Farmers National Reports an Increase in Farm and Ranch Land Sales

Farmers National Company reports that real estate sales volume is up 21% during the first half of its fiscal year compared to last year and up 38% from a year earlier with an increase in both individual sales transactions and acres sold. The acres sold by the company are on the increase as well, increasing 10% from last year and 27% compared to two years ago. Transaction volume has also been on the increase, up 47% over the last two years!

When asked why Farmers National Company is seeing a significant jump in its real estate sales, Randy Dickhut, senior vice president, notes, "Our sales activity continues to be driven primarily by the non-operating landowner. So far, few farm operators are selling land and investors continue to be in the market looking for opportunities to add acres to their holdings. The slow decline in the land market is part of the reason some are selling"

Some landowners are making the decision that now is the time to sell and capture some of the land appreciation of the last few years. Dickut also mentioned that there is still good demand for land in most of the company's 28-state service area. "The number of buyers and sellers for good land in most markets is in equilibrium, and that seems to be helping our land sales. As long as the seller is realistic about today's market price for land in their area, there are buyers looking to buy. I credit our increases in the face of a slowing land market to our large network agents of educating their clients on the current market prospects."

Farmers National also reports continued strong land auction activity with a 12% increase in the number of auctions sales over last year at this time. The volume of listings for sale is also strong. "Having the ability to either sell land by auction or through a private treaty listing gives our sellers the most options to achieve a successful sale" commented Dickhut.

Kansas and Oklahoma

Land values in these two states haven't changed much from mid-year 2016, reports Brock Thurman, AFM, vice president and area sales manager based out of Kiowa, Kan.

"Top quality land is still holding the same values if in the right location," he said. Medium quality land has seen a slight decline of five percent, Thurman said, while poor quality land has been difficult to sell. "It could be down 50 percent from the top when it's in poor condition and not in a good location. Location is key," he said.

Thurman said he doesn't anticipate significant changes in land values for the first half of 2017 and possibly beyond. "High quality land will remain stable most likely due to investor money coming back into the equation," he said. "Medium quality land ought to remain steady for the same reason. Low quality land will remain soft."

Auctions remain the best method for moving medium- to high-quality land, Thurman said. "We are using private and phone auctions on some tracts and it appears to be working well," he said.
Some privately sold land has been sitting on the market for extended periods of time, because it was priced too high, Thurman said. So far, there have been only a few tracts that didn't sell.
"Conversely, approximately 95 percent of public land auctions close the day of the auction or the week of the auction," he said.

The most active sellers to date have been absentee owners who were aiming for high value peaks, but now simply want to sell before any perceived crash, Thurman said.
"We are seeing a new wave of interest from investors," Thurman said. "Farmers are still buying the 'right' farm if it is available, something next door or a good addition to a current operation. Investors are looking at better values than the past three or four years."


Land values for the first half of 2017 in Nebraska likely will remain relatively flat unless there is an uptick in grain and livestock commodity prices, said JD Maxson, assistant area sales manager for Farmers National Company in North Platte, Neb. Overall, the land market has softened due to weak grain and livestock commodity markets. But, Maxson anticipates high quality land in sought-after locations to continue to be in demand in the first half of the year.

"A farm with Class I and II soils, good access, water and a level to gently rolling topography has and will continue to get the attention of local neighboring farms and investors," Maxson said. "Typically, this type of farm offers high yields and excellent productivity, which translates to bottom line profits and above average return-on-investment. In comparison, an average to medium quality farm with any tract needing improvements such as gravity irrigation to pivot, which is a combination farm with Class III and above soils and may need cedar tree removal, is being discounted by as much as 25 to 30 percent."
Maxson also said inflation could be on the horizon with the recent one-fourth of a percent hike in interest rates.

"However, land is a hard asset and can be leveraged against inflation versus other paper investments," he said.
Still, since August 2016, top quality land in Nebraska continues to hold its value, while medium and low quality land is trending lower. Hard grass and meadow acres, as well as soft grazing acres, also are trending lower.

High quality farms are selling best through the auction process and sell within days if priced for the market, while medium and low quality farms are moving better with private treaties, but sit on the marketplace for longer periods of time. Almost all auctions have been successful in this state from June 2016 forward.

Unfortunately, Maxson has seen a few forced sales due to farmers' financial constraints.
"However, lenders have been meeting with the producers after harvest. We certainly could see an 80-acre farm or short-quarter come on the market to generate operating capital for 2017," he said.
Active sellers include absentee land owners, farmers/owner-operators and trusts. In the last few months, buyers have been investors.

"1031 money has had a huge impact in the last 90 days," Maxson said. "High quality farms are holding value, while medium and low quality farms with issues like access, soil and water, along with a low percentage of tillable acres or land that needs improvements, are taking a hit of 25 to 35 percent."


Story source: Farmers National Company

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