value of farmland

I was looking for some input from you guys regarding land pricses. My situation is as Follows. Currently my father own a 170 acre farm free and clear and is a livestock dealer. I'm a teacher but Im involved on the farm on a daily basis especially in the summer. My two sisters are not involved on the farm at all. My parents set up a trust to help with the division of things when my parents pass on. I'm to get 90 acres (includes the farm buildings) and my sisters are to split the other parcel of land. It is also stated that we will get first chance to buy the land if my sisters want to sell (which they will). Me and my wife would like to talk to my Dad about possibly buying some of the land on a yearly basis and not waiting 15 years. What is Ag land worth in you area. It is good cropland but is not buildable currently in our township due to zoning laws. Is there a place I can research farm land sales. Any input would be great.

Joe

I'd look at comparable real estate sales in your area. A good place to start is the county courthouse or whereever they keep deeds and tax rolls in your area. There is a lot of variation throughout the country, and a lot more even between jurisdictions for reasons such as zoning, employment, etc. With all that said, I've found farm auctions to be a quick easy way for me to gage the local land market.

As to price, for years here, smaller tracts were at a strong premium. Development was the driver. A building lot, depending on the area was from a quarter acre to 2 acres. You could bank on it being worth 25-30K retail for the lot. If you had 10 acres that would yield 5 lots it would bring about 240,000. The break came at about 500,000 total cost. After that it discounted to around 5000 and acre. With whats happened of late to the economy most of the smaller parcels have dropped by 50 pct or more. Larger tracts are holding steady in the low 4000's an acre.

It all depends on the Location, that's the key to price, Location = Location = Location.

What State are you in, and how close is the biggest City.

How much Wooded land do you have, does it have any creeks, all this is part of price.

Why would you want to buy land that will someday be yours? I would think that if you want control then why not approach your dad with plan you have. as far as your sisters - a lot can change in that many years/ are they married ? do they have kids? a lot of variables to work out without taking the chance of causing a family rift because of what you think they would do now.

I would have heart-to-heart with the family and find out some more details of trust, wants and wishes of parents, desires of sisters, etc. Might be a few surprises come out - especially when real money starts to hit the table.

Also; do you get first chance to buy if sisters want to sell or does trust state they must sell within a certain time frame? Big difference.

As to price of farmland in this instance if your parents agree to sell I would suggest a Rural Ag Land Appriaser. That way you and your sisters are forever mad at an outside party that determined the price that obviously will be too high or too low. Depends on which side of the market you're on. Also having a third party might make your holidays more enjoyable.

If you go ahead with some type of sale get some legal advice.

As to estimating the price of land yourself; 1) ask local banker, 2) ask County Extenion Educator, 3) get online and look at your State Land Grant University website, 4) ask locals what land has sold for, 5) go to County Courthouse to look at recent comparable sales, 6) look at tax records, 7) discount the future income stream to find the present value, and 8) divide the rental payment by a desired rate of return. The above should get you started in estimating price.

Always remember the circumstances of any land sale when looking for comparables. Was it an arms length sale?

I do not think some people are reading this carefully. I think what the one fellow is trying to say that even if you have right of first refusal, is it for a limited time period in case you can not secure the funds or the sisters refuse to finance you? That might be one thing to be ironed out in the very near future.
Secondly, where would you be if one or both parents had to go into a nursing home to the point where only the liquidation of the farm would pay off the debt. Most states have increased the scrutiny of people deeding/transfering assets just months a head of when they need medicaid for such a purpose. Back when this was an issue in our family the lawyers recommended to try to have at least five years pass before when this would likely happen. I thought at the time that maybe it would be good to buy the assets from the family member (because of Medicaid being a very likely situation) and avoid steeper payment terms through a commercial lender and the possibility of not obtaining outside financing. Unfortunately, the other family members that had a say in the matter did not want to do this and ultimately the property wound up outside the family. Allow for events to unfold in a way that you may not think most probable.
Is it too late to obtain insurance on your parents to offset any nursing home risk?
Talk to the family and line up a lawyer (that specializes in estate planning) to advise you ASAP.

I have a friend of mine, his family has a annual family meeting, and all the issues are discussed then. They have been able to work out some pretty tought issues ( money !! ) that way. And everybody is still talking to each other. Not to be a downer, but if you get divorced after you buy this property, your wife will get half. I know a guy who's family owns a car dealership and a large farm. The assets are in the old mans name. Good thing, jr has been divorced 3 times.

It all depends are where you are, what kind of ground it is, and how bad your neighbors are wanting ground. If you wanted to keep every thing low key, just go to the court house and pull some deeds of ground like your folks that have sold the past 2 years in say a 4 mile circle. If you have some one you trust at a local bank or local real estate place they can get you pretty close. For the past 5 years there has been one guy who has bought or been last contending bidder on every chunk of ground that has come up for sale. People have started use'n him as an apraiser, if you want to know what your farm is worth, just call Bill and ask what he would give for it.

Dave

First off, if it is your intention to buy the entire farm, do it now if you can. Talk with your sisters to see if they would have any problem with you buying the farm from your Dad right now at the actual property tax value at some fair market interest rate (called a Land Contract or Contract For Deed). Make sure you can continue to make payments on the Contract for Deed to your sisters should your Dad pass before the loan is repaid.

There's really no sense waiting until the inevitable happens and getting into an financial mess during an emotional mess. If your sisters think they are getting robbed by the tax-value price, you may have to deal with them, but in reality they will likely end up with more money this way if they think about it.

Shouldn't it be "My wife and I" rather than "Me and my wife"? Doesn't matter on this board but you are a teacher. Certainly wouldn't be happy with getting inflated dollars rather than land if I were your sisters.

What we did when dad passed away was. Mom & Dad had a will. I was trucking full time and farming anymore my sister did not farm my brother was farming the land. The will stated that incase of either mom or dad died the land would be sold to my brother for appraied price over ten years. The money would put into 3 CD's. Mom got the interest from the CD's plus the interest from the land price. know one could cash the CD's as long as mom was alive and she got the interest from the CD's until she died.

What we did when Dad died was. Dad & Mom had their will and it stated that my brother could buy the land. The land was to be appaised by two local farmers. My brother was to pay for the land in ten yearly payments plus six precent interest. The interest went mom the payment went into three CD's each year. Mom got payment interest plus interest from the CD's as long as she lived. I had quit farming and was trucking full time and my sister didn't want farm. That was the way mom & dad wanted it and we did what they wanted.

If it doesn't matter on this board,why are you ridiculeing the man for a slight grammer error.We all make mistakes ,check out all the other responses and note the grammer and spelling errors.We all see the errors and mostly let them pass but sometimes the correct Police show their self styled personalities and do detract from the postings of some one wanting an honest answer to an honest question.

You need to consult a lawyer that specializes in estate planning. I had an uncle who had to sell off parts of his farm to pay for my aunt's care in a nursing home. If I remember correctly, the lawyer said that a minimum of 2 years would have had to pass after they conveyed ownership to my cousin to shield the farm from being taken to pay debt.

He is a TEACHER, and if properly educated to be a teacher, should know basic grammer. God help the teaching system and the English language if this is what we can expect from today's higher education. Never would have passed freshman English when I went to school.

Perhaps he is a teacher of some subject other than grammar. I know proper grammar, but in a casual situation, I often stray from the rules..

I'm a history teacher not an English teacher. However that doesn't really matter as this was a casual situation and I was not writing a research paper. If it was I would have proof read more closely etc..... I take offense to you attacking my qualifications to be a teacher. Last semester I had 90% of my students pass the AP US History Exam while the national average was only around 75%. I wonder how that happened????? Must have been luck. Guys who respond like you on this board drive away good people who have alot to share with others. Hope you felt better after correcting my grammar. PLEASE LET ME KNOW IF ANYTHING IN THIS POST IS INCORRECT AS I SPENT THE SAME AMOUNT OF TIME PROOFREADING THIS MESSAGE. Well I'm off to make the next generation stupid. For the rest of you guys (and ladies) on the board thanks for the input as it was mostly good honest advise.

Joe

My response above confused a few folks so I will offer an example.

My dad stated in his will that I had the option to purchase my sister's share of the farm within one year from the date of his death at the appraised value on the date of his death. My sister could not refuse to sell the property to me within the one year. I could refuse to buy it but she could not refuse to sell it within one year of the date of death. If one year passed from the date of death she could refuse to sell it even if I offered to buy it. I had it appraised and made the purchase within the year --- I own the land(debt) and my sister has the cash.

Dad had given me fair warning through some heart-to-hearts so I actually had 3 years to arrange my finances to be ready to purchase the farm. He had MDS.

<a href="http://s200.photobucket.com/albums/aa5/jameslloydhowell/?action=view&current=marktwain.jpg" target="_blank"> </a> Mark Twain once said [b:654c4848f0]"Don"t let schooling interfere with your education."[/b:654c4848f0].

All of us on this forum share a common interest with one another.

Regardless of the level of our "schooling", the "education" we get from one another by sharing what we know and learning what we need is priceless.

United States history was always one of my favorite courses.

Congratulations to both you and your students on achieving a 90% pass rate on the <a href="http://www.collegeboard.com/student/testing/ap/sub_ushist.html">AP US History Exam</a>.

Keep up your good work.

You didnt mention what county you are in but I believe all WI counties have them online resources. Not all have full access, some you need to visit the courthouse but most are avaiable. I know mine allows to look up assesses value, sale price last time sold (and every time sold since mid 1990s), owners name and all that info. All you have to do then is get comps for other sold farms similar to your parents. Once you have those from the MLS, just compare to the county tax listings.

Just google "(your county) county tax parcel"

If you cant find anything, list your county and I should be able to find more, just let me know.

You go, Joe!! You're right. I had a question and was afraid to ask.