful auction for the sellers. But was it as successful as it could have been? We’ll never know because you can’t do it both ways and compare.
A FFSBO can be successful, and could possibly be the best option for your farm. Our goal at DreamDirt is to be an honest resource for farmland owners. From our years of experience, we’ve compiled a handful of tips to help those who elect to utilize the “Farmland For Sale By Owner” method! Read on to learn how to conduct a successful FFSBO!
1. HAVE A REALISTIC PRICE AND DON’T OVERPRICE THE FARM.
Overpricing your farm is the most dangerous thing you can do. If you don’t know the value of real estate, you are never going to get more than its worth. If you try to overprice, it can cause permanent damage that’s irreversible. Not only will will you lose buyers, but also time, effort and money. The best way to avoid this is by getting an appraisal that is supported by solid data.
It’s important to realize the difference between an appraised price and market value. At DreamDirt, we often exceed the appraised value when selling with a cooperative seller at auction. We’ve also seen the situation when an appraisal was substantially higher than the sale price which is often caused by two issues: Either a seller that tries to micromanage the process or the appraiser was just wrong and/ or missed issues relating to value.
It is a fact that appraisers and brokers can not measure or anticipate some things that affect value of farm and land real estate. It’s actually easier for us to calculate the “bottom” or “minimum expected value” based on comparable sales than it is to calculate the “top” of the market.
2. DON’T PLAY GAMES IN THE PROCESS.
The tried and true “we have another buyer that offered $X” is tempting, but in the long run you’ll find it is ineffective. When your bluff is called, you’ll be standing there without any buyer. Unfortunately, this pressure tactic will turn off farmland buyers faster than anything. It’s in your best interest to opt for an open, fair, and transparent process.
3. CREATE A PROCESS THAT HAS A DEFINED TIMELINE.
In real estate marketing, we call this “a campaign”. In a campaign we do things step by step. A logical process is:
- Research (Get solid information before Advertising)
- Advertising (Continuous)
- Exposure (Allow 2-3 weeks for this)
- Offers and Consideration
- Acceptance and Contract
- Closing and Settlement
4. SELLING BY OWNER HAS A LOT OF LEGAL CONSIDERATIONS.
If you are not going to use an agent or an auctioneer, you really should be getting good legal advice from an attorney. However, not all attorney’s understand selling farmland as well as they could. An attorney that specializes in real estate or farmland may serve you best.
The other option to consider is to hire a professional and licensed farm real estate agent. We have been trained and certified in the farm selling processes and laws. An agent can help navigate the negotiations, marketing, and legalities required to sell a farm successfully. Selling a farm can be one of life’s biggest decisions – by hiring a professional, you can ensure it’s sold right.