As owners and potential sellers, families always wonder when is the moment when the market is at a peak, that they will receive “top dollar” for their land.
The truth of the matter is that no one knows for sure when the market will peak, when it will level off, or when it will fall. Many families are finding a rational way to confront the timing of the market by selling a portion of the farm land now – when they know the market is very strong – and holding on to the remaining acreage for potential timed sales in the future.
The justification for this is no different than farmers selling a portion of their grain every few weeks or families making a monthly investment into a Roth IRA throughout the year – simply put, timing the market by not having everything rest on one single transaction.
For example, if a family owns 500 acres of land, they may want to market and sell a 150 acres parcel of it this fall at auction. Individual sellers, and families who have inherited land tell us this approach has brought them a lot of comfort. The main reasons they list, include:
- Allows families to liquate a portion of the estate and pay heirs, all the while allowing family members who are attached to the land continue to enjoy pride of ownership.
- Peace of mind in that a portion of the farm that is being sold now is leveraging the full benefits of a very strong ag economy.
- “We still have the home farm.” Families who own different tracks of land are selling the pieces unconnected to the “home farm” which allowed them to take advantage of this market without breaking up the most emotionally attached acreage.
As owners of family farmland ourselves, we understand how difficult these decisions are. It has been enjoyable to see how many families have benefited from a timed sale of acreage that has proved to be a winning solution in terms of their financial, strategic and personal goals.