Teaming Up To Transform Your Real Estate Business

“If you want to go fast, go alone. If you want to go far, go together.” – unkown

What is the best way to achieve the highest level of success in your land brokerage career? The answer to that question varies greatly depending on your definition of success. Many brokers would like to see an increase in income earned, number of transactions closed, quality agents hired or retained, or any combination of other metrics used to define success. There are many definitions of success that do not have their own column in your firm’s P&L sheet, such as: spending more time with family, creating a steady stream of income, or dominating your local market. Figuring out the best way to achieve those goals is a real challenge for real estate salespeople.

“If you want to succeed, buckle down and work harder. You need to make more calls, set more appointments, and spend more time in front of decision makers.” This is good advice, but at a certain point in your career it becomes unproductive to pour yourself into more of the same. You can reach a plateau where spending more hours at work does not yield the desired results. In economic terms, this concept is called “The Law of Diminishing Returns.”

In 2013, my co-worker, Robert King, ALC, and I candidly discussed our goals for the year and how our numbers were tracking to date. Robert shared how his goal for the coming year was to increase the size of his average transaction to raise his total commissions earned. At the time, Robert was closing forty land transactions per year and was one of the top producers for Southeastern Land Group. The next year, he and Randall Upchurch teamed up and formulated a plan to increase their business and target a market segment that was largely under-served in Alabama. They focused on marketing and selling poultry farms across the state.

Poultry is the leading agricultural product in our state, and both Robert and Randall had previous experience with poultry operations and real estate brokerage. In 2014, they formed PoultrySouth to focus on marketing poultry farms. It took only two years for Robert to not only increase his commissions, but he was also able to more than double them as a result of teaming up with Randall. This is a perfect example of how two REALTORS® Land Institute members can partner to totally transform their business.

Randall is grateful the partnership has worked so well and, as he recounts their success, he does not take it for granted. “By working together the past three years, Robert and I have helped our clients close twenty-five poultry farms for a total of about fifty-five million dollars in sales. We currently have six pending farm deals, and are working on others.” Robert explains the upside of their partnership this way, “The benefit of two minds working through the issues of real estate transactions is a multiplying effect, not merely additive.” King continues, “Having slightly different perspectives focused on the same goal is a win-win for agents and clients. Additionally, we have seen the unexpected benefit of being able to multiply our effective handling of listings. Randall and I could probably only manage twenty-five or thirty listings apiece. Together we are able to handle one-hundred or more listings, while providing good service to our clients.”

The financial success of the partnership at PoultrySouth has opened doors for Robert and Randall to add cattle to their personal herds and each have purchased additional acreage for their family farms. The benefits from their business have overflowed into achieving goals for their families and farms. They are the perfect example of how real estate teams are supposed to function.

How do we achieve the positive outcomes we desire in our careers? One way is to align yourself with like-minded people. The power that comes from working together to achieve a common goal cannot be overstated. Fletcher Majors, an ALC from Alabama, has done a great job fostering an atmosphere of cooperation at Great Southern Land, both internally and with outside agents. In early 2015, Fletcher and three of his agents worked tirelessly to help one of their clients sell 6,477 acres in forty-five different tracts to thirteen different buyers in a single bid sale. Calvin Perryman, an ALC who works with Fletcher, explains why they believe in the team approach, saying “We often use a teamwork approach on special projects as well as everyday listings and appraisals. We believe having multiple opinions and ideas along with additional boots on the ground helps us better serve our clients.”

Each winter, nature demonstrates the power of teamwork when we see the V-shaped formations of geese as they fly south from Canada to warmer climates. The flock is able to survive by travelling great distances with maximum efficiency because of the cooperation of all the individuals. Each member of the flock benefits from the cooperative efforts of the group. This collaborative effort only works because each individual is clear on the objective, their responsibility, and they expend the effort to achieve the desired result.

There are many ingredients to creating a great team, but there are three essential elements that this article seeks to address. In order to form a great partnership, you must ACT like a team.

Agreement- “Can two walk together unless they are in agreement?” This question was posed by Amos, a shepherd turned prophet, that lived about 750 B.C. This question is still relevant millennia later. For a partnership to be effective, the partners must hold a common vision and agree on implementation of their strategy. The objectives must be clear so that everyone knows what they are working toward and how they will achieve the desired result.

Communication- Operation without communication leads to frustration. Sharing frequent updates, addressing problems jointly, and asking accountability questions helps ensure that the partnership stays on track. No member of the team should blindly assume that everyone has the most recent information or is acting on it. There will be hiccups in every partnership, but as a mentor often told me, “Communication covers a multitude of sins.” Receiving information makes people feel important and in the loop, so, be sure to share all that is appropriate with your teammate to increase the chances of mutual success.

Trust- The single most important ingredient to a well-functioning team is trust. Working with people that you know unquestionably have your best interest at heart frees you to focus on the challenge before you, and not on defending yourself from the people around you. Trust is very difficult to manufacture or bestow, and is generally built gradually and methodically through shared experiences. Trust breeds loyalty. Loyalty begets a willingness to work hard and take risks together. Working hard and taking calculated risks together is the formula most successful entrepreneurs use to achieve their goals.

RLI’s 2016 ALC-to-ALC Networking Award was recently presented to three ALCs from Hertz Real Estate Services in Iowa. ALCs Kirk Weih, Troy Louwagle, and Kyle Hansen teamed up to close a $12,263,100 transaction on 998 acres. This size and type of transaction requires that teammates have a lot of trust. Kyle’s advice for creating this type of success is, “Remember why you are working with another broker. It isn’t because they provide the highest referral or pay the best commission; it is because they can provide the best service to you and your client. We are in business to provide the best product and experience possible. To do that, you need to work with the best brokers possible. That’s why I like to work with Accredited Land Consultants and agents that I trust. That is what our clients deserve.”

A quick search in the “Book” category on Amazon.com for “Team” returns about 310,000 entries. With that much written on the topic, the best this article can hope to do is highlight a few essentials to creating positive teamwork for land brokers. There are dozens of free resources on teamwork available at the National Association of REALTORS® website. We face a challenge when we take a competitive vocation and ask individual agents to work together; however, good brokers know this is the formula for long term success.

“Our industry is unique in that it helps to have salespeople that are fiercely competitive, and yet be able to work well as a team. In many land brokerage companies, the agents are independent contractors and not traditional employees. In that type of relationship, you mandate only what is necessary and encourage your group as much as you can,” says Dave Milton, ALC and President of Southeastern Land Group. Dave adds, “For agents to succeed in this business, brokers have to do all you can to create an atmosphere of trust that leads to a strong team. The best way to help new agents launch their career is for them to team up with someone more experienced. Hiring the right kind of people is the best way to ensure buy-in from existing employees and protect the continuity of your team.”

A wise writer of antiquity once observed, “Two are better than one for they get a good return for their labor.” My hope is that by hearing other brokers involved with RLI share stories about the success they have had by teaming up, that you will find new ways to foster teamwork in your land brokerage business. “If you want to go fast, go alone. If you want to go far, go together.” Here’s wishing you all the best as you “Go together!”

This article originally appeared in the 2017 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Jonathan Goode, ALCAbout the author: Jonathan Goode, ALC, is an active member of the REALTORS® Land Institute. He is a Co-owner of Southeastern Land Group, LLC (SELG) and is the Responsible Broker for the company in Mississippi. He is passionate about helping people buy and sell land.

Washington D.C. land real estate

The Four New Realities of Washington, D.C.

Usually I give a brief update on land real estate public policy issues of interest to REALTORS® Land Institute (RLI) land professionals and the landowners they serve.

However, the election of Donald Trump to the highest elected political office in the land has scrambled the usual political dynamics of Washington, D.C. – the rule-book has been thrown out and we are in uncharted waters.

Given the unusual political environment we find ourselves in today, I thought it might be helpful to identify some of the factors that now make up the new reality of Washington, D.C., and how these factors might impact land real estate public policy issues that land agents and landowners care about. So here they are, the four new realities of Washington, D.C.:

  1. New Administration. The Trump Administration was elected to achieve several big priorities: immigration reform; comprehensive tax reform; construct a wall on the southern border; and repeal and replace Obamacare. Smaller items on the agenda include reforming existing trade agreements and repealing Dodd-Frank. The Trump Administration is still finding its way on how to achieve its policy priorities, but eventually, they will find their footing. When they do, tax reform could be the issue they turn to for a legislative win.  Of all of these issues, tax reform could pose a threat to RLI’s most important legislative land real estate public policy issue: preserving the 1031 Like-Kind Tax Exchange for landowners and investors.
  2. New Congress. While the Republicans have captured both the House and Senate, they did so with small majorities and increased ideological polarization. Practically speaking, this is a recipe for legislative gridlock as congressional leaders discover it is difficult, if not impossible, to cobble together enough members to pass legislation. However, this could work in RLI’s favor.  While legislative stagnation means that some bills RLI members might support don’t get passed, it also means that other bills, such as tax reform that harm 1031s, might never see the light of day.
  3. Executive Order (EO) Governance. A recent trend for presidents is to issue Executive Orders when they are unable to achieve their policy agenda in Congress. This occurred quite often during both the Clinton and Bush Presidencies, then, accelerated quickly during Obama’s presidency. Trump has used them even more frequently to achieve early momentum on some of his key policy goals. While EOs are limited in scope because they only impact activities of the federal government and not broader corporate or social institutions, they can be used in a targeted way to achieve a specific result.  One recent EO directed the EPA to begin the process to rescind and replace the controversial and damaging Waters of the U.S. (WOTUS) regulation. If Trump does nothing else as President, rescinding WOTUS will help land owners and real estate agents more than anything else.
  4. De-regulatory Environment. President Trump has made it clear to all the federal regulatory agencies that they need to establish a process for reviewing and rescinding unnecessary or antiquated regulations. This has also been the subject of several EOs as well. While deregulation of the private sector is an important goal, this strategy has limitations as well.  First, the process for repealing a regulation is cumbersome and time-consuming.  Second, these only apply to regulations that originated in the federal agencies.  For example, the WOTUS and the Clean Power Plan regulations were initiated by the Environmental Protection Agency (EPA), without any statutory direction from Congress, so they can only be repealed by the EPA.  Regulations implemented under the direction of Dodd-Frank or the Affordable Care Act were initiated under the congressional authority, so they can only be repealed or modified by Congress.  Deregulation will unburden land real estate agents and their clients as well as help spur innovation and economic development.

This article originally appeared in the 2017 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Riggs, Russell - NAR Government AffairsAbout the author: In his position with the National Association of REALTORS®, Russell Riggs serves as the RLI’s Government Affairs Liaison in Washington, D.C., conducting advocacy on a variety of federal issues related to land.

Forget the Capital Gains Tax, Full Speed Ahead!

One of my favorite old westerns is “El Dorado”. Yes, it stars John Wayne and Robert Mitchum. Yes it has James Caan and Arthur Honeycutt. And, more importantly, it has Charlotte Holt and the cutest Cary Michelle and, of course, the golden tunes of George Alexander singing the theme song…

In the movie, the bad guy, Ed Asner tries to steal a ranch owned by the McDonald family. In the end, Wayne, Mitchum, Caan and Honeycutt come to the rescue and the ranch is saved. Maybe the best part is when Ed Asner gets shot about a gazillion times at the end. Considering how he treated Mary Tyler Moore about 80 years later, he got what he deserved. The moral of the story is, when the McDonalds thought that they would lose their ranch, the gang came to the rescue and that is what we are going to discuss.

Like the McDonalds, landowners are under attack and now it’s from Congress. Congress is actually considering making changes or even revoking 1031 exchanges. What are these people thinking? Real estate associations, qualified intermediaries, and all kinds of people and groups associated with real estate have been lobbying; however, their efforts may be falling on deaf ears. Maybe Congress should be spending more of its time on spending reform and leave 1031 exchanges alone.

So the million dollar question (before taxes!) is what can a landowner do if 1031 exchanges are no longer part of the tax code to defer taxes. Well, there is good news! If there wasn’t, would I be writing this blog?

There is a great opportunity today for RLI members to assist their clients to defer taxes when the sale of a great property creates a large tax liability. That can be any type of property including a primary residence. Not only is there a way to defer taxes with a 20-year track record of success, but it may also be more flexible than a 1031.

I am fortunate to be one of the few advisors nationwide with access to a proprietary trust that was created by some of the smartest tax attorneys in the country to defer taxes when the sale of a highly appreciated asset creates a large tax liability. The IRS conducted a two-year examination of the proprietary trust and that examination was concluded in Washington DC. Other regulatory agencies have also conducted examinations and had not had any concerns.

Our proprietary trust has a 20-year track record with over 2,000 trusts being successfully created with our largest transaction being over $100 million with a tax deferral of $50 million. The proprietary trust has also successfully passed all 13 IRS audits with no changes recommended by the IRS. Our proprietary trust is on solid legal and tax ground but it is always important for your clients to do their due diligence as well. Because of the flexibility of our trust, almost any situation where there is a tax liability can be an opportunity for RLI members to sell more real estate by deferring taxes. Here are a few of the opportunities where our strategies may be useful.

Imagine for a moment if you could defer your sellers’ capital gains tax, state tax, depreciation recapture, and the Obamacare tax on their hard earned sales proceeds and you can defer them indefinitely. Imagine being able to defer those taxes without 45 or 180 day periods, no loan to value ratios, and your seller can buy any type of property at any time in the future. If it takes a year to find another property, that’s fine.

Imagine that you have a farmer or rancher client that has worked his property for decades and would like to sell and retire. You can sell that property and defer those taxes on his hard earned sales proceeds and give the seller a larger retirement income than if he had to pay taxes first.

Imagine all the times in the past that either your seller’s 1031 exchange couldn’t be completed or 1031 exchanges aren’t appropriate. Being able to defer those taxes today, and without an exchange, provides a great opportunity for your sellers. If you can’t identify a property in 45 days, no problem. If it takes six months, we can still defer taxes. You identify a property and if a problem of some kind occurs and the exchange falls apart, we can still defer taxes.

Has this scenario ever happened: You are selling a great property for your seller but he refuses to accept any offer until he finds a replacement property, and six to eight months later he is still looking for one. What if instead, you sell the property now, defer taxes now, get paid now, and, if it takes a year to find that replacement property, everyone is happy.

Say you found a great buyer for your seller. There is a slight problem. The seller is going to have a large tax liability and would like to defer taxes using a 1031. Unfortunately, the buyer has to pay for the property over four years. A 1031 exchange to defer the capital gains tax probably won’t work but our strategies will.

Say you have three owners of a great property that want you to sell the property for them. One owner wants to take the proceeds and run. The other two owners want to defer taxes. A 1031 probably won’t work but our strategies will.

You have a great client who is thinking about selling his high end residential property. He is going to have to pay millions in taxes. You can defer his capital gains tax, state tax, and the Obamacare tax on the sales proceeds. In gratitude, maybe he will buy a ranch or farm from you.

As a long-time partner of the RLI, I have worked with brokers all over the country. We have deferred millions in taxes and we are now also working with large institutional buyers of rural properties. Our Section 453 tax deferral strategies have been utilized successfully over 2,000 times with our largest transaction being over $100 million with a tax deferral of $50 million.

The bottom line is… relax. If Congress is smart, they will leave 1031 exchanges alone and our strategies can be a great Plan B. If Congress ends 1031 exchanges, we may have a better option to defer taxes, and in more situations. If there is a potential tax liability, let’s chat and see if there is an opportunity to defer that tax liability. Your sellers will love you.

Every time I watch a John Wayne movie except maybe The Quiet Man, Wayne comes to the rescue and I always wish that was me. Now is my time to come to the rescue and help your property owners sell a great property and keep more of their hard earned sales proceeds in their pockets while sending less to Washington and their local state capital.

Happy Selling!

About the Author: David is a Partner at Creative Real Estate Strategies, a 2015 Silver Partner of the Institute, and has been in the industry since the late 70s. His years of experience help him to assist land brokers in helping their clients defer capital gains tax, state tax and depreciation recapture taxes on their client’s sales proceeds when either their clients are unable to complete their 1031 or the client would like to sell and retire but still defer taxes. By understanding these tax deferral strategies, brokers have been able to sell more real estate. David can be reached at 713-702-6401 or at David@cresknowsrealestate.com

Public Relations: The Land Real Estate Professional’s Ultimate Weapon

Public Relations has become the most fundamental tool for shaping public opinion, investment markets, company reputations and business outcomes. As a land professional, your career is tied to a commodity with many stakeholders and many opinions on how land is to be managed and regulated. Far from being a “nice to have,” PR defines success—and failure—in today’s world.

Land professionals and Accredited Land Consultants (ALCs) have a right-down-to-the-soil impact on the physical and economic well-being of America. In a high-risk world, land—particularly commodity-producing acreage—offers roots of stability and a solid base for expansion. Land professionals, including brokers, agents, appraisers and auctioneers, together comprise the infrastructure upon which land is profitably conserved, exchanged and utilized.

Public Relations Gets You Known

But who really knows these things about land professionals?

By survey, one of the biggest hurdles a land professional faces is trying to explain what they do, what their knowledge and skills are, and how to care for the land and livestock on that land—free range, antibiotics vs. organic, and so forth. Ninety-eight percent of the general public has no knowledge of agriculture. This is a strong indication that effective public relations is not in play. The objective of PR is to make your business well-known and highly regarded so that you don’t have to repeatedly explain yourself.

If what you do, your purpose and the benefits you provide as a land professional are not clear to your public, some other perception will take its place—one that usually favors a competing interest.

Public Relations is About Reaching Minds: It Manages Emotions and Directs Attention

Public opinion regarding land management, its resources and the concept of stakeholder (the general public) over shareholder (the owners) is being shaped today by social media. And that social media, uncontrolled, has the liability of amplifying emotions over logic, presenting inaccurate data as fact, and omitting balanced points of view. It is a runaway horse, and only the art and science of public relations can manage.

Strong new community realities, such as sustainability; natural resources stake holding; environmental impact management; the control of interrelated natural systems such as navigable waters (Waters of the U.S. or WOTUS) and wildlife habitats—along with many other concerns—have created tension with private ownership. All of these factors influence legislation and can negatively affect land prices. Look carefully at any new legislation that affects land profits or limits sales—or any successful repeal of legislation—and you will usually find a publicity campaign that preceded it.

PR is often confused with activities that are more properly parts of branding, promotion and marketing, or it is thought to be only a plan to put out press releases now and then. While it has high synergy with these activities—even making them more effective—PR has its own precise scope.

It takes only a quick look at the news today to see that we live in highly opinionated times. People with strongly held beliefs and agendas often seek out only the news and information that support their viewpoints, and will disregard conflicting reports. Imagine, for example, trying to sell a fervent Republican on a Democratic candidate—the facts would be flying back and forth, but neither side would be listening to the other. Impasse! PR would need to step in, find the real issues people care about, and either makes a bipartisan solution well known, push a workable compromise, or show one side (or the other) to be the best solution.

PR—not money—is how the world turns today. It’s PR first that determines how the money will be spent.

As simple as it should be, the buying and selling of land will face increasingly complex challenges in the immediate future as more organized groups and government agencies seek to exert influence on how land is managed, transferred and used. Each will be passionate about their position.

Public Relations Creates Agreement

PR is the art and science of creating agreement and cooperation. It achieves this by framing the real issues involved in such a way that both sides might better work together.

Take, for example, the Clean Water Rule. Its stated purpose is to ensure that waters protected under the Clean Water Act are more precisely defined, more predictably determined, and easier for businesses and industry to understand. A visit to the EPA website shows the scope of the rule. But the comments on the regulations.gov website range from fear that individual farms will be decimated to fears that a government conspiracy aims to take over control of farming.

PR exposes the real issues in a strategic fashion in order to gain agreement, and in so doing, a solution often appears that everyone can get behind. Sometimes it’s simply a matter of reframing an issue to eliminate unproductive bias or false data. We want a clean flow of water. We also want viable farms and sustainable lands. Workable resolutions bring about mutual understanding and progress.

Public Relations is Proactive

A recent seminar by Hertz Farm Management, Inc., revealed that most farmers are over sixty-five years of age, and that forty-two percent of them plan to retire within the next five years. Many of them have yet to identify a successor. The number of farmers under the age of thirty-five is dwindling. These factors could change the characteristic of the farm market within this decade—more farms for sale by auction. A land professional who proactively prepares to take on a leadership position will be able to take advantage of shifts in the marketplace—but to do so, requires a PR strategy. Many prospective buyers are investors. They may run their own numbers and valuations, but they look for brokers with strong local savvy—someone who can connect the dots for them and has easily referenced credibility. Keeping yourself in the news, leading thought with insightful articles, and making public your good works are invaluable.

PR releases are written specifically to change perceptions, create strong affinities, forward strategies and form profitable perceptions. They are not fluff pieces full of bragging. Some common errors that show up too often, wasting valuable time and money, include:

  • Written by a committee. You’ve heard that a camel is actually a horse designed by a committee. Don’t let anything you publish sound like it came from a group. No one will read it, and no media will pick it up. Writing has to connect on a one-to-one basis. PR releases with strong points of view and a persuasive story/argument directed at the right public are pure gold.
  • Deliver a relevant message. It is the whole point, really. However, incredibly, it is often missing or overshadowed by less important details. Every PR campaign has, as its purpose, to deliver a specific message and make it stick in the minds of the public. A message is really what the reader comes away thinking, once he or she has read the release.
  • Keep it lean. Factually, you have about 1/125th of a second to grab attention, and from there, every word has to count. Short and sweet communications get read. They stand out from the ocean of verbosity online.
  • It’s not about you. Bad releases often come off as too self-serving and are rarely newsworthy. How great you are is not news, how you can serve your public is.
  • Not written for humans. Releases and web content cranked out to attract the eyes of keyword searchers with sentences built for search engine optimization don’t engage anyone, and make the reader think the writer doesn’t know what he or she is talking about.

Public Relations is Causative—It Gets Results

As a land professional, public relations technology really is your ultimate weapon. You are dealing with the most basic commodity on earth—Earth—and you are living in a time of unprecedented attention on how we manage our natural resources. Your efficient use of PR can help you get out ahead of non-optimum legislation before it happens; influence those who might otherwise oppose you; secure your business leadership; and create a stable future. These benefit everyone.

This article originally appeared in the 2016 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Karla Jo Helms, Public RelationsAbout the author: Karla Jo Helms, is the CEO and visionary behind JoTo PR. She has patterned her agency on a combination of her hard-won Public Relations experience, uncompromising high standards and exacting nationwide market research. Karla hosted two breakout sessions and a round table discussion at the 2016 National Land Conference.

real estate auction

Real Estate Auctions Just Don’t Work In My Area

Real estate auctions just don’t work in my area! Oh, how many times I have heard that over the years. I always find that statement amazing as our company has completed over 1,200 auctions in just the last five years and, as near as I can figure, in my 35-year career I have been involved in somewhere around 2,500 land auctions. Auctions have been around for more than 2,000 years. Records handed down from the ancient Greeks document auctions occurring as far back as 500 B.C. At that time, women were auctioned off as wives. Now, those of us that have been doing this a while know of landowners who might be willing to auction their wives or husbands for a well drained 160 acres of land even today.  All joking aside, if you’re trying to enhance your image as a full service real estate professional, real estate auctions should definitely be a part of your business.

What is a Real Estate Auction?

A real estate auction is an intense and accelerated real estate marketing process that involves the public sale of property through competitive bidding. The word ‘auction’ derives from the Latin word “auctus,” which means increasing. Well run, successful real estate auctions can create momentum for future business for you; increasing your income and enhancing your image as the person that can get things sold.

Is every property a good auction prospect? No and not every seller is a good auction prospect. As a real estate professional, it is your job to understand what makes a good auction property and if your seller will be a good auction prospect. I’ll talk more in detail about qualifying the seller and the property a little later in the article but, for now, let’s look at some types of real estate auctions that I have successfully used in my business and their advantages and disadvantages.

Absolute Real Estate Auctions

In an absolute auction there is no minimum bid. The property is sold to the highest bidder, regardless of price. The advantage of an absolute auction is that it attracts more buyers because they know the property is going to sell. The disadvantage is that it provides no safety net for the seller, which makes it difficult to recommend to seller client’s in some situations.

Minimum-Bid Real Estate Auctions

Sometimes called a minimum published bid auction. In this type of auction the lowest acceptable price is pre-determined by the seller and the auction firm. The minimum price is then stated on all the marketing materials. When the bidding reaches the minimum amount, the property will sell.  This is a good type of auction to use when you have a property that might have been on the market for some time and is market weary. The advantages of this auction is that it lets buyers know what the minimum price the seller is willing to take for the property, and it still creates a safety net for the seller; unlike an absolute auction. The disadvantage is that sometimes the inexperienced agent and a demanding seller may set the minimum bid too high and buyers will not be willing to bid.

Reserve Real Estate Auctions

In a reserve auction, the seller reserves the right to accept or reject the highest bid. The owner, with the advice of his agent, determines the price at which he would be willing to sell the property. This pre-determined price is not published or disclosed to the public. Sellers are not obligated to accept any other price than the pre-determined reserve price or above. The advantage to this type of auction is that it provides a safety net for the seller while still giving the real estate professional the knowledge at what price the seller is willing to let the property be sold. The disadvantage is that many prospective buyers do not want to take the time or go to the expense of investigating the property when there is no guarantee that they will receive the property even if their bid is the high bid. Over the years I have had many buyers tell me that “We don’t come to auctions to bid, we come to buy, and so, until I know that the reserve has been met, I am not going to bid.” This can be a problem with this type of auction, so, it is very important that the seller and agent establish a very realistic reserve price.

Sealed Bid Real Estate Auctions

All bids are confidential. Usually, they are submitted to the agent and then opened at a predetermined time and place. This type of auction can also be used in conjunction with the three listed above. The advantage is that if you have a buyer with a very strong personality or presence in an area and other buyers don’t want to publicly compete with him they can do so. The disadvantage is that by doing everything confidentially, some buyers may question whether there really were other competing bids. You also lose the excitement created at a public out-cry auction that often times will cause competing bidders to pay more than they thought they would for a property.

Multi-par Real Estate Auctions

This type of auction works well for large parcels that need to be offered in smaller parcels to attract the most buyers. It allows the bidder to bid on one parcel or any combination of parcels. The advantage is that it allows bidders who want only one parcel and bidders who may want several or the whole thing to compete. The disadvantage is that the buyer who wants to buy the whole parcel does not need to compete until the end. It also requires a very knowledgeable staff to keep track of bids and help potential buyers submit bids that keep them in the winning position.

There are other types of auctions that can be used, but these are the ones that work best for me. As technology has advanced, online auctions and online bidding is becoming more common. However, since I often hold auctions in areas that I don’t have even good cell phone service let alone internet connections, this type of bidding has been a problem for me. These auctions are being used very successfully in the selling of livestock and personal property, and I do see them becoming more common in the land business in the future.

What Makes a Seller a Good Candidate?

Now, let’s talk about what makes a seller a good candidate for a real estate auction. Here is what I consider the top five questions you need to ask as the real estate professional:

  1. Is there adequate equity in the property?
  2. Is the property being sold to settle an estate or divorce?
  3. Has the property ever been listed?
  4. Does the seller have realistic expectations?
  5. Is the seller familiar with the auction process?

A “yes” answer to these questions would be positive towards an auction. A “no” answer would lead to the need for additional questions to be asked before deciding on encouraging the use of an auction.

What makes a good property to auction?

As a general rule, a property that is in good condition and in a desirable location will sell successfully at an auction. Am I saying that only good, well located properties should be auctioned? Of course not! The auction method can successfully be used in the marketing of just about any type of property. It is very important though that you analyze the seller, the property and the market to see if there would be positive demand for the property.

An auction should be a well prepared and carefully planned event. It definitely is not a one man show.

If you do not plan to become an auctioneer yourself, it is very important that you choose an auction company wisely. There is a saying, “There are three types of lies used in the marketing material of a lot of companies, lies, damn lies, and statistics.” Don’t just rely on the statistics presented to you in their marketing material. It is important that you attend a few of their real estate auctions, and don’t be afraid to ask for references from past clients. The entire auction team needs to be competent and professional in both their dress and their actions. Many times you will have people attend your auctions who are considering an auction on their property in the future. A well conducted auction is a great selling tool, but if the auction is disorganized and poorly ran it will be a reflection on you and you won’t get their future business.

Auctions can be a win-win situation for all. The sellers get their property sold at an acceptable price. The buyers purchase the property at fair market value, knowing the price was determined by open, competitive bidding and you as the agent have a happy client and a successful transaction.

I can’t possibly tell you all the things you need to know about auctions in this article. If you would like to know more about auctions and the auction method of selling real estate I would encourage you to take the Real Estate Auctions course offered by the REALTORS® Land Institute. This course will give you a very good background in auctions and how to use them to market real property.

I can tell you from experience that auctions do work and that the auction tool is one you, as a real estate professional, need to have in your tool box.

This article originally appeared in the 2017 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Sam Kain, ALC, Real Estate Auctions LANDU InstructorAbout the author: Sam Kain, ALC, is the Assistant Vice President – Real Estate / National Sales Manager for Farmers National Company in Des Moines, IA. Kain served as the 2005 National President of RLI and continues to be active in the organization as a LANDU Instructor for the Real Estate Auctions course.

Top Four Considerations When Finding a Real Estate Mentor

I listened to Zig Ziglar say once “The fastest way to get what you want is to help other people get what they want.” I didn’t understand this until I had a real estate mentor for a couple years and realized what Zig said was true. Whether you are the mentor or mentee there are great benefits to the relationship that can be established.

When I was looking for a real estate mentor, four things came to mind when I started my search that I felt were important.

The first thing that was important to me was finding an individual who was successful. The success that I was after was not just in the finical category but rather a list that I constructed when planning who I wanted to surround myself with. Successful to me was an individual who worked with integrity, spent time away from work with friends and family, was healthy, financially very well off, and had a process and system to their business. I have learned you can make more money than you can count. However, if you do not have a passion or dreams to go after with that money, more is actually less.

The second thing I looked for was someone who was not going to be a “card holder,” which also meant that this individual I was after probably was not going to be a direct competitor. When someone is a direct competitor, or sees you as a threat to their business or their current way of life, they most likely will not show all the cards and truly want to help you along your road to success. My mentor choice was a couple hours away and almost never worked in my area which also made it easy when it came to referral opportunities on both sides.

The third thing I looked for was time. How much time am I willing to give to my real estate mentor and how much time is he or she going to give to me. I have a very tight structure to mentor meetings. I want this person’s knowledge and friendship, and know I need to appreciate their attention like it is gold when they offer it to me. First, I list out all my sales numbers, transaction types, goals, and executions. Second, I listen to what they have to say or ask about whatever I have documented. I usually try to keep the time with them to one hour or less and write down three to four action items that I am going to do between the meeting and the next time we meet.

The fourth thing I found important was knowledge outside of my typical “sell more farms intentions.” Once I find the money, what can I do with it so I don’t have to go find it again? How do I make it find me? The mentor I was looking for needed to be an investor with lots of tax knowledge. If you are going to make money to waste it, you can skip the making step and save yourself lots of time. I was looking for someone that had answers to investment and savings questions as well.

If I was going to find another real estate mentor, I would use a simple set of questions for myself. What do I want? When do I want it by? Who do I know or can I meet that will help me to best help myself get it? and when am I going to set up and appointment with that person? In my experience, with the right mentor for you and documented goals, there is nothing the land business cannot provide.

About the Author: Jacob Hart, ALC, is a licensed real estate broker and auctioneer in Minnesota, Iowa, and Wisconsin. His firm, High Point Realty & Auction, specializes in land sales and management of agricultural row crop and recreational ground.  He attended SDSU in Brookings, SD, then studied at the World Wide College of Auctioneering.

1031 Tax Exchanges

Section 1031 Like-Kind Exchanges: Current Threats to A Hundred Year Old Tax Tool

Almost one hundred years ago, Congress enacted Internal Revenue Code Section 1031, permitting deferral of capital gains and recapture tax on 1031 like-kind exchanges. Two primary purposes of the tax law were: 1) to avoid unfair taxation of ongoing investments in property and 2) to encourage active reinvestment. These purposes are even more relevant today in our global economy than they were in 1921. Section 1031 not only permits efficient use of capital to preserve and manage cash flow, it also encourages U.S. businesses to reinvest in their domestic operations, rather than offshoring business activity.

Impact of the Presidential Election on 1031 Like-Kind Exchanges

Fast forward ninety-five years to the 2016 Presidential election. In a surprise finish to a long and sordid year of election drama, Donald J. Trump was elected President and Republicans retained majorities in both the House and the Senate. This trifecta of power centers ratchets up the threat to Section 1031.

Mr. Trump’s refusal to disclose his tax returns during the campaign, and the disclosure of a $916 million tax loss claimed by Mr. Trump in 1995, set off a firestorm of media speculation about tax strategies that may have enabled a tax loss large enough to wipe out his income taxes for up to eighteen years. A plethora of news articles were published, listing various “special interest tax breaks” that ordinary real estate owners would think of simply as common business tax provisions, such as depreciation.  Unfortunately, the §1031 like-kind exchange was swept up in this commentary, mischaracterized as an abusive loophole used by wealthy real estate developers to repeatedly exchange properties and never pay the tax.

This is unfortunate because it is wrong on many levels.  First, Section 1031 is not a loophole; it is a legitimate tax tool used by a broad spectrum of taxpayers including individuals of modest means, farmers, ranchers, small and mid-size businesses, as well as taxpayers at the higher end of the income scale. Second, developers that build or rehab properties and then sell do not qualify for tax-deferral treatment, because their properties are considered inventory, not investment assets. Third, tax is deferred, not eliminated. After reviewing more than 1.6 million real estate transactions over an eighteen year period, a recent study concluded that in one-third of all exchanges, some tax is paid in the year of the exchange, and that 88 percent of replacement properties acquired in a §1031 exchange are actually disposed of through a taxable sale, not a subsequent like-kind exchange.  Tax is ultimately paid on the overwhelming majority of exchanged properties.

The agriculture community has the broadest use of 1031 like-kind exchanges.  Farmers and ranchers use §1031 to combine acreage, acquire higher grade land, exchange breeding livestock and upgrade farm machinery. Retiring farmers are able to exchange their most valuable asset, their farm, for other real estate without diminishing the value of their life savings.

Section 1031 also promotes conservation and environmental goals.  Grants of conservation easements can be structured as tax-deferred exchanges, facilitating programs designed to improve water quality, reduce soil erosion, sustain critical wildlife habitat, and provide recreational green-space for all Americans. Section 1031 makes the economics work so that these landowners can acquire more productive acreage in less environmentally sensitive locations.

Blueprint for 1031 Like-Kind-Exchanges Tax Reform

In June, 2016, House Ways & Means Committee Chairman Kevin Brady (R-TX) and his predecessor, Speaker of the House Paul Ryan (R-WI), announced the “Blueprint for Tax Reform,”  an ambitious Republican plan for radical simplification and complete rewrite of the tax code.

With Republican control of Congress and the White House, a comprehensive tax reform package based on the Blueprint is now expected to be fast-tracked through a process called Budget Reconciliation. Tax reform included in a budget bill that has been agreed upon by both the Senate and House could not be filibustered and would require only a simple majority to pass. The whole process could be concluded within the first few months of 2017.

The authors believe that the Blueprint will achieve three distinct goals:

  1. Create jobs and economic growth
  2. Make the tax code simpler, fairer and less burdensome
  3. Transform the IRS into a kinder, gentler, taxpayer focused agency.

The Blueprint calls for reduction of income tax rates for all taxpayers, with three brackets for individuals at 12 percent, 25 percent and 33 percent. A 25 percent rate would apply to income generated by pass-through businesses, such as partnerships, and a 20 percent rate would apply to C-corporations.  The Blueprint also calls for elimination of the Alternative Minimum Tax (“AMT”) and abolishment of the Estate Tax. Capital gains, dividends and interest income would be subject to a 50 percent exclusion, resulting in effective capital gains tax rates of just 6 percent, 12.5 percent and 16.5 percent.

The path to achieving massive simplification and rate reductions appears to be elimination of most deductions and exclusions in favor of larger standard and personal exemptions.

On the plus side, businesses would be permitted to claim an immediate expense deduction of 100 percent of the cost of newly acquired tangible and intangible business investments, including real estate improvements, but not land. Unlimited net operating losses could be carried forward indefinitely. The flip side is that taxpayers would lose the expense deduction for interest paid on business debt.

Section 1031 and the Blueprint

The Blueprint is silent as to 1031 Like-Kind Exchanges but many of the details are still unknown. There is concern that the tax writers may assume that with lowered rates and full expensing, §1031 would be unnecessary.

It is imperative that 1031 Like-Kind Exchanges be preserved for exchanges of land and other assets that are not covered by immediate expensing. Of particular concern to real estate owners is the potential combined whammy of the inability to expense land value with the elimination of the business interest expense deduction. Given that land values represent approximately 30 percent of the value of commercial and multi-family residential improved properties, and up to 100 percent of agricultural land investments, landowners would be particularly disadvantaged if they had neither the option of a tax deferred exchange nor expense deductions for land acquisition and interest on related debt.

Recent studies on the economic impact of repealing 1031 Like-Kind Exchanges have concluded that without a tax-deferral mechanism, a lock-in effect occurs.  The immediate recognition of a gain upon the disposition of property would impair cash flow and could make it uneconomical to replace that asset.  If property owners are faced with reducing the value of their investments and life savings through capital gains or recapture tax, even with lower rates, they will likely hold onto these properties longer. This leads to reduced transactional activity, slowed rate of investment, and reduced property values. Section 1031 removes the lock-in effect, and permits taxpayers to make good business decisions without being impeded by negative tax consequences.

Proposals to Limit 1031 Like-Kind Exchanges

For the past several years, the Treasury’s annual proposed budgets have included a proposal to limit annual gain deferral under 1031 Like-Kind Exchanges to $1 million per taxpayer and to disqualify artwork and collectibles from tax-deferral treatment.  This Democratic proposal is unlikely to go anywhere in a Republican controlled Congress, but it remains an idea that could be picked up as a “pay for.”

Such a limitation would be particularly harmful to the economic stream generated by like-kind exchanges of commercial real estate, agricultural land and other assets. The value of these assets generates substantial gains. Transfers of large commercial and agricultural properties generate economic activity and taxable revenue for brokers, appraisers, surveyors, lenders, inspectors, contractors, attorneys, accountants, title and property / casualty insurers, architects, exchange facilitators and more. High volume equipment exchanges provide inventories of affordable used assets for small businesses and taxpayers of modest means. Turnover is key to all of this economic activity.

Summary

A broad coalition of organizations, including the REALTORS® Land Institute, the National Association of REALTORS®, and the Federation of Exchange Accommodators are working to make our policymakers aware that 1031 Like-Kind Exchanges needs to remain in the tax code. Like-kind exchanges stimulate economic activity in the United States – property improvements that benefit communities, increase property values, and generate jobs ancillary to the exchange transactions. Recent economic impact studies have quantified that either eliminating or restricting like-kind exchanges would increase the cost of capital, slow the rate of investment, lower property values and reduce transactional activity, resulting in economic contraction of up to $13.1 billion annually.

You can make your voice heard by sending a letter to your legislators, letting them know how important §1031 is to you and your business here or access information to help educate your members of congress.

This article originally appeared in the 2017 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Suzanne BakerAbout the author: Suzanne Baker is Executive Vice President and General Counsel of Investment Property Exchange Services, Inc.  She also Co-Chairs the Government Affairs Committee of the Federation of Exchange Accommodators, and serves on its Board of Directors.

Four Reasons You Should Never Buy Land Without An ALC

Let’s face it, buying or selling land real estate can be terrifying. There have been countless times I have noticed visible anxiety on people as they contemplate a transaction. We live in an era where one “bad apple” can spoil the whole bunch.  The news of bad real estate experiences travels fast. The value an Accredited Land Consultant (ALC) can bring when purchasing or selling a property is becoming increasingly more substantial. There are many reasons to never buy land without an ALC, but let’s focus on four.

Trust

This is kind of like hitting a baseball on a tee, but it can’t be said enough. Society tends to hear the horror stories and it can be hard for people to feel a sense of trust from a real estate agent. Right or wrong, sometimes us agents get lumped into the over-generalized stigma of used car salesmen and attorneys (comment not intended for the fantastic attorneys with whom I work!). There are far more honorable agents than bad ones, and that is distinctly the case within the REALTORS® Land Institute.  Someone who has taken the time to obtain the ALC designation learns through education and experience that you are often only as good as your reputation. The backbone of becoming an ALC is defining yourself as a trusted professional with high moral character.

Skill

When it comes to selling land, I am absolutely convinced that ALCs are the best in the business.  For starters, you can only become a designated ALC after you have proven yourself in the field.  ALCs are given countless opportunities to hone their craft in negotiations and property presentation.  Through the National Land Conference, Summer Education Week, Online courses, Webinars, ALC to ALC teleconferences and the top-notch staff at the national office, ALCs are given the tools to grow.  A rookie coming into the major leagues for the first time doesn’t stop practicing, and likewise an ALC doesn’t rest on the three letters of the designation.  We are all a work in progress who uses the tools available to get better every day.

Knowledge

I am not a self-proclaimed intellectual genius by a long shot, but I can tell a client without a shadow of a doubt that I am smarter in my field and better equipped because of my ongoing ALC status.  The diversity of knowledge I have obtained through my involvement with the REALTORS® Land Institute is impressive to be honest.  That statement has nothing to do with my IQ or ability to retain information; it has everything to do with what is offered to each and every ALC. What about your competitor at John Doe Reality down the street whose staff hasn’t pursued the ALC and LANDU’s education?  Do they know about Delaware Statutory Trusts, 1033 involuntary conversion exchanges, Timber REITS, current legislation challenges, natural resource negotiations, etc., etc.?  I am confident that an ALC is much better-rounded in knowledge than your typical non-ALC agent.  I don’t see any avenue that would lead me to achieving this vast knowledge without being an ALC.

Connections

When I attended the 2011 National Land Conference in Nashville, I was green as grass and very new to the real estate game.  I remember hearing people talk about the networking and being able to swing all of these deals because of the platform being an ALC provided them.  I have to be honest, that part of me wanted to think these comments were “fluff” or “humble bragging”.  Time and experience corrected me.  Just this year, I was able to help close on one of the largest deals I’ve had the privilege of working on.  The ONLY reason it happened is because of a friendship through RLI.  The large farm wasn’t even being advertised, but my sellers had mentioned that if the right investor came along with a lease back possibility, they would listen.  I made one call.  It was a winding road from there, but it got done and only because of RLI and our bond as ALCs.  Similarly, I have a client moving out to Wyoming.  I have been to Wyoming a couple times, but my knowledge of Wyoming begins and ends with knowing it is out West and is gorgeous. With that said, I can confidently refer him to several ALCs from the Wyoming chapter.  This is a people business. Knowing like-minded professionals throughout the country is a huge asset that not many agents can provide.

Do You Need An Accredited Land Consultant to buy land?

These reasons all sound so simple and in some ways they are.  But, you could delve further into each of these reasons and find sub categories (and sub categories of those sub categories!) on how valuable an ALC can be in this industry.  I shudder to think about how my quality of service would be if I hadn’t made the decision to give it my all within the REALTORS® Land Institute. Maybe I would be oblivious to my shortcomings, but knowing what I know now, I can’t possibly recommend someone buy a property without the help of an ALC.

Contributor Luke Worrell, ALC, Worrell Land Services
Luke Worrell, ALC, is a Broker and Accredited Farm Manager in Jacksonville, IL. He specializes in agricultural real estate and land management in west central Illinois. Luke enjoys all things sports and traveling. He resides in Springfield, IL with his wife Allison and two sons Kale and Benson.

Top Reasons to Invest in Buying Rural Homes & Properties

This article originally appeared in the 2017 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

As fall and winter are around us, I can think of nothing better than to drive out in the open country side and appreciate the views, the rolling pastures and the calm. You may want to stop and smell the fresh air and the crispness as it surrounds you. No vehicles except for an occasional farm truck or tractor. This is the country. For me, this is the land that lies between Houston and Austin and San Antonio.

Our offices are constantly asked about moving to the country. Their reasoning is the return to their hometowns, different lifestyle, out of the hustle and bustle, maybe the love of the land. But it is also investment. This is all the land we have. There cannot be any more manufactured for growth, enjoyment, recreation.

Our location is rural from towns of less than 100 to those of 15,000 or more. But the air is cleaner, fresher, the small town lifestyle of festivals, fiestas, parades and other fun and unique gifts of small town living abounds.

Rural Land Real Estate

So what is rural living? Obviously the population is much less. Our houses are spaced more widely apart. Even in town lots are larger. Go outside city limits and tract size grows by leaps and bounds. There is room for grazing animals, large pieces of agricultural land and greenery. We live in nature, which has a very positive effect on our health. Pollution levels are lower due to fewer vehicles and less industry. Our technology is catching up, and many people in rural areas have short to no commutes and work shorter work weeks. You have privacy, it is peaceful, and there is tradition.

Groceries, pharmacies, and medical facilities are more accessible than ever. Hard working people, who still care about what they do, provide services equal to or better than those found in urban areas. People hold the door open and ladies or the elderly are first to pass through. Politeness and manners still matter more than in most urban areas and are always noticed. It is safer, but as the larger cities grow out towards our country towns, the reality is you still need to take heed of what is around you. However, being in the country, you will also find many people carry handguns and you will still see pickups with a gun rack–a natural deterrent in the country.

The problem arises when the property is more expensive than expected, when a buyer thinks they are aware of the costs of building, upkeep and hard work it is to own a country property. This is no different from any other area of the country. Most of all, they think fifty acres is their goal but have no idea what it means. They get out on property and they are shocked to see how big it is, quickly twenty acres or ten acres is much more in their plan. Naturally, there are still large parcels available for the farmer or rancher want-to-bes. That is part of what we do in the farm and ranch business. It is essential that we as land specialists help the buyer with what purchasing a farm or ranch really means.

Property for $5,000 to $100,000 per acre and all in-between are possible to locate. But where do you want to be? Are you going to live permanently on the property or is it a weekend, future retirement property. Our property in this triangle is not inexpensive. That being said, I just sold a half-acre lot in a very desirable in town subdivision for $200,000!

A question remains: How are we going to be proactive in rural areas and not hang on to the success of the past? How do we encourage young people to want to be involved in rural farming if you don’t have a proactive message? You are competing against the world and opportunities everywhere in more urban areas. Young people need opportunity to continue to run the family farm or ranch or to stay in their hometowns and not feel they cannot make a living in small town America.

Rural America encompasses nearly seventy-five percent of the land area of the United States. It only accounts for fifteen percent of the country’s population. The census bureau classifies rural areas as open country and settlements with fewer than 2,500 residents.

Industry and college educations have pulled our young citizens into urban areas where they marry and grow their families. Most of them do not return to their rural roots. However, as we see in our area of Texas, more young families are coming back, not in droves but in steady thoughtful ways. Family roots, family farms and ranches and a slower pace. We still need to find a way to make rural America enticing enough for those in their twenties and thirties and forties to stay, work and raise their family.

How do we do that? This area for certain is seeing growth due to our most desirable location in that magical triangle spoken of before. An hour to Houston, 1.5 hours to Austin and 2.5 hours to San Antonio makes this a great place to be. Our economy has turned to tourism as a major factor to entice the public here. Fifty years ago it was agriculture mostly driving the economics. New companies are eyeing our area due to the location, as our Economic Development and Chamber of Commerce work diligently to increase work places and jobs.

Second home ownership is driven by amenities and age. Let’s get the children back to our family roots and be closer to grandparents. Let’s buy a weekend place so we can breathe, relax and socialize in a different way. If our area is 60 percent second homes, that is a huge population to get engaged when owners only come to the country maybe twice a month, if that.

farm house

Another point of rural living is scientific. It is confirmed what every urbanite has long suspected, life in the city is more stressful. Those people who are born and raised in urban areas are more likely to suffer from anxiety, depression and schizophrenia than those brought up in the countryside. Studies show, that exposure to green space reduces stress, boosts health and makes us less vulnerable to depression. This information comes from a study of the brains of volunteers from urban and rural areas.

Pollution, toxins, or noise could all contribute, however, other studies show access to green space soothes frayed nerves and improves wellbeing. Further studies show, that those with access to the county side are less likely to have heart disease or strokes.

Is this what contributes to the rise in retired people moving to our area? I say so, but also our area is culturally diverse. Orchestra performances, plays with professional actors, restoration of old buildings, shops with high end goods, restaurants and other venues for concerts and music of all types as well as restaurants with more refined menus are popping up all over. The rural arts are benefiting all age groups as spectator or participants. Renovations to existing buildings, are giving them the ability to support more activities for young people drive the younger residents to stay and enjoy events and to invite their friends from the big cities. If we can culturally capture their interest, it is much better as they experience the benefits for all citizens. Years ago I would hear people say there was nothing to do here…. Not anymore!

Also, a small community lets you participate in helping others for fundraising to save a theater, museum, parks, libraries and hospitals. A great fear for country towns is not only the loss of the countryside itself but also the way of life and the community involvement. General concern and care of neighbors and generations of tradition is the focus. We take care of each other and work together to bring a new soccer field, sports complex and other fights for the community.

One thing about living in the country is that when the power goes out after a major storm, it could be days or weeks before power is restored. If a piece of equipment breaks down, it may take weeks to repair and this can mean trouble when it is essential to the running of your farm, ranch or small property. There are no push mowers on properties with twenty acres or more! You become self-sufficient because you have to be. You do a lot more hands-on repairs that you never dreamt of needing to do. It’s an exercise in patience, willingness to learn, taking turns and helping neighbors. In that way, you earn a pat on the back, a handshake, a beer on the porch and know that the person you just helped get a job done is a person you can rely on to assist you, too. Neighbors are key in the country. It is a pace of life you learn to live with.

That is not to say that being part of the country community can take some getting used to. From uninvited visitors, human and wildlife, to the internet not working, cell phones dropping calls in low areas, septic tanks instead of sewers, no streetlights or pavement, it is a far cry from many newcomers previous urban lifestyles.

I hope people will come to visit and stay a little longer than for an ice cream cone or a beer. I hope people come to experience our way of life, the more they can enjoy, appreciate and support it. Our future lies in being able to deliver sustainable communities with thriving local economies made for and by the people who live there.

Cathy Cole, ALCAbout the author: Cathy Cole, ALC, Owner/CEO of Heritage Texas Country Properties, the largest real estate company in south central Texas. She served as the Chair of the REALTORS® Land Institute’s 2016 Government Affairs Committee and as President of the Texas Chapter of RLI. Cathy serves on the Nominating Committee for Texas Association of REALTORS® and is currently a member of their Land Use Sub-Committee. She is also a founding member of the Texas Land Brokers Network.

The Risk of Buying Land Without Using a Land Real Estate Professional

Why do we buy land?  We buy land for:

  • Use as an owner/operator
  • Recreation
  • Investment
  • 1031 exchange
  • Development
  • A legacy
  • Retirement…..

How many types of land are there?

  • Agricultural – farms and ranches
  • Confinement operations: hog, dairy, poultry
  • Agribusiness uses: elevators, seed processing plants, etc.
  • Timber
  • Orchards/vineyards (permanent plantings)
  • Hunting/recreational
  • Development
  • Land-in transition
  • Commercial
  • Residential
  • …the list is lengthy!

Land real estateHow, then, do you make an educated decision in the acquisition or disposition of land?  How do reach your land goals and objectives?  Do you know where to start and the questions to ask?

When you work with a qualified land real estate professional, such as an Accredited Land Consultant (ALC), the land professional can assist you in reaching your goals and objectives through:

  • Asking the right questions to determine what those goals & objectives are
  • Once identified, to provide thoughtful analysis and innovative solutions to help you reach those goals
  • Presenting you with appropriate information on current economic conditions at the local, regional, national and global levels; interest rate trends; commodity prices and effect on land values/rents/sale prices; as well as updates on legislative issues that affect your land
  • Discussions to determine if you should/could do a 1031 exchange, DST, or other tax deferment with the sale proceeds based on your goals/objectives, how large a tax consequence there will be…
  • Determining the highest and best use of your land
  • Handling mineral or water rights issues using the proper legal avenues and guidelines
  • Marketing your property appropriately including through the REALTORS® Land Institute’s Land Connections listing site, Lands-of-America affiliation, as well as marketing at the state and national meeting marketing sessions.
  • … again, the list is lengthy due to the depth and breadth of issues for any tract of land.

Minimize the risk with your largest investment by working with an Accredited Land Consultant (ALC) who can provide the connections, education, experience, and expertise to guide you through the changing, complex world of today’s land market. Before you consider buying or selling a tract of land real estate, make sure to Find a Land Consultant to ensure you get the best representation possible.

Terri Jensen, ALC land real estateAbout the author: Terri Jensen, ALC, was the 2015 National RLI President. She is currently the VP Real Estate/Appraisal Operations at Upper Midwest Management Corporation. She is a licensed REALTOR®/Broker in Minnesota and Nebraska as well as a licensed appraiser and auctioneer in Minnesota.