Do you want to maximize the value of your farmland investment?

By Howard Halderman

08 /27 /18

 

DJI_0001.00_01_33_07.Still005Last week we were fortunate to be able to offer the Blue Mound Farm at auction in the little town of BIG things – Casey, IL. Yes, Casey is the home of the world’s largest rocking chair, wind chime, yard stick and pitchfork!! On August 22nd the Blue Mound owners enjoyed the successful outcome of an auction that achieved a sale price 13% over its appraised value! In a farmland market that many say is flat or sideways this was a surprise.

The farm’s manager (one of the owners) and farm tenants worked diligently with us to market this property. The buildings were painted, the farm yard and lots were spotless and the roadsides were mowed like a golf course! The crops are fantastic this year and this farm was in its best condition for the entire marketing period. The farm’s appearance certainly helped it sell above appraisal as interested prospects were able to see the care and effort the owners and tenants have for the farm.

Every farm has a reputation. The reputation can be positive or negative, depending its operation and maintenance. Many times we hear “the ____ farm always has a good crop” or “ the ______ farm is wet” suggesting it is poorly drained. These perceptions may be incorrect, but they do play a factor in a farm’s ultimate value. A landowner can do a lot with a few dollars invested to improve the farm’s reputation and perception.

Some of things we focus on when managing a farm or preparing one for sale are:
1) Creating large “clean” fields. Eliminate fence rows, trim back woods overhangs, and keep the weed pressure low.
2) Improve the farm’s drainage. This may involve maintaining existing tile drainage and fixing tile holes or it could involve investing significant dollars in a tile installation.
3) Improve the soil health on the farm. This is done through proper annual fertilization, appropriate tillage or no-till and eliminating soil erosion through the use of waterways, buffer strips, and other erosion control systems. The soil on your farm is like a bank account and you either make deposits or withdrawals.
4) Maintain the improvements. The farm buildings may be older or relatively new. Maintain them well through paint, minor repairs and proper insurance against larger claims. Also keep the farm yard clean and remove any “junk” on a regular basis.
5) Track the farm’s production history and seek ways to improve the average production over time.

Effectively you can build a library of data about your farm that can be beneficial to a prospective buyer or a farm appraiser when they want to learn about your farm. This way they make their decisions on factual data and the “eye test” rather than assumptions or rumor. If you hire us to represent you as the farm manager or sales agent our goal is to create the best reputation for your farm so that we achieve its maximum value at the sale or the time of the appraisal.