Selling a horse farm isn’t often an easy task, but there are a number of things you can do to help ensure the best outcome possible. There are also a number of things you can do to ensure that the task is as arduous and stressful as possible and, unfortunately, these mistakes are all too common. These are the mistakes to avoid when selling a horse farm.
Forgetting About Liability. What types of animals do you have on the property? Horses? Dogs? Showings can become complicated when you have to figure in the safety of both humans and animals. Depending on what animals you have on the property and how your farm is configured, it may be wise to schedule showings by appointment only with either yourself or your Realtor present at each. If you feel comfortable putting up a lockbox and allowing buyer agents to access the property with their clients, be sure to have your agent leave detailed instructions. You don’t want people feeding the animals or leaving gates open.
Not Hiring An Agent. I couldn’t put this down as the first item because I knew you’d stop reading, but hiring the right agent is critical. The horse world feels small sometimes (Ok—all the time) and I know it seems like reaching out to your contacts should be enough to get the job done, but the reality is that in a niche market, your property will need as much exposure as possible and an agent with knowledge of horse properties will be able to make that happen. Now, there are many FSBO horse properties on the market and I never hesitate to make the call to a FSBO seller if my client isn’t finding what they need on the market at that moment, but I often find that these properties are on the market for much longer than they might have been had they been listed with the right agent from the start.
Relying On Acreage. Acreage is important, but it is not enough to sell your farm. Sellers often feel the acreage of their property compensates for the deteriorating home and outbuildings or the poor fencing (pictured), but remember, acreage is just one of many factors that help to determine market value. It is also important to remember that acreage isn’t always subdividable, which means the price per acre won’t be as high as you might think.
Skipping Photography. Nowadays, buyers love to look at photos before deciding to go look at a home or a farm. Why wouldn’t they? It’s a major time saver. If you are trying to sell a horse farm, you need quality photos of the home, outbuildings, arena, and pastures. I know that readying a farm for a showing, let alone a photo shoot is a daunting task, but in this day and age, it is a necessary step to getting your farm sold.
Waiting To List Until You’ve Bought A New Home…or found a home to buy. Many sellers want to know where they are headed before listing their farm for sale. It’s understandable. Relocating yourself, your family, and your horses is a gargantuan task. If you have the finances to make it happen, lucky you! Unfortunately, many sellers need the proceeds of the sale to finance their new property and the sellers of that new property won’t be too happy to see an offer that includes a contingency for the sale a farm, particularly a farm that has yet to be listed. Needing to both sell and buy is stressful regardless of the type of real estate, but horse farms can be particularly tricky given the length of the transaction and the number of moving pieces involved. It is best to come up with your game plan a few months before listing. Decide when you would like to list, speak with your lender, get an idea of what is on the market in your price range, and have a back up plan. Ideally, you will be able to list your property, start looking at homes with your realtor, and tie up both transactions neatly, but there are two dreaded scenarios that sellers often encounter. Here’s how to deal with them:
What if your farm sells faster than you anticipate and you haven’t found a new home?
Consider negotiating a leaseback with the new owners. If you are struggling to find a new place to live and you receive an offer that is too good to pass up, you can negotiate a leaseback for a certain period of time. I’ve spoken to a few sellers who had tried to sell in the past and made the mistake of turning down above asking offers on their farms because they didn’t have a new home for themselves or their horses. Before you list, research boarding facilities for the horses should this situation arise. It is also worth keeping an eye on rentals or reaching out to family so you have a place to live if the new owners need to move in right away.
What if you find the perfect home, but you have yet to receive any offers on your current home?
Making an offer contingent upon the sale of your property would be the most obvious choice, but as I said, farms take some time to sell and if yours is sitting on the market, you may not be able to convince a seller to accept your offer. If you feel you must have that home, then speak to your lender. They will be able to go through your loan options with you. You may be able to use equity to make a down payment or get approved for a loan with a lower down payment. Ideally, you will have spoken to your lender before you list and start looking for a new property so you can go through the different scenarios. Keep in mind that you would be paying two mortgages for a time. If you planned to sell your farm and pay cash for a new property, it may still pay to speak to a lender to see what temporary options are available to you. Ultimately, you need to feel comfortable with whatever plan you choose. If something seems too good to be true, it is worth speaking to more than one lender to ensure that you are making a good financial decision.
This oh-so-common mistake really comes back to haunt many farm sellers and it’s not incomprehensible given the amount of wear and tear horses put on a property, but condition is crucial. You may think that updating the home with a coat of paint and new décor would be the way to go, but the best way to protect your equity in a home is to make sure all the systems are well cared for. The well, septic, boiler, plumbing, and roof are common deal killers when it comes to farms. Make sure you are keeping up with annual maintenance and budgeting for any repairs and replacements. Ultimately, a dated home with good bones is less of an issue for buyers than a renovated and updated home with failing systems. When it comes to the outbuildings and pastures, take care plumbing, electrical, and fencing. Spend your money where it counts.
Lastly. Pay attention to what is on the market and, when going through comps with your agent, ask to see the days on market in addition to both the sales price and the original list price. Every farm is custom so coming to a number can be difficult, but days on market and original price are very telling. You will find that prices vary wildly and many seven-figure listings close for over a hundred thousand dollars under asking after many days—if not months or years—on the market. Farms that sell less than three months from the list date are relatively rare, but they don’t have to be. If you plan ahead, surround yourself with a good team, and have a realistic goal, you will be successful at selling your horse farm.
Sarah is a Realtor specializing in residential and equestrian properties. She is based in Bethesda, Maryland and Wellington, Florida.