Selling the Family Farm
It can be hard to sell the family farm, but sometimes the benefits can far outweigh the emotional price.
At a recent farmland seminar I presented the benefits many families have realized by selling their farmland in this hot real estate market. I began the seminar by pointing to a picture of my home farm – land my father still farms today in central Kandiyohi County – and I stated that I hoped I wouldn’t be alive when this farm is sold. My point of course, is that for me, and most farm kids and farmland owners, selling the land is very emotional and a very difficult page to turn in life.
All of that said, for me and for nearly every family, a time will come – whether it is tomorrow or 100 years from now – that selling the family farm is the right call. If you think you are nearing the point where the time is right for your family to sell, here are the main points we suggest you consider:
1. Don’t pass up a hot market! If you think your farm will need to be sold in the coming year or so, don’t wait until a hot agricultural land market turns lukewarm or cold.
2. Don’t wait until distant cousins or the extended family members fight over the land, sell when your family is getting along.
3. Consider another investment your family can use and enjoy together. We recently had grandparents in their 60’s sell an 80-acre parcel they inherited, and rarely ever spent time on, and purchased a summer cabin for three children to enjoy with them.
4. Consult with your investment and tax advisors to ensure your family has the best strategy for the proceeds and fully understands the tax consequences.
5. Don’t sell it to your renter without consulting a real estate professional or thinking long and hard about that decision. This is one of the biggest decisions you will make and may have the largest financial consequence to your family. Many landowners give distant or unrelated renters deep discounts on the price of the farm. Often, they could have used the money to pay for their grandchildren’s college education or another family goal. Simply put, many families are losing hundreds of thousands of dollars by selling to their renter at a price below fair market value.
6. Spend the time to interview potential real estate brokers and land auctioneers to find the right firm to represent your family.
7. Be thankful you had the chance to own the farm for the time you did. Applaud yourself for you being rational about the sale of the land. Your wise decision making about the transition of the land to another owner likely served your family’s long term interests in the best possible way.