Q: What’s the rental value of my farm?
A: Rental values are determined by many things. Location, soil quality, drainage, and farming efficiency are just a few things that determine rental value. We determine the fair market rental value annually, from these factors, by letting the market tell us what rental values are. Each year we have farms that call for a competitive bidding process in order to determine the rental value of the farm. That information is then applied to other farms that we manage in the area to determine what the rental value should be. This method is much more farm specific, and therefore better, than are annual reports on cash rental values sent out by universities and other organizations. Generally, these surveys are district or county specific at best and not geared toward your specific area of the county.
Q: What’s my farm worth today?
A: We let the market dictate values. Generally, as commodity prices move, land values follow in the same direction. In today’s production agriculture, there are risk management programs in place to help with the extreme downward swings in commodity prices, thereby sometimes putting an artificial bottom on income.
Q: What does a farm manager do?
A: Farm managers generally step into the shoes of the landowner in consultation with the owner to the degree that the owner wishes to be consulted. It begins with understanding the clients goals and objectives in regards to the farm. From there we move to lease type recommendation to lease negotiation and preparation, to crop monitoring, to work with the federal agencies (FSA and NRCS), to crop marketing.
Q: What are the consequences, taxes and otherwise, if I sell my farm?
A: Generally, capital gains tax is the biggest issue facing farm sellers. It needs to be determined prior to you making the decision to sell and is generally done in consultation with your tax person.
Q: What’s the best way to sell land today?
A: We annually do a study of many counties looking at the land sales that occurred that year and the type of sale that brought the most “net” dollars to the owner. The results are dependent upon which way the land market is moving. In a down trending market, generally, the listing of the property for sale seems to return the most. In a stable or increasing land value market, full cry auctions return the best. We very seldom see the “submitted bid” method do well, nor the private sale do well. Understand that we sell land by all these methods.
Q: Where are land values headed?
A: At this time, it appears we’re in for a little stability. That can quickly change however.
Q: How do I know my long term tenant will be treated fairly?
A: Our clients want “not a penny more, or a penny less” than the going rate. We’re not going to be unfair with your tenant. However, we’re not going to lease it to him at under the market either. Tenants quickly understand this.
Q: My siblings don’t/do want to sell the farm and I do/don’t want to. What do I do?
A: There are methods available through the courts and otherwise that keep an unhappy party from being tied to ownership. They’re generally referred to as “partition actions”. You should consult your attorney regarding this. Many times, after a careful look at the situation, we can make recommendations to all parties that will allow a successful division without having to go through the court system.