Page 14 - WCA July Ketch Pen 2020

By Allison Trimble: Coastal Realty
The decision to sell a farm or ranch is often made in the long winter months. With the emerging summer, homeowners often find themselves motivated to sell. It’s important to be prepared for what the process entails. Here is an outline of what to expect during each step of selling an AG property.
Find a Realtor
It’s important to use a Realtor who is con- nected and well-versed in the AG industry and land use. Unlike other property types, additional advertising in farm/ranch-specific publications, social media, and websites can make all the difference in the sale. A Realtor who knows what makes a particular property desirable to an farmer/rancher will do a bet- ter job of presenting the property to a poten- tial buyer by highlighting the right features. The right Realtor will also be knowledgeable about potential land-use issues, avoiding pit- falls in the transaction.
Buyers in today’s real estate market almost always encounter a property first online. I can- not emphasize enough the importance of qual- ity pictures and thoughtful drone photos and video. Help your professional photographers by having the property prepped and ready.
Is this a sale and purchase of another property? The plan can change depending on what the next life step is for the seller. Communication about needs is crucial from the start, and any change in needs should be communicated to the Realtor.
What is an estimate for net proceeds? In Whatcom County, Washington, the seller’s customary expenses include commissions (6% is standard), excise tax (transfer tax of 1.6% +), title insurance and one half of
escrow fees totaling approximately 8.5%. To figure out net proceeds multiply the sales price by .915 and then subtract any mortgage owed on the property.
Listing Agreement
The listing agreement outlines the listing and commission terms along with important information that is binding between the list- ing brokerage and seller. Read the agreement carefully and ask questions if any part of the document is unclear.
Open Space Classification
If not already zoned AG, most farm/ranch properties are in an open space tax classi- fication that provides tax breaks based on continued enrollment in a program that promotes either agriculture or forestry. There are standards for meeting the requirements of the program that must be accounted for at the time of sale.
The continuation or removal of the proper- ty from this type of program must be indicat- ed in the contract. Often the removal requires one party to pay a tax liability of the previous 7 years adjusted taxes. That can be a hefty sum in some cases, and the shift in taxation affects the buyer’s monthly payment.
Preparing the Property for Sale
In a perfect world every property would be in pristine condition, inside and out. In the real world, it doesn’t always work that way. Many owners are still actively working while trying to sell their operation.
Curb appeal is powerful. The first impres- sion of the property when a buyer arrives makes a lasting impact. Have a frank conver- sation with the listing broker and determine which things to focus on then prioritize tasks.
AG properties accumulate stuff over the years. Everything will have to be removed prior to a sale, so it’s best to do as much of that as possible before going on the market.
What’s Included in a Sale
Unless other- wise specified, the sale only includes the real property. This means
the property,
home, out-
buildings that
are permanent,
and permanent
fixtures. In AG
properties, this
can be more
convoluted
than a strictly
residential sale.
For example,
water buckets
are personal property, but an automatic water- er fixed to the wall of a barn is real property. What about round bale feeders?
The seller must outline anything not in- cluded in the listing that a buyer may assume is part of the real property. Arguing the point right before the closing of the sale isn’t good for anyone. I also encourage sellers that if they have a tractor or lawnmower they don’t want included in the sale, remove it prior to listing. There is something about those two pieces of equipment that buyers can’t resist writing into a contract.
Selling the Farm?
What to Expect Each Step of the Way
Allison Trimble, Owner of Coastal Realty
14 KETCH PEN - July 2020