Buying a farm is a big commitment. Below are some considerations before buying farmland:
Prepare and Plan
Build a relationship with your lender. You will be better prepared for buying farmland if you have already gotten pre-approved for a loan in advance. This helps you understand and have time to save for the appropriate down payment required and to know how much you can afford. The type of land (tillable vs recreational) you are purchasing will have an impact on the down payment requirements as well. Having all of the financing details in order before the right opportunity comes along ensures a less stressful transaction.
- What programs are the land enrolled in? Contacting the local USDA Farm Service Agency is a great resource for helping you understand the productivity of the land and the programs that are in effect on a particular farm.
- Are there recent soil test results? Knowing the types of soils will allow you to have a better understand of what nutrients are present and more importantly, those that are missing. This should affect the price per acre positively or negatively depending on the modifications that may be needed to the soil to bring up productivity.
- Check with your local county surveyor to learn more about the drainage of the farmland. Is there direct access to a drainage ditch? Is there ponding? Does it need tiling to make the land more productive? Even the local USDA office should be able to assist with gathering some historical aerial views to help illustrate drainage issues.
- Is there land that can be reclaimed and put into production? If so, what are the costs associated with doing so?
Enlisting the Services of a REALTOR®
Locating a REALTOR® that handles farm real estate transactions can save you both time and money. They are will assist you with locating the land, viewing it, collecting your data for your due diligence review, writing the offer to best suit your needs, negotiating the price and terms, doing any inspections, reviewing title work, surveys and closing documents, and lastly ensuring you get to closing in a timely manner. The REALTOR® is paid a commission for this work generally by co-broking with the listing agency.
Now read about why you should consider Lisa as your farmland real estate professional!