Selling Your Ranch

SELLING YOUR RANCH

BY TAMRA KELLY

Is it time to sell your ranch? Low inventory, increased prices and consumer confidence in the economy make this a good time to sell your ranch. Whether selling the historic family cattle ranch for personal reasons, selling the starter ranch in order to buy back in to a larger operation, or investors “flipping” their cattle ranch purchased several years ago – now maybe the time to sell your ranch.

Selling working cattle ranches presents unique issues not common to normal commercial or residential real estate transactions. As a result, I would suggest hiring a “ranch real estate agency” – an outfit which specializes in selling agricultural properties. A google search using terms such as “Arizona working cattle ranch for sale” will reveal several ranch real estate agencies in the southwest. A quick look at the properties they have listed for sale should readily distinguish a ranch real estate agency from a more traditional residential or commercial agency. Unique terms such as “carrying capacity,” “CYL” (cattle year-long), “AUM” (animal unit month), “headquarters,” “cow-calf,” “ephemeral grazing,” etc. distinguish the listings in a true ranch real estate agency from the numerous ranch real estate companies that sell their acreage under the moniker “ranch.” The importance of selecting a true ranch real estate agency cannot be understated. Unlike residential or commercial properties, the ranch real estate broker may have to transfer ownership of federal and state grazing leases, surface and/or groundwater rights, livestock brands, cattle, specialized equipment, subleases, wind rights, etc. requiring specialized knowledge which a typical residential or commercial agent may find unfamiliar. Moreover, the marketing of your ranch is entirely different from typical real estate sales. A working cattle ranch is not typically place on the “MLS” – the exclusive listing service accessible only to real estate agents in a particular geographical area.

A cattle ranch must be marketed nationwide through use of websites, social media and a few well-established ranch real estate marketing publications. Prospective buyers are located anywhere, both within and outside the United States. Prospective buyers have varied reasons for buying a ranch. The reasons may be to make a short or long-term investment, to subdivide, tax opportunities, to buy a hobby ranch, to actually raise cattle for a profit, or simply to buy a cattle ranch to live and raise a family. An objective, honest look at your ranch in order to analyze the motive of prospective buyers, evaluate comparable sales and the highest and best use of the ranch will a help in determining the right listing price to ensure a sale in a reasonable time. Given the dollar amounts involved, hiring a ranch real estate appraiser is often a good idea to ensure your ranch is listed at a fair price in order to sell within a reasonable time period.

Ranches come in all sizes and shapes and in every type of environment. In the southwestern United States the habitat, grasses, browse, flora, fauna and environmental influences on a particular ranch may vary greatly. It is not unusual for a single ranch to exhibit radical differences in feed, water, climate, and topography within its boundaries and during different seasons. As an example, the La Cienega Ranch we owned for several years in western Arizona was approximately 300 square miles in size consisting of private and public grazing lands. Elevations on the ranch ranged from 1400 feet in the Lower Township Pasture near the Colorado River up to 7,200 feet in the Hualapai Mountains. The variety of grass and browse species available for grazing was markedly different from the sparse desert on the low end to the pinyon/ juniper habitat in the middle, to the brush and pine forests on top. The cattle rotation was dependent upon the seasons, moisture and predators. When marketing a working cattle ranch, identifying these types of factors is critical information for a prospective buyer. Although often overlooked, the sellers of the ranch are the best source to describe the feed production, seasonal changes and other factors influencing cattle production.

As a ranch real estate agent, gather relevant data regarding the specific ranch is critical. Land surveys, tax information, water rights, mineral rights, public lands leases, private land leases, utilities, income/expense ledgers, environmental assessments, administrative operating instructions, etc. are critical items which must be obtained from the seller a soon as possible. Gathering this information at the outset ensures its availability to a prospective buyer enhancing the quality of the ranch showing by the ranch real estate agent. Importantly, early disclosure also helps prevent a delay in closing after escrow is opened by providing this important information upfront and prior to the buyer’s due diligence period. In addition, providing common sense information obtained from the seller such as distance to local schools, grocery stores, hardware and parts stores, airports, sale barns, etc. is important. All of this information may be summarized and included in the marketing brochure increasing the odds that qualified, interested buyers consider a particular ranch.

Maps, maps, maps. Every prospective ranch buyer wants to see the “map.” Whether allotment maps, aerial maps, hand drawn maps, road maps, USGS topographical maps – any kind of map helps sell the ranch. The more detailed and extensive the various maps are made available to buyers, the better the sales presentation by the real estate agent. These maps help explain the location of water sources, storage tanks, drinkers, water lines, fences, natural boundaries, distances, topography, and pasture rotation helping communication between the buyer and ranch real estate agent enhancing the quality of the ranch showing.

The marketing of a working cattle ranch is as specialized as ranch real estate brokers who sell them. Unlike residential properties, ranch real estate agents commonly do not belong to the MLS (Multiple Listing Service) and do not market their ranches through this geographical real estate service. Cattle ranches are commonly marketed on online websites operated by the ranch real estate broker or specific sites websites catering to the agricultural community such as Ranch World Ads. Another frequent marketing technique is through advertising in trade magazines, agricultural magazines, or ranch real estate magazines. These entities typically publish both “hard copy” and online versions. In today’s market, the pool of prospective ranch buyers is of local, national, and, sometimes, international scope. Marketing a working cattle ranch through a variety of these agricultural resources enhances the probability of sale.

The ranch showing is a critical aspect of selling the ranch. The agent should have good working knowledge of the ranch operations including such matters as pasture rotation, seasonal influences on production, governmental pressures and/or assistance, predator problems, environmental factors, weather cycles, etc. During a typical, lengthy ranch showing, buyer questions range from weaning weights, cattle breeds, stocking rates and numbers, seasonal influences on feed and water, to the personality of range con, character of the neighboring ranchers, and distance to the best sale barn. Providing authentic, honest answers to these questions is dependent upon good communication between the seller and the agent during the initial ranch listing conference.

Finally, it is often equally important to considerthe aesthetic aspects of showing a ranch. Thisis especially true for ranch family buyers. Thewife and kids may have as much influenceon the prospective purchase as the rancherhusband. I have found that pulling up toa clean, neat presentable house, yard, andheadquarters of a ranch with that feeling of“home” is often as important as working rangeimprovements, quality fences and corrals. Mybelief is confirmed by the Arizona Brand Bookpublished in 1908. Its author provides hissage advice to a stock grower as follows: “Heshould try to have fruit trees, vines, berries,a garden and make his cattle ranch a homewhich will have some attractiveness for his wifeand family, and in which they may feel prideand contentment. . . . His chief pride should bein the development of an attractive home andin an intelligent, industrious and contentedfamily. Good, intelligent and attractivewomen do not care to live surrounded bynothing but sagebrush, miles and miles fromanything that may please the eye or gratify thesense of home comfort.” In addition to thewaters working, fences up, pastures properlygrazed, and cattle in good shape keeping thehomes, camps, saddle house, and shops neat,clean and orderly will definitely increase itsprobability of sale.

ABOUT THE AUTHOR: Tamra S. Kelly is an Associate of CPNA and head of its Ranch and Farm Division and Qualifying Broker of Ag Lands Southwest. She sells cattle ranches and other agricultural properties in Arizona and New Mexico. Buying or Selling... Call Tamra Kelly Today! (928) 830-9127

Contact: www.aglandssw.com

ARIZONA Tamra Kelly Associate Broker

Commercial Properties Northern Arizona Ag Lands Southwest Ranch & Farm Division

140 N. Montezuma St. Ste 300 Prescott, Arizona 86301

tamra@cp-na.com

NEW MEXICO Tamra Kelly Designated Broker

Ag Lands Southwest

P.O. Box 409 Prescott, Arizona 86302

tamra@aglandssw.com