Top Trends for Land Professionals to Plan for in 2024 | with Guest Rebecca Frantz, ALC

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Justin Osborn: Welcome to the Realtors Land Institute podcast, The Voice of Land, the industry's leading land real estate organization.

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JO: Hello, this is Justin Osborn, Accredited Land Consultant with The Wells Group in Durango, Colorado. On today's episode of The Voices of Land podcast, we're talking to RLI member and an Accredited Land Consultant, Rebecca Frantz. Rebecca grew up in Johnson County, Iowa on her family's century farm. Her dedication to the ag industry led her to Iowa State University, where she earned a bachelor's degree in ag business while also obtaining her real estate license simultaneously. Rebecca's passion for the Midwest land, diligent work ethic, and life experiences have led her to where she is today with Hertz Farm Management, serving clients in the eastern central part of Iowa that are looking to buy and sell land over the past four years. She has dedicated her time to serving those around her on a local and national level through her involvement in multiple organizations. Welcome to the podcast, Rebecca.

Rebecca Frantz: Thanks for having me, Justin. I'm excited to be here today.

JO: I'm excited to do this with you. You know, it's cool hearing kind of what you did in college because it was very similar to the path that I took.

RF: Wait, seriously? 

JO: Seriously. And I didn't realize that before. So yeah, I got my major in business with an emphasis in marketing, and then I did a minor in ag business. But while I did all that, I got my real estate license my junior year of college.

RF: Okay. I love to hear that. No, mine was honestly such a crazy story. I had no idea I'd ever do real estate. I made the decision to study ag my senior year of high school, and I remember vividly walking on campus and my mom calling me and being like, "I think you should get your real estate license," and just like went for it. And it's been a dream ever since.

JO: Nice. Was there real estate experience in your family before that led your mom to say that or? 

RF: So, I mean, grew up with a dad who owned a construction company that my parents built when they got married. So, we were around the business, but no one in my family, particularly immediate family that's a real estate agent. Luckily, my cousin let me join his residential team in my college town while I was in college. So, I had a great person to learn from during that time. And then my true passion is being involved in the farm and agriculture. So, being able to come back to this area of it is bittersweet.

JO: Well, I'm looking forward to learning more about what you're doing. I'm out in the Rocky Mountains and we've got a few irrigated farms here and there. But for the most part, my farm and ranch clients have a big recreational play on anything they are buying or selling. And so it's so opposite of what you're doing out there with crop production. And, y'all do a lot of auctions too, don't you? 

RF: We do a ton of auctions and I'm going to blank on the stat off the top of my head. We're down a lot from last year. The last two years, all we did was auction farms really for the most part, because no one knew what their piece of ground was really worth. I mean, it was a fun market to be in because we were continually setting records, but we're definitely seeing a shift as other markets are. And we're starting to list a lot more land if we know the farm isn't adjoining some strong land owners or it's high quality enough that investors are going to push it also.

JO: Yeah, we kind of saw that in the COVID era where we weren't necessarily hiring auctioneers and going through the auction process like you were. But in a way here in the Rocky Mountains, like every resort town was just, all right, let's put it out there and see who the best buyer is. And it wasn't always the highest offer that was the best, but we would get five, six offers that just kept climbing the ladder, climbing the ladder and escalation clauses and buyers trying to outbid each other and waiving inspection periods. And it was like, oh my gosh, I feel like I'm an auctioneer right now.

RF: No, and I'm starting... I mean, we're not seeing it as much with listings today, but we saw that with a lot of listings the last two years, you know, someone would call and say, I wanna put an offer in on the farm. And what we'd tell them, we already have a full price offer. And they're like, "Well, I'll pay over." And so, I mean, different times, obviously not sustainable long-term, but it's been fun the last two years, no doubt.

JO: Well, it's healthy to kind of get back to what I consider a balanced market.

RF: Completely agree. I think it's shifting a little bit, but I think we're having a smooth landing in terms of kind of how things are going and how they've gone 2023.

JO: Well, let's talk about the Farm Bill and how that's affecting you and your business and your clients.

RF: Something that I think we all have to ask ourselves is with this extension, what does that really mean? And how does it affect the attitudes of our buyers today? You know, we have a divide in Congress at the moment. We avoided the government shutdown, but this bill is on an extension right now. And the current state of our farm economy is starting to shift. In the Midwest, specifically, something that our buyers are talking about, the farmers, is the crop insurance, which is Title 11 of the Farm Bill, and then increasing reference prices, which is Title 1 of the Farm Bill. And with crop insurance specifically, it's just something that we need to strengthen, making it more affordable for people to buy at a higher coverage. That's something that they're looking at today.

RF: The other area that is a concern is the reference prices and that they've been the same since the 2014 Farm Bill, and where we're sitting at since then is 3.70 on corn and $8.40 on soybeans. And there's other commodities that are part of the reference prices and that have their own, but those are the ones that my buyers focus on. Those are the crops that we're producing here in the Midwest. When you look at what we sold, for grain prices over the past two years and the cost of production in the Midwest, those prices just aren't supportive anymore to where we're at. And that's why we're hoping that that's something Congress takes very seriously in this Farm Bill, is that they increase the budget for this. And I guess that's a question people are asking themselves is, is this something that the Farm Bill can actually do? And I think the answer is yes to that question. It's just a matter of where that money is coming from and shifting things in the bill.

RF: There was a representative that made the comment that we need to put the farm back in the Farm Bill. And I don't think that could be any more true today.

JO: So, can you educate our listeners on how crop insurance works, the general concept and how the feds come up with the calculations on how to pay that out? 

RF: Justin, that's a great question. Thank you for acknowledging that so that our listeners can understand this more. Assuming that farmers paid for crop insurance, the insured farmer is protected against losses which are occurred during that crop year that they paid for that insurance. Losses that are typical could be drought, a freeze, a disaster that happened. We had the derecho back in 2020, which would have... Where crop insurance would have kicked in for those people. It also can be the loss of revenue due to a decline in commodity prices. That's where crop insurance comes in. But as for the PLC, that has more to do with reference pricing and the reference price are prices for covered commodities in Title 1 of the Farm Bill. And they're used in programs like PLC, which stands for price loss coverage or ARC, A-R-C and that stands for ag risk coverage.

RF: And it's used as a triggering mechanism when signaling when payments are going to come from the government due to large scale disasters. So, we don't tap into those as much because of what they're used for, but that's a quick, high level definition of what the reference price is and why it's so important.

JO: Great. Well, thanks for explaining that. Are you seeing many foreign investors up there in the Midwest like they're seeing down in the southeastern part of the country? 

RF: So, yes and no. Depends on the Midwest state we're talking about. In Iowa specifically, where I do most of my business, no, because there are state regulations on foreign owners here, and there's a little bit of blurred lines with that for Iowa. They can have partial ownership in an entity, but they can't come in and buy it completely. So, in our state specifically, no, we're not seeing it as much, but it's a huge conversation for us right now because other states like Illinois, for example, have wider state laws on it that allow people to purchase and people are worried about it. I'm not against selling to someone foreign, but I think that there is national security issues that come at stake, from a food security standpoint and things that we have to consider. So, I'm hoping it hasn't been a huge discussion with the Farm Bill, but I am hoping that they do consider putting in federal laws, not just state laws on foreign ownership.

JO: Okay. Yeah, that makes sense. I mean, I guess I could totally see it from a food safety standpoint, considering all the crops y'all are growing up there. Everything we're dealing with down here, when we get foreign investors coming in, it's typically, buying big ranches, big trophy homes, a recreational component. There's not any ag component to it unless it's an alfalfa farm on a little bit of a forest that they're using for harvest, but just the tap is to attract all the elk and big mule deer.

RF: 100%. And that's the thing. I totally understand why there's state laws and it's a state by state case right now because it looks so different for you and me, but you're right, coming from the Midwest where we're number one in corn, soybeans, you know, different production, it's important to make sure that we know who's on the ground and what they're doing with it.

JO: So, how much of your business is cash versus getting loans farm credit or ag credit or USDA? 

RF: So, that's a good question. The last two years, I would say, we saw a lot of cash buyers, and I would say we still are. It's shifting. I don't want to say it's 50/50, if not more cash, because so many people are sitting on cash today that they held on to the last two years, because if they were getting a loan, I'd be getting a lot of 3% to prior to today. But I would say a lot of buyers, especially the farmers with money made from commodities, government payments, the last couple of years, we saw a lot of farms bought in cash.

JO: Yeah, I've seen the same thing out here in Colorado and New Mexico. I mean, it's the younger generation of buyers, they're really getting priced out when they're trying to buy a product and they're getting quoted 7 1/2 percent for just a small farm house, or they're getting quoted 8 1/2 percent for land. At that's if they can come up with 35 to 50% down. So it's really starting to cause a gap in our market where the buyers that have the cash are obviously the ones that are winning out, but they didn't get the cash by being stupid. They've got the cash sitting in their money market right now earning about 5% and they're saying, well, if I can buy that smoking deal, I'll put some cash into it, but I'm not going to buy it right now if I think I can get it cheaper in six or 12 months.

RF: I think our buyer pool is shifting a little bit, especially in the Midwest. You saw so many investors the past two years, I think our market grew for them. Because they were buying at lower prices in 2020-2021, and I think they're going to sit on it until we see another high again. But I think that's starting to shift because they don't have the sentimental attachment that the farmers do to the ground and continuing to work that, who are going to push those prices, you know, with another farmer today.

JO: Do you have many of your farmers that are open-minded to doing owner carry, or are they at the point in their life and their age where that's not something that they're willing to entertain? 

RF: Explain what you mean by owner carry.

JO: Owner financing, excuse me. Some states call it a land contract, some states call it owner financing, but basically where the seller says, yeah, I'll be the bank, you can put down 25 or 35% down, and I know the ag credit bank is quoting 8 1/2 percent, but I'll do it for 6 1/2 percent.

RF: I would say it's not common that we see that, just because people are either paying cash right out that they want it now, they don't want to be dealing on someone else's terms other than a lender, so I would say it's rare that we see that. We'll do contracts over an extended amount of years, but again, those happen but it's not as often as you'd think.

JO: That's great. We're seeing a lot more of it out here, and so I guess we're probably seeing it because we don't have the amount of cash buyers that y'all have. I mean, we've certainly got a fair share, and it used to be 25%, now we're floating 35, 37% of the transactions in Southwest Colorado are cash, but we're not quite at that 50% number that y'all are seeing. But we also deal with a lot of different stuff. So, where you're selling primarily farm properties, we may be selling an irrigated farm one day, a ski condo the next day, a historic home downtown the next day, and so our market is extremely diverse.

RF: No, I completely agree. One of my favorite things about RLI is learning from all the different agents across the US truly, because I'm... The only thing I've ever known is corn and soybeans.

JO: Well, that's a great opportunity for a plug. I mean, what better opportunity to learn from all the RLI agents that are across the country than to attend the National Land Conference in Louisville, Kentucky, March 10th through 13th? I mean, you'll be there, I'm going to be there. That's reason enough. But just in case somebody needed another reason, my beautiful wife, Tammy, is going to be there, and you know how much fun it is hanging out with her.

RF: We love Tammy.

JO: Well, good. Well, I hope our listeners put that on the calendar, March 10th through 13th, Louisville, Kentucky. And remind me, is that where we met, Rebecca? 

RF: National Land Conference? 

JO: Yeah. Did we meet there? Did we meet... No, maybe... I think it was...

RF: You were my instructor, and I believe it was for transitional land before I got my ALC. I think it was a class up in... This is crazy that I remember this. Up in Minnesota, I think you were teaching like two years ago, maybe it was last summer. I took your class there.

JO: You're right. Yeah, that was a fun class. We got to go out and watch some horse racing.

RF: We did watch horse racing. That was probably one of my favorites, just because it's an area that I want to dive deeper into, and transitional land looks different everywhere. So that was a lot of fun.

JO: That was a lot of fun. And that wasn't the only reason that was your favorite. It could have been the company that you were around that week.

RF: You know, you might be right there. [chuckle]

JO: Well, good. Well, yeah, we definitely will have more classes coming out to the Midwest soon, so people can definitely take a look at your RLI chapters website to see what classes are going to be out that direction. Well, let's shift gears for a little bit and talk about kind of the new buzzword that's happening in our industry, and that is AI.

RF: You know what, Justin? I love to keep up with technology that's continuing to change and things that are going to help us in our business. But this is an interesting topic for me, and I'm so curious to hear other people's thoughts on it as well, because it's something I'm growing in myself right now, and I'm starting to test out a lot more. I'll be honest, I was naive to AI at first. I didn't want to consider it, but I'm learning that it, like all things, is a great tool to use when it's balanced with other things as well. It's just a matter of how we approach it. And I think the way I'm currently using it right now is more of a marketing marketing standpoint and ways to just help my brain push other ideas forward. I heard someone talking about the idea of typing in problems to solve in my market or problems to solve for this buyer, and I started testing it out of ways to use it, and it was a lot of fun, and I was like, okay, this point's good.

RF: This point, I don't know if I agree with ChatGPT on, but I think some of those things are really important that it's all about how we use it in moderation and kind of what that looks like, and probably to continue to be cautious with it because it is so new, but it's something I think all agents, no matter where you're at, need to dive into more in 2024.

JO: Well, I think that you make some great points there. It is a great tool. I'll add to that and say it's a great tool if it's used properly. Something that I've seen, it's really funny how many, like you can pick it out right away. As soon as a new listing comes on the market where I'm at, the words like exquisite and stunning and oasis, and all these words are being used to describe properties that are not those things, but you can see that the agent just puts it into AI or whatever the ChatGPT formula is that they're using, and it spits out and they don't edit it. They just put it in the remarks, and I was looking at a listing the other day. I actually had a client, a buyer, that reached out to me. They're like, "This seems like such a good deal. What's the catch? Why is this irrigated valley so cheap?"

JO: And you read the description, and it makes it... I mean, they literally use the words like an irrigated oasis, and I'm like, "Wait a minute. I've hunted over there. That's full of scrub oak, pinyon, juniper, sagebrush, and it is not an oasis." Yeah, in the 10 days a year that they get irrigation water, it's lush, but the other 355 days a year, it is not. And I think we should probably start hitting on this in some of our classes now that we're talking about it, but there's a huge liability with misrepresentation in our industry by letting a computer generate the remarks instead of the agent who's actually going out to the property, writing the remarks, or editing the remarks to make sure that there's a clear representation of what buyers are going to be buying.

RF: So, and if anyone wants to go look into it, NAR put out a great article talking about laws with AI and just misinterpretation, code of ethics, things we need to be considering. And like you said, everything is great to an extent in moderation. I think it's all about how we choose to approach it. And that's the thing. You can't copy and paste those things over, because I don't sound like that, and I'm sure you don't either, Justin. But that's something I would consider and tell people to look into is remember the code of ethics and some of those things that come with these things that are helping us be more efficient but also, no one wants their license at stake.

JO: Right. Yeah. I mean, if you can be so much more efficient, I love the word you just said there, because, I mean, that's the one thing we don't have more of is time. And we could all use it. But you've got the same amount of time in your day as I've got in my day. And I know there's days we certainly wish we could use more. But yeah, what an opportunity to take a tool and use it to help make us look better, help represent our clients better and allow us to be more efficient to move on to the next property, to move on to the next client.

RF: No, I completely agree with you. I think it's something that everyone wants to be on the forefront of, everyone wants to be ahead of it, but I would caution people to use it wisely and double check things with it. But I love it just as much as the next person. It has helped me tremendously come up with different ideas over time. But again, it's all about your approach.

JO: Well, is there other technology other than AI that you're kind of excited about that you're using right now that our listeners should be aware of? 

RF: I'm trying to think if there's things specific to all real estate agents that would be helpful. I mean, obviously I'm always looking for more tools towards communication and ways that we can do that. And that's something I'm on the search for right now, but I wouldn't say there's other things off the top of my head that I can think of.

JO: Okay, well, I want to make sure our listeners know that if they want to understand more about what's happening in the land real estate market, the economy, technology, and many of the other topics we've touched on today, they need to be sure to register for the 2024 National Land Conference. There's absolutely no replacement for being face-to-face with experienced land professionals like Rebecca to talk to about the business. They can share challenges and even refer business back and forth. And that's something we should probably talk about is, you've been in this industry, what, four years now? 

RF: Four years, roughly.

JO: Yeah. So, talk to me a little bit about the referral network. Like how has being in RLI benefited you and your industry? 

RF: I think specifically because in the Midwest, it does look a little different, I've had the opportunity to talk with people out in different parts of like Colorado, Steamboat Springs, for example. I knew someone that wanted to sell a property there and move to the Midwest. And it's been great to call on other agents for those things. In my short time, I would say the referral business hasn't been as big of a deal to me as it is the ability to bounce ideas off of other agents. Recently, I started getting together with another RLI member who's not in my state and we will do calls every other week and just bounce ideas off of each other and hold each other accountable on things. And I think that's probably been one of the most beneficial things to me in RLI is just the ability to talk to someone outside my market, have them look at my ideas and be like, "Becca, what about this?" And just that's probably the biggest gift I've had so far.

JO: That's awesome. Yeah, I mean, that's huge. And that's hard to replace. That's things you can't learn in a class. Sometimes we sit in these classes when we're getting a real estate license and we learn the real estate law, but we don't often learn the the nuts and bolts, the pieces that are in the day-to-day transactions. And so having an accountability partner like that, or a mentor that you can call up and bounce ideas off of I think is great. And I had the same thing when I was new to RLI, getting involved from going from like this residential realtor who was dabbling in land to all of a sudden selling a ton of land, and then those land transactions starting to get bigger. And I remember calling up a guy who was totally outside of my market, just like you're saying like, "I need an ag appraiser. And all I know, is residential and lot appraisers, development appraisers. Where can I find a good farm and ranch appraiser?" And he got me in touch with a guy that was four hours away, that drove down to Durango, just because of the RLI connection that he created for me. And so that was my first RLI wow moment, like, this is huge.

RF: That's awesome. But that's the thing. I think RLI and being able to use those words, Realtors Land Institute holds weight to a lot of people, whether it's referrals, or it's the ability to have someone as a mentor, knowing that they have that behind them holds weight.

JO: Well, Rebecca, is there anything else that you'd like to throw out for our listeners here before we wrap up? 

RF: I don't think so. Thanks for taking the time today to talk about things that I'm looking forward to keeping an eye on this coming year.

JO: Yeah, thank you for taking time to do this with us. I know, when you're doing the amount of business that you're doing up there in the Midwest, time is money. And so I appreciate you taking a half hour aside and giving it to us today.

RF: No, thank you.

JO: For more expertise on land real estate topics, be sure to check out the RLI blog, follow us on social media, and of course, tune in for the upcoming episodes of the Voices of Land podcast.

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