Pricing Your Farm, Ranch and Land Property · 2015-09-03 · 36 Pricing Your Farm, Ranch, and Land Property SEVEN MAXIMS FOR PRICING IN A SHIFTING MARKET 1. Be a student of your market

Pricing Your Farm, Ranch, and

Land Property

Kasey Mock

Kasey MockAustin, Texas

Director, KW Farm and Ranch Division

Tell Keller Williams University what you think!

Simply enter

www.evalfr.cominto any mobile device to complete your

evaluation for this session.

3 Pricing Your Farm, Ranch, and Land Property

“There is a gap

between what a seller

thinks and the realistic

price they can get.

That gap is where

your skills must work.”

-Dave Norberg, San Diego, CaliforniaSHIFT p.143

“The direction in which a market is

going and the speed at which it’s

moving determines pricing

strategies. Properties that are

appropriately priced for the market

will always make the best

impression. They’ll be the first

shown, the most talked about, the

first to receive offers, and the most

likely to sell.”

- SHIFT p.141

“If the price doesn’t match the direction of the

market the buyers will merely move on and

never even give it a second thought. Since they

won’t even look at it, they’ll never get to

experience the property’s real appeal.” - SHIFT p.141

Pricing Your Farm, Ranch, and Land Property6

What is the cost of an overpriced listing?


What is the risk of an overpriced listing?

1. CMA (Comparative Market Analysis)

2. Income producing

3. Auctions

4. Shifting markets


Four Models


• Craig Bowen

• Plateau Land Group, LP

• KW SWMC Austin, Texas

Pricing Using the CMA

• Appraisal districts or taxing authority

• -70%

• Maps

• Old listings

• Client


Research


• Location

• Access

• Amenities

Attributes and Limitations

“The essence of the pricing science is identifying

the right comparable properties. The right

comps make the analysis more accurate and a

seller’s acceptance more likely.”

- SHIFT pp.139-140


Comparables

• Land Condition

• Improvements

• Location


Comparables

• Location

• Access

• Amenities


Weighted Value

Growing the KW Farm & Ranch Division Toolbox15

Comparables

Comps

Location Acres Price $ / Acre Notes Weight Given Weighted $ / Acre ADOM

Subject 5000 FM 3237 276.09 $4,250,000.00 $15,393.53

401 Skyline Dr 140.00 $1,330,000.00 $9,500.00 Overgrazed, some views, fields, modest home 0.2 $1,900.00 125

00 RR 2325 279.40 $3,632,200.00 $13,000.00 Parked up (bad), views, good land comp 0.3 $3,900.00 76

777 Burnett Ranch Rd 381.88 $5,350,000.00 $14,009.64 Luxury, huge barn, 9 acre lake, west of Wimberley 0.05 $700.48 155

500 Pursley Rd 368.00 $3,027,616.00 $8,227.22 Good location, small live water, no improvements 0.1 $822.72 25

419 NW Hilliard Rd 334.67 $4,090,000.00 $12,220.99 Close to SM, best land comp, decent habitat 0.35 $4,277.35 200

1

Average 300.79 $3,485,963.20 $11,391.57

Sold

On-market

Subject $ $11,600.55 $3,202,796.24

“It is my job to market the property, and your

job to meet the market with a fair asking

price.”


Suggested List Price

• Get the listing

• Explain market response

• React to market


Reality

Production AgricultureUsing numbers to price income-

producing property

Travis Bard

The Bard Group

Prescott, Arizona

• Analysis of income and

expense statements, tax

returns, and production

records


Analysis

• Data from government agencies

can be used to validate actual

production numbers or to prepare

pro forma statements


Data

• The sum of all parts – using a

combination of acreage and animal

units


The SUM of All Parts

PRICING QUANTIFIABLE RESOURCES

Board Feet of Timber

Bore Samplings to Determine Aggregate Quantities

Agriculture can mean management of multiple resources.


Agriculture


Pricing per Acre

Nd.gov/tax

Real Estate Auctions

Suzy Moore Bid Loud Realty Auctions Tulsa, Oklahoma

• A marketing tool

• Changes the perceived supply and demand

• Creates urgency

• Suggests scarcity

• Maximize seller’s ROI


Why Auction?

• Unlike traditional listings, bidders determine the price!

• Set and advertise a low opening bid price

• Auction companies typically charge 6%+ to the seller

• Buyer premium may apply

• Advertising fee paid up front by the seller

• Sellers can set a reserve

• Sellers may maintain the right to reject the highest bid


What is different about an auction?


• Timing • Zoning • Access • Location • Income Production• Oil and Gas

Factors that Affect Pricing

An auction changes the “perception of

supply and demand”—Whereas

conventional marketing would bring one

buyer at a time, an auction brings many,

thus creating competition among buyers.


Auction

Probably the most important thing about an

auction is timing. Consult with the seller

about when they want or need to sell, set

the date, and require all bidders to close

within a certain amount of time.


Timing

Are there any underlying attributes to the

land? Such as oil, gas, or mineral rights?

Determine if the mineral rights are still

intact or severed, and if there is any

production.


Underlying Attributes


“Real estate is a cyclical business. What goes up must come down.”

“All of this simply boils down tobuyer demand, which is drivenby affordability and perception—how many buyers can affordto buy and how many think it’s a good time to buy.”

Pricing in a SHIFTING Market

Buyer’s Market

Seller’s Market

Balanced Market Pricing Your Farm, Ranch, and Land Property33

Market

Don’t chase the market—let the market chase you!




SEVEN MAXIMS FOR PRICING IN A SHIFTING MARKET 1. Be a student of your market – know the numbers

2. Focus your main comps on actives – pendings and sold, may already be out of

date

3. Be a student of property – preview them so you understand what is selling and

why

4. Keep your presentation as current as possible – let your ongoing research do the

talking

5. Prequalify for motivation – sellers who most need to sell, sell most often

6. Price ahead of the market – to avoid chasing it

7. Always secure price reductions in advance – to avoid falling behind the market

- SHIFT p. 156

Pricing in a Shifting Market

Questions and Aha’s


Thank You!Please complete an evaluation for this session.

Use any mobile device!

www.evalfr.com.

To download a free copy of this presentation:

www.familyreunion.kw.com/downloads

Documents

Pricing Your Farm, Ranch and Land Property · 2015-09-03 · 36 Pricing Your Farm, Ranch, and Land Property SEVEN MAXIMS FOR PRICING IN A SHIFTING MARKET 1. Be a student of your market