Most Costly Mistake Ranch Sellers Make

by Buzz Tatom
Engel & Völkers-Big Sky

The decision to sell a ranch is something that sellers usually have thought about for a period of time before the final decision is made to make a phone call to us. There are exceptions to this from sudden events, but even in that situation the thought has long been discussed over the dinner table. Some of our clients biggest regrets after working with EVRanchLand are that the Broker is not brought into the planning process of selling the property early enough. The most costly mistake is not getting started years before the ranch goes to market so there can be a long term plan that is considered and implemented over the last several years before a property hits the market. The reason I say this is in any selling of an asset timing is critical. There is always a range in the sale of a ranch, business or most any asset. If we are representing the seller, we try to hit the peak of that range and we can do it by spending some time preparing the asset for sale with the owner.

Here are several items that having a few years of effort and planning can lead to more dollars at time of sale.

Is the property clean and organized both physically and legally. Has it been decluttered? Most buyers don’t have the vision to see what the ranch could be so you need to try and paint a picture for them. Get rid of old equipment you aren’t using anymore and take the time to catch up on maintenance. House and all outbuildings need to look well kept. Buyers don’t want to take on cleaning up from years of living. If they do buy a property in disrepair they want to be compensated for the effort it will take to clean up the property.

Tax planning should be done well in advance so that Uncle Sam gets as few of the dollars you have worked so hard for. If the layout is where a house is near the entrance or border think about dividing it into a parcel where you can get your primary residence exemption sale that exempts $250,000 gain for singles and up to $500,000 for a married couple. Have you taken all losses on equipment that are possible? Do you want the money to go to a Trust for heirs? Are you going to consider doing a 1031 to shield some of the gains. These are all potentially huge savers of money and need to be planned out a few years in advance.

Legal planning is also incredibly important and can have a big impact on what a property will sell for. Make sure all easements are recorded. Water rights and mineral rights need to be understood. DNRC is an excellent resource to help you understand your water rights. Any legal actions should be put to bed before the ranch is put on the market. Uncertainty is not a good thing from a buyer’s perspective.

Wildlife management has become a huge factor in today’s world of recreational ranches and recreational values. If someone is looking for a recreational ranch and there are pictures of trophy animals or fish going back five years and you can show the progress in size and antler growth the job of selling that property just got a lot easier. Nothing makes a buyer reach for his wallet quicker than pictures of trophy animals and big fish. This can be done through extensive management of forage and harvest of the right animals. There is a science to it but it really isn’t hard to do and it can make a large impact in what you receive for the ranch.

Not overbuilding the property. This is the only one that doesn’t require the time factor but is important to mention. You don’t want to overbuild a home or outbuildings for the size of the property. I have seen more people take a beating by building a massive home or large outbuildings on a property with acreage of 500 acres or less. Properties that are 200 acres or less are really in danger of not getting their investment back if they outbuild a property.

If you consider and follow all of the above factors it will make a difference in what you sell your property for and what eventually goes in your pocket. Not difficult issues but you don’t need to be trying to do these things at the last second before you put the ranch on the market. Remember how hard you have worked through the years. Finishing the process off right gives a sense of pride and likely helps you sell your ranch at the top end of the range.

Buzz Tatom is an Advisor | REALTOR® with Engel & Völkers-Big Sky and is licensed in the state of Montana. EVRanchLand is a western land broker that covers the states of Montana, Wyoming, Idaho, Colorado, Utah, California, and Washington. Our networked brokers have hundreds of years of combined experience and have been a part of numerous large transactions of legacy properties and ranches. Land Investments with Great Memories!

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