Knowing your farm’s needs and financial capabilities are crucial when looking to buy land
By Jennifer Jackson
When expanding or upgrading your farm, there are many factors to keep in mind, according to Allan Earle, sales representative for Culligan Real Estate Limited Brokerage, and Philip Chabot, broker for Sutton Group Select Realty Inc.
First, buyers need to have their financing information ready to go, says Earle.
Having your financing in order “means having some type of pre-authorization from a lender before anything else,” he says. “(Buyers) will need to know what farm fits their purchasing criteria and their financing capabilities.”
Chabot agrees that this should be a first step for buyers.
“Buyers should always be in close contact with their financial advisors and financial institutions so they know they are on track (budget-wise),” says Chabot. Questions such as “can you survive an interest rate bump – a two or three per cent increase in interest,” should be asked.
Accompanying financial readiness, Chabot believes buyers should have a determined plan for how they plan to grow their farm.
This plan is “to be clear that the buyer has the available capital to handle farming the extra acres, whether it’s inputs or extra machinery.”
Once the buyer has the financial capability for expansion, he/she should work with the agent to help determine his/her priorities.
“In most cases, buyers will have their priorities set before they contact us, however we can help them prioritize their needs,” says Chabot. “It’s very nice when they confide in us their abilities financially and their wishes on how they want to grow. If we can be a part of that from the beginning, we can sometimes help tailor that growth.”
The next step is looking at the potential farm property’s attributes and characteristics, says Earle.
Buyers “need to look at things like soil type, acreage and drainage verification, building and machinery inspections, and herd health status, just to mention the most obvious,” he says. “Any restrictive covenants or future developments (such as) wind or solar in the area are sometimes never thought of. However, (these covenants or developments) can be very important in some areas.”
Chabot also recommends looking into the history of how the sellers farmed the land.
Buyers need to look at the “condition of the farm in its present state,” he says. “Has it been well maintained and well farmed under proper stewardship?
“We always try and get a three-year crop history report with yields. We also try and get copies of any tile maps and any soil tests that have been done in the last three-year period.”
While investigating the property’s history and productivity, the buyers should also be well aware of other buyers in the area. Earle describes these buyers as “neighbourhood influences – who the other buyers are and where they are located. (This has) great influence in the agricultural market,” he says.
Overall, when it comes time to talk to a real estate agent, buyers can simplify the process by supplying a growth plan, a list of farm priorities and financial boundaries.