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Wildlife Management 101

This article on wildlife management was originally published in the Summer 2016 Terra Firma Magazine.

When learning that RLI had an interest in publishing an article on wildlife management, I have to admit, I was more than hesitant.  My reservations didn’t stem from a “lack of knowledge”, my reservations were derived from “the knowledge I have,” and the criticism I’m aware it may attract. Success doesn’t come easy, nor without trial and error or a failure or two, and sometimes it doesn’t fit within a traditionally accepted box.

Wildlife management consists of so many factors, that the series of books, videos and blogs about the subject are literally overwhelming.  Politics, legislation, social perceptions and opinions, environment, mathematics, chemistry, biology, regions, species, habitat and disease are all just a few on a lengthy list of complicated factors that affect managing wildlife.

In a nutshell, wildlife management is ultimately about conservation; the guardianship and best practices of safekeeping our greatest natural wild resources for future generations.

wildlife forest

It also provides an extraordinary enjoyment through a passionate relationship between land and property owners, and justifiably continues to be a motivating factor for folks who purchase land!

I’m extremely fortunate to own, manage and control a respectable tract of leased and deeded ground in the Pacific Northwest.  Taken with a laugh, my personal experience, hasn’t been learned easily, nor done inexpensively via traditional venues.  Private land wildlife management practices are commonly dominated by Whitetail deer, a little waterfowl and an occasional fish or upland bird topic.

To be candid, the folks in the Midwest and down South are hands down, far ahead of the curve in regards to wildlife management.  Whitetail deer are routinely the primary topic of choice.  Justifiably, the Whitetail deer geographically dominate North America by the location they reside.  Non-profit and traditional organizations such as the Quality Deer Management Association (QDMA) and Tecomate have done a fantastic job of promoting and making wildlife management materials available.  However, I humbly believe, the Whitetail species is a much easier species to manage than many others, and another reason why I chose to write on this subject.

I know, I know… I’m sure I’ll never live that comment down (laugh). Okay, how about this, because there’s more information available on Whitetail wildlife management, justifiably because it’s the dominate non-migratory game in North America, I feel they’re easier to manage and understand (and should be) than other species with less availability and a broader migration range… and they’re easier to harvest than blacktail deer… KIDDING!… sheez… relax! Just trying to keep ya’ll interested in reading!?

In the early 2000s, after reading an in depth QDMA book, frequenting blogs, watching videos and living the lifestyle we sell, I made the commitment to start managing wildlife on our family’s ground about forty minutes outside of town.  Easy right? Just install a few food plots and feeders, develop water sources (if they’re not already there) and voila, the wild game will come flocking in!  Yeah? Not so much!  As with many topics in life, a person can read all the books they can find, but real life experiences, both good and bad, are the world’s best teachers.  In general, the basics are the same: provide a superior food source, water, and lush habitat. Doing this, is without question, enticing to wildlife.  The primary difference between my management practices and traditional wildlife management practices are dictated by my region.

food plot wildlife management

The wildlife management industry started to flourish in the early 2000s. Game cameras were few and a new “hot item” and feeders were on hunting shows everywhere – plus, they were all over the internet.  Ever hear the saying, “Never test the depth of a river with both feet first”? That’s good advice! My original thought process was methodical, and focused on the generals; to enhance food, water and habitat within drainages that naturally lent themselves.  Logically, it made sense to research and purchase available products that have worked so well for others?  So I was off… Feeders! Cameras! Food plots! …and all the associated equipment!

Little did I know that I was in for a completely different education, and all the equipment would eventually be destroyed with minimal results of what I was trying to manage–big Blacktail deer, elk and turkey.  The failing factor wasn’t a lack of genetics, nor wildlife population.  It boiled down to my regional location, and the lack of experience managing wildlife in this location.  Our terrain isn’t flat to rolling like the South or Midwest, where flatter open plains and pockets of creek bottom thickets monopolize regions.  It’s the opposite where I manage wildlife.  We have timber covered mountains, drainages and ridges as far as one can see; small pockets of open meadows monopolizing the terrain in hopes to get a glimpse of something.  That situation also positions the ultimate unmanageable factor; multiple species of wildlife, including and not limited to, abundant predators!  Most importantly, learning how and where those species habituate throughout the year and how to best manage my terrain and climate was a game changer for me.

predator

Being new and few, the first few game cameras I purchased were “top of the line,” nothing but the best… HA! I’ve never been accused of catching on too quickly. After countless dollars in cameras being destroyed, no matter how well I concealed them, a light came on in my head: never set a trail camera after eating without washing and deodorizing your hands in Black Bear country! Their eyesight is poor in comparison to their smell and hearing. Regardless of what slight scent is on my hands when I set cameras, they’ll wind it–and evidently, bears think trail cams taste like chicken!

 

black bearTraditional feeders? UHG! My three-hundred pound metal feeders were knocked over, ripped open and crumpled up like cheap little tin cans. It’s unbelievable how strong Black Bear are! So, I improvised by designing and installing “Bear-proof feeders”. Ah-ha–Gotcha! Only to learn that feeders, if used too consistently, work like a dinner bell for our abundant mountain lion and predator populations.  Luckily, I check my cameras frequently, and DID catch on quickly BEFORE witnessing any lion kills on camera. Embarrassing as it is, at first, I was like, “hey, there’s another mountain lion on camera? I didn’t know they’d come into feeders also after they go off?” Then, a Wait!? Ruh-Row-Shaggy! light bulb came on.

So I now only use the feeders, installed in different drainages, sporadically throughout times of the day and week and primarily during the winter when natural feed and food plots sources are dormant from deep freezes and snow.

Late fall, winter and into the spring are the most crucial times of year for wildlife management in my opinion. The does are pregnant and bucks are either rutting or later shedding their antlers.  It’s truly the best time to provide a solid protein source, vitamins and minerals to the males for recovery, during the rut and horn growth before they migrate to higher elevations. While essential nutrients to impregnated momma’s throughout the birthing and nursing process is pertinent.

All that being said, the most productive source of wildlife management that I’ve consistently witnessed by all types of wildlife are my licks.  The food plots are nice, but there are a lot of natural competitive sources for deer and elk to browse in this area. Ours are primarily frequented by does and younger bucks while the mature ones are at a higher ground, only passing through.

My licks aren’t the blocked type purchased and shipped online.  Those don’t last long around here.  Bear will pick those up and even haul them off like little tennis balls in their mouths or sometimes eat them in one sitting like candy.  I use a formula I found online years ago, posted on a blog by a retired biology teacher out of Missouri, called “Mo’s Lick”.  I’d sure like to reconnect with that gentleman again to thank him and follow up.

He’d posted a detailed story about only being able to afford a five-acre tract of creek bottom ground to lease and hunt on.  He knew there were good genetics in that region, but relying on those deer to reside within his creek bottom without purpose was an unreasonable hope.  Similar to our mountainous country, his tillable food plot ground was limited by access and terrain.  So, in turn, he started his own biology project using licks.  His first deer harvested, and a common size in that thicket scored in the one-hundred and twenty inches, if I recall.  By the fifth year, he’d harvested a one-hundred and eighty-six inch Whitetail!  He never concluded whether he’d thought the original smaller deer were just young, underdeveloped and grew into mature bucks being under nourished prior to his lick supply or if the previously mentioned mature, good genetic bucks from the region frequented and resided his creek bottom more often because of the licks.  His only conclusion was, he’d leased the ground for several years prior, constantly scouting smaller bucks.

After several years of consistently using the “Mo’s Lick” formula, the average buck’s antler size changed dramatically and more consistently within that thicket.  I have used Mo’s lick since, and found great results.  I have pictures of all species using Mo’s Lick: squirrel, fox, turkey, elk, deer and more.  However, once again, our regional terrain plays a big role in consistency.  We don’t routinely see the same bucks over and over like many Whitetail managers.  When fawns hit the ground and the weather starts warming, the Blacktail deer bachelor up and head for higher elevations where it’s cooler–typical males, right? Babies are still young and can’t travel the distances or terrain that mature bucks go each summer.

deer

In turn, I know what I call “my girls” by name when I see them on camera as spring progresses.  I keep a fawn count, who’s had how many, a buck to doe ratio and so forth, while watching them grow up, or disappear to predators–when Mama appears on camera at the lick or food plot alone later in the year.  By the time the babies are strong enough to make the migration to higher ground, fall is upon us again, days get cooler and the need to migrate higher becomes less and less desirable.

As winter storms blow in and the rut approaches, the mature bucks start heading to lower ground.  Depending on which direction the storms blow in and the amount of snow that falls on which facing slope, this can dictate the drainage taken by those mature bucks over previous years. (Bear in mind, our ground isn’t flat, a grid of one-hundred and sixty acres can be three-hundred and twenty plus acres of surface ground, it’s just not flattened out on grid view). The younger bucks stay local for a couple years. Then, start to migrate each spring with the other mature bucks as they mature.  Every year we get mature bucks on camera that we’ve never seen before, and likely may never see again.

Cattle have been known to do similar.  Oregon is an open range state.  We’ve often had cattle in our drainage, with tags belonging to a rancher whose range is three drainages over.  As feed thins, they start heading down the drainage they’re in.  Oregon is extremely diverse.  I’m aware of an area, ten miles away as the crow flies, that buddies of mine manage who find the same deer sheds every year…?  Those deer also migrate and only frequent the area in late fall and shed in winter.  The difference is that there’s really only one major drainage option, a highway and a river that I believe naturally funnel those deer back every year.

For me, the wildlife management learning curve has been an expensive and dedicated commitment worth every second and cent spent.  My advice is that there is no perfect solution or magic wand in managing wildlife.  If there was, the book would have been written and no more needed. Consider your terrain, species and the final results you’re seeking to obtain, before buying a bunch of things that have worked well in other regions and species.  Don’t get me wrong, I’ve used, continue to use and try new wildlife management products all the time–because they work! However, keep in mind that each area possesses different circumstances.  Talk to others in your region that have been successful. What’s worked for my region, may not work for your region.  Most of all get out and do it, enjoy the process. Management practices can change, but the goal should always stay the same.  Best practices of safekeeping for our greatest natural wild resources, for future generations.

Mo’s Lick Recipe

deer lick recipe

(1) 50lb bag of Di-calcium phosphate (21% or more)
(1) 50lb bag of Trace Mineral Lick (fine)
(1) 50lb bag of Rock Salt (fine)

Dig a hole near a year near a water source, pour and mix ingredients well. I’ve added Selenium to the mix in higher elevations and received a good response from Elk also.

 

 

Thank you for taking the time to read my article and best of luck!

About the author: Garrett Zoller, ALC, is the Managing Principal Broker of Record, and a founder of both LandAndWildlife.com and LandLeader. Garrett’s hands-on experience in the development of real estate, with strength in rural and commercial properties, administers an expert knowledge of recreational, agricultural and timber real estate.

 

How To Increase The Equity Value Of Your Recreational Land

My days are spent working with buyers and sellers of recreational and tillable land. So when I was approached about writing an article about recreational land it was a no-brainer. My fellow Minnesota agents and I do seminars every year at our state’s Deer Classic and the topic is “Land Buying & Selling 101”. During each seminar, we do a Q&A and we typically find many of the questions are about building equity in a current property or future property.  Although I live and work in MN, this information will hold true for many recreational properties and almost any place whitetail deer call home.

In my opinion, the cheapest and most effective thing you can do to grow equity and value to your property is purchasing some trail cameras. Buyers are always asking me to see trail camera photos from the property for sale.  When we check the analytics of our listings, it is proven that a listing with good trail camera photos vastly outperforms a listing without them. In addition, I personally advise my new buyers to go buy a thumb drive and save trail camera photos from day one, even if they have no plans of ever selling. It is great to be able to show a buyer 2-10 years of trail camera photos and allow them to see the quality and quantities of deer using the property.

The next low cost and high return item would be “road appeal”.  Much like curb appeal on a house, that first impression of a property will have a lasting effect. Start at the entrance of property; even if your property is not completely fenced, installing a simple yet sturdy gate that is lockable with a chain and adding a “no trespassing” sign, will add appeal for a buyer.  This low-cost item gives buyers a good sense of security and sets the tone of what they are going to see when viewing your property.  If you have spent any time on a farm you know there is a good chance of coming across an old junk site.  Removing these items can be time-consuming but in the long run, it will be build value in your property and make it more marketable when it comes time to sell. Clean up any trails you have on the property so when touring the property it is easy to navigate.

A property that is mainly used for whitetail deer hunting in a managed neighborhood is highly sought after. Creating a so-called managed neighborhood will take a great deal of work as well as time but will give you an abundant return.  I’m not going to discuss how a so-called management group should be run as that is an entire article in itself.  Ideally, you want your property to be in the center of this management group. Reaching out to all the neighboring landowners of your property is where you start.  Once you get them on board with a management plan ask them to reach out to their neighbors and so on and eventually you will have a large area of landowners all working towards the same management goals.  Sounds easy, but I can tell you it is not. This will take a lot of time and you will most likely have some people that will not want to participate and that is ok. The goal is to try to get as many on board as possible and work on growing the group.  This typically will take years, but keep in mind the value you are adding to your property.

The next few items are more labor-intensive and cost more money to complete and maintain. If you watch any hunting show or spend any time around an avid hunter you know that food plots are a huge factor when it comes to hunting whitetail deer these days. Just remember when it comes to food plots bigger isn’t always better.  Making sure you locate the food plot to maximize the hunting and access on the property is more important than the size of the plot. Having several well-placed food plots and keeping them maintained every year will be not only be a great increase in value, it will also help make memories when hunting season comes around.  In my opinion even more important than a food plot is water on a property. Not all properties will have flowing water on them.  Even those that do may not have the water in ideal locations for hunting. If your property is lacking a water source I personally would add this feature before I would add a food plot.  This can be as extravagant as hiring an excavator to install a pond in a location for natural run off to hold water or as simple as taking a 55-gallon drum and cutting it in half and digging it in the ground.  I personally use a product made by a local company that holds 100 gallons of water and has a trough for the water to sit in and allows all kinds of wildlife to drink from it. I have 5 of these on my property and they are all located in great travel and staging areas I hunt. I do have to fill them a few times a year but since they are mobile they give me the option to relocate them.  Since they are portable I can make location changes based off of my hunting observations. I can’t do that with a pond made by an excavator.

A good trail network will allow you access in and around a property.  The extent of the trail network needed will depend on the topography and makeup of the land. I personally deal with the rolling bluffs of Southeast Minnesota so creating access from the bottom to the top is almost a must if you want to get the most for your property.  Most landowners do not own excavating equipment so I highly suggest asking around to find out who others have worked within the area to do such projects. It is in your best interest to do your research and get references prior to hiring someone.  A quality bulldozer operator can accomplish a lot in a short time. Most first time buyers are nervous about what it will cost to create a good trail network.  I have even encouraged sellers in the past to invest in a trail network as it I knew it would make their property more marketable and they would see the return on their investment.

Hunters from Minnesota we are used to hunting in extremely cold weather.  In my opinion, the old saying “you’re not a real hunter if you sit inside a blind” has gone out the window in the last decade. Box blinds are here to stay and the more hunters that hunt out of them the more buyers want them on their property.  As an example, our state’s Deer Classic event this year included at least 7 different manufacturers of enclosed deer stands. If a manufactured stand is not in your budget you can also build it out of lumber, just make sure it is clean, sturdy and safe. From there adding quality sturdy ladder or hang-on stands will also increase your property value. Stands are something every hunter wants and if you have created a great location for them and they’re of good quality you will always get your money back out of them plus you get to enjoy them while you own the property.

“Has this property been surveyed?” is almost always asked when I’m showing a potential buyer a property.  In my territory, the land is not flat and often times you can’t see from one corner to another.  Spending the money to hire a professional surveyor to mark your property boundary corners as well as points between the corners will make a buyer more comfortable when purchasing your property.  It also allows you to easily establish or maintain your property line. This can also be helpful when doing any logging, adding a trial system, food plots, water locations or even hanging stands and posting your property.  With anything, I would suggest getting a few quotes on this project and asking around on who someone would recommend. If you are not in a time crunch to get this done I would recommend asking the surveyors what time of the year they are least busy as they may give you a better price during their slow time versus their peak time. In my area, the downtime is during the winter.

These next three improvements are much more expensive but can add some serious value to your property. They are not going to be good for all buyers and will require more thought than the previous improvements I have mentioned.  These three items, in no particular order, are 1) adding a driveway, 2) bringing in power and 3) drilling a well.  A couple questions you need to ask yourself or your group of owners are “Will this improvement be something almost all future owners of this property see value in?” and “Could it be any cheaper to do it later versus now?” Adding a driveway that is easy to travel won’t get cheaper with time and will always make the property more enjoyable and user-friendly.  Bringing power to the property will also be worth your investment. This can become costly if you are having the power brought in a significant distance.  However, I have talked with clients that had power brought to their property for almost free and I have met clients where it was going to cost them $10,000 or more to get power to their property. So this one can get tricky, if the cost to bring power to the property is extremely high and you are not going to use it for a length of time it might not be an investment you will want to add to your property. The last of the three items, drilling a well can vary in cost all over the country. Personally, I know the cost is pretty significant in Southeast Minnesota.  However, when I tell a buyer there is a well on the property they all understand what cost went into it and they see the value. I do not see the cost of these three items getting any cheaper by waiting.

Now we are going to talk about the biggest decision that can add value but at the same time affect the marketability to the greatest number of future buyers of your property.  I get people all the time that ask if they will get their money back out of a cabin if they built one.  My advice is to keep it simple, yet clean and functional, don’t get elaborate or install high-end finishes if you want to make sure you get your money back out of it. It is best not to overbuild as it will limit future potential buyers. As soon as you make a cabin or house addition to a property you immediately take some future buyers off the table. The goal is to not eliminate too many of the remaining buyers by building something that is either too personal or elaborate that it would shrink your potential buyer pool so small you will not see your return on your investment.  Don’t get me wrong if you want to build a custom log home on your reactional land and you enjoy it for 20+ years, go for it. You will get your return out of the use and enjoyment.  If you have a short-term plan for the property then stick to something simple.

As you can see there are many different ways you can increase the equity in your recreational land. These improvements may take years or even decades and can vary drastically in cost but they are all great ways to increase the equity value of your property while enjoying it.  I will leave you with the one thing I always ask while giving my seminars. “In a show of hands how many of you have ever made any memories on your 401k or stocks or bonds?” No one has ever raised their hands, but I can promise you every single landowner in America has made memories on a piece of land they have invested in. Owning land is one of the best financial investments you can make in your lifetime and the memories you make on it while you own it will be your favorite return on investment.

About the Author: Bob Stalberger, ALC is the Land Specialist in Southeast MN for Whitetail Properties Real Estate. Stalberger is the Realtors Land Institute Minnesota Chapter President and a recipient of the Apex Awards 2017 Top Twenty Producer. Bob specializes in selling hunting and farmland and has been an ALC since 2016.

Shift Your Brokerage into High Gear

This piece was originally featured in the Summer 2018 edition of Terra Firma Magazine.

Five years ago, I was a hobby farmer in Western Ohio, on the prowl for a new career. After 19 years in the automotive industry, working my way up from lot porter to salesman to GM and president of a dealer group, I was ready for a change.

I was eager to apply my background and experience in consumer marketing to a new line of work, one that preferably highlighted my passion for land. Should I get a broker’s license or go to work for a management company or call up a trust department to see if they had any openings? I honestly had no idea how to proceed. Fortunately, my wife, Jessica, made a brilliant suggestion: Call the publisher of that magazine I was always raving about, and see what he had to say. You probably already have an inkling of how things turned out.

I lobbed an email to The Land Report publisher Eddie Lee Rider, and that very day I got a call back. The sales guy in me immediately liked this. Not five minutes into our initial conversation, we both sensed an opportunity. My gut told me to sign on with the Magazine of the American Landowner. After a heart-to-heart with Jessica, that’s exactly what I did.

Almost immediately, I recognized that the tenets of marketing and branding that build successful dealer groups also applied to the successful marketing of land. I guarantee the lessons I learned as I worked my way up from the mailroom to the showroom and finally the boardroom can better your book of business.

 Consistency is Key

One of the principle tenets of automotive marketing is that reach without frequency equals wasted money. Eddie Lee hammered home this very same point to me. “If someone wants to buy a one-time ad, tell them not to waste their money,” he says. “Selling land isn’t about when a broker is ready to market a listing. It’s about when a buyer or a seller is ready to pull the trigger.”

“Consistency is key” is especially true when marketing land and your services. A well-crafted branding message, delivered consistently, creates top-of-mind name recall. In my humble opinion, this could well be the factor that generates that all-important phone call from a potential buyer or a motivated seller.

 There is No Off-Season

Many industries target a certain time frame to ramp up marketing. Car sales is not one of them. It may seem as though dealers are doubling down when they do a “year-end clearance,” but that’s just one of many arrows in their quiver. How many times a year do you see ads about factory incentives? Or special dealer financing? By the time you factor in all the limited-time offers that are pitched – President’s Day, Mother’s Day, Memorial Day, Back to School, Black Friday, New Year’s Eve – a far more sophisticated strategy emerges. Automotive dealers market 24/7/365.

So if investors who buy and sell land have no off-season, why should you?

Yes, we both know that as the calendar year wraps up, so does deal pace. I equate this to an auto dealership’s year-end clearance. But if your own marketing slacks off during the off-season while your competitors are busy reinforcing their branding, guess who gets the cold call in the middle of winter? Guess who hits the ground running when the snow melts or school lets out? Not you.

As entrepreneurs, our instinct is to keep our powder dry when things slow down.

Yet the decision to buy or sell a legacy property is often a family decision that is discussed and debated during the off-season, a.k.a. the holidays. Does it really make sense to pull back your marketing at the exact moment you need to be building your business?

Like countless brokerages coast to coast, The Land Report shifts into high gear as spring turns into summer. Yet we consciously produce our biggest issue of the year, which features The Land Report 100, so it comes out in December. Why? Because we practice what I’m preaching. Our must-read content is on coffee tables and in private jets precisely when families gather for the holidays.

Effective marketing is a full-time, year-round commitment. The consistent marketing message that you deliver, even during spells of lower activity, builds brand equity and name recall. These are priceless.

Marketing is Not an Expense. It is an Investment. Treat it as Such.

Best practice dictates you establish a marketing budget and commit fully to it. Budgets create limits; you can’t have a presence everywhere. So, do your research, negotiate well, and pick your platforms based on their position within the industry. Only invest in favorable brand association. Demand added value for your marketing dollars. Above all, challenge your marketing partners to deliver your message effectively and specifically to the right audience. Trust but verify.

Please note that I said “platforms.” Do not put all your eggs in one basket, be it print, online, or direct mail. And that includes my own title, The Land Report. Do you go to the trade shows your target buyer attends? You’d be surprised how many of those events take place during the so-called off-season. How about hosting your own event, even if it’s just a cast-and-blast for a handful of key clients. Again, money well spent.

Fish where the fish are. By that, I mean make sure you connect with your target market in person, online, via direct mail, and in print. That’s a sound investment.

Branding is Not A Slogan. It’s the Truth.

I’ve always been a big fan of Ford’s slogan: Built Ford Tough. It’s confident. It’s catchy. And it hammers home the fact that more than a century after Henry Ford founded the Ford Motor Company, Ford is very much an industry leader. I know that for a fact because I spent the majority of my career with the blue oval.

Let’s apply that marketing savvy to your business. If your brokerage has been around for a while, what are you best known for? A specific land use? A certain market? A specialized expertise? Spell it out in an honest, straightforward manner. At The Land Report, we call ourselves The Magazine of the American Landowner. It’s confident. It’s catchy. And it hammers home the fact that we share the stories of America’s leading landowners.

But what if you’re new to the business and just starting out? What drives you? What inspired you to launch your business? Are you a longtime local? Then put those deep roots and your local ties to work for you. Maybe you relocated to the land of your dreams. If so, doesn’t your trailblazing decision make you the ideal candidate to pave the way for others who might want to do so? Do you love to hunt? Is life better on the back of a horse?

Consider these questions and write down your answers. Look at it closely. Refine it. Hone it. Buff it. THAT is your brand.

There’s Never Been a Better Time to Market Your Brand

The landscape of marketing choices for land professionals has never been more diverse. Traditional advertising is gone. Kaput. Once upon a time, advertising featured an “offer” that was deliverable through standardized channels. Today, it’s all about experience marketing. When I got my first paycheck in the automotive industry, Facebook, Google, and YouTube didn’t even exist. By the time I left, key influencers were creating billions of impressions with blogs and podcasts that reached consumers via their iPhones, a product that debuted in 2007. This avalanche of new technology has created exciting opportunities for small business owners to create and control marketing and branding. Use it to your advantage.

I’m a big fan of Instagram. The visual-forward nature of this rapidly growing platform and its ability to integrate video and drone footage gives a broker the unique opportunity to conduct virtual showings on multiple listings from a handheld device. If you are a land broker in 2018, an active Instagram account is a must, not an option.

Finally: hashtags, hashtags, hashtags. Marketing guru Gary Vaynerchuck insists that for real estate professionals, the most effective way to grow your Instagram following is through the use of strategic hashtags. This means the use of a minimum of 10 hashtags per post. I recommend including hashtags featuring the state where your listing is located as well as the type of property – i.e., #farm, #ranch, #timberland, #hunting. Keep the hashtags relevant and watch the interactions with your posts build.

Thanks to Jessica’s suggestion, I’ve been on board with The Land Report going on five years now. Even better, I’m applying insights and ideas that I gained in one of the most competitive industries to my new career. I sincerely hope that one of these kernels of truth helps you take your book of business to the next level in 2018 and beyond.

P.S. If you want me to share more, reach out to me at davidz@landreport.com. I’ll even help you set up that Instagram account you’ve been putting off. 😉

About the Author: David Zawalich lives in west central Ohio with his wife, two kids and a Wire Haired Pointing Griffon named Zeke. His love of land and the outdoors was sparked as a child in the wilds of northeast Pennsylvania. He employs his unique vantage point as a landowner and marketing professional as the Associate Publisher of The Land Report.

From Inside The Beltway

With the biggest legislative achievement of this Congress behind us – tax reform and the preservation of 1031 like-kind exchanges – there are other issues that are circling the congressional runway, jockeying for position and waiting to land.  While not having a direct impact on the land professional, these broad issues could have far-reaching secondary impacts on land markets, real estate development and the economy.

Farm Bill Introduced But Passage Unlikely in 2018

A 2018 farm bill proposed by House Agriculture Committee Republicans passed by the Committee in April set the groundwork for tense debates on farmland conservation and forestry — and a much more partisan battle on nutrition assistance — as Congress tries to act before the current law expires at the end of September. However, this legislation is unlikely to pass in 2018 due to a decreasing window of opportunity to act on a very controversial proposal.

The bill strikes a good balance by holding the bill’s cost close to the total spending levels of the current version. Doing so allowed the Committee to protect crop insurance, tweak the safety net for cotton and dairy producers, and reform conservation and crop programs.

On the other hand, the committee wasn’t able to boost spending on farm programs that some groups say are more needed than ever, given the tough farm economy.

Significant changes in conservation programs reflected Chairman Conaway’s interest in seeing these programs work more effectively to preserve land that helps agriculture.  The legislation would eliminate the Conservation Stewardship Program — the biggest conservation program in the country, with about 72 million acres enrolled — and move some of its initiatives to an expanded Environmental Quality Incentives Program.

The bill would allow an additional 5 million acres, 29 million acres in total, into the Conservation Reserve Program, which takes land out of production for 10-year periods.

On forest policy, the proposal would allow for bigger and faster forest-thinning projects, through a 6,000-acre exclusion from certain reviews under the National Environmental Policy Act, to reduce wildfire risk. It would also remove a requirement for consultation under the Endangered Species Act if a forest management project does not harm a listed species.

Infrastructure: All Talk and No Action?

Infrastructure effects all parts of the American economy, from good roads and clean water to flood protection and mass transit. Both President Trump and Congress have floated proposals that would provide resources to fix aging infrastructure, such as roads and water treatment plants; and develop new and transformative projects, such as modernizing the electrical grid and high-speed rail.  All of these kinds of activities would have a positive impact on land markets.

President Trump’s plan would incentivize and stimulate at least $1.5 trillion in new investment over the next 10 years, shorten the process for approving projects to 2 years or less, address unmet rural infrastructure needs, empower State and local authorities, and provide for intensive workforce training. The plan addresses more than traditional infrastructure — like roads, bridges, and airports — but addresses other needs like drinking and wastewater systems, waterways, water resources, energy, rural infrastructure and public lands.

The proposal introduced by Democrats in the House would offer 5 times the amount of federal infrastructure funding over the President’s plan.  Their plan would boost local economies and generate billions of dollars in new economic activity without adding to the deficit.  Our infrastructure plan will invest in American iron and steel and new American-made green infrastructure materials to support good-paying jobs, and ensure opportunities for small business owners.  Our plan will ensure projects advance quickly, while maintaining key environmental protections and labor standards.

Both plans are similar – both seek to leverage federal resources to empower the private sector and state and local governments to develop these projects. Both promise to shorten and ease the permitting process and both promise extensive worker retraining.

Would you like to know another similarity between the two plans?  Nothing has happened to either of them since they were published.  Yes, the President has pushed federal agencies to ease permitting restrictions and some individual bill have been introduced, but at this time nothing substantive in this area has been accomplished.

If I were a betting man (which I am most decidedly not) I would not place my hard earned money on a massive infrastructure spending bill moving through Congress in 2018.  Just like with the Farm Bill, Congress is running out of time and lacks the focus to get something like this across the finish line – neither party wants to give their opponents something to brag about in the upcoming elections.

If you would like additional information on any of these issues, please contact me at 202-383-1259, rriggs@realtors.org.

This article originally appeared in the 2018 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

 

About 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.

Welcome Reception Networking NLC20

Listen Up! The ROI on NLC

Married people, who can relate to listening to your spouse without really listening? No, just me? For years, I’d heard my husband, Luke Worrell ALC, come back from the National Land Conference raving about how valuable it was – the speakers, the networking and everything in between. I didn’t fully grasp what he meant until I experienced NLC18 for myself this year. It was the single most valuable professional development tool I’ve put in my work belt in a long time.

Luke and I are blessed to work together in the land business that his dad, Allan Worrell ALC1, started and that we now own together – Luke as a land broker and farm manager, and me on our marketing and operations functions. NLC18 equipped each of us with new ways to become more effective and efficient in our roles. Allow us to elaborate…

Networking Opportunities

Luke: The NLC has become somewhat of an annual pilgrimage to me. Like many organizations and activities, you get what you put in, and the NLC has given me so much. The thing I most value about the conference is the chance to come together with colleagues from around the country and network. It can go beyond networking as well; I have made countless genuine friendships over the years by attending this event.

The 2018 conference in Nashville was special to me. Not only was it the first NLC that Allison and I could attend together as business partners, but it held certain symbolic meaning to me personally. My very first NLC was in Nashville back in 2011. I was “green as grass” to the industry and literally knew no one there other than my dad. I was there lacking confidence and not really knowing what to make of everything and everyone. Ray Brownfield held a national position with RLI at that time and was on stage talking about how the NLC held such distinction to him. He cited that networking through RLI has led to great business. I distinctly remember a younger, naïve version of myself sitting there wondering to myself if what Ray was saying was true or something nice he felt like he had to say since he was in leadership….

Fast forward seven years to 2018 and I was in Nashville again, this time winning the National ALC-to-ALC Networking Award for the largest real estate transaction closed between two Accredited Land Consultants. Low and behold, the colleague with whom I partnered and closed that sale was Ray Brownfield himself. As it turns out, Ray was telling the truth back in 2011! Closing on an $8.4 million farmland sale is a huge gift from God that makes for a great story and a feather in the cap to networking at these events. The biggest take away goes beyond an award-winning sale – it is the people. Since that first trip to Nashville in 2011, Ray has become a trusted colleague, a mentor of sorts and a genuine friend. The wonderful thing about the NLC and going year after year is that I could say that about many other members of the Realtors Land Institute. Barring tragedy or the birth of a child (literally the only reason I missed Tucson in 2015!), I refuse to miss the National Land Conference. It is an invaluable experience for me as a land professional, and me on a personal level.

Knowledge Acquisition

Luke: Another obvious benefit of the NLC is amount of knowledge you take away. Over the years, the conference has continued to add high-quality breakout sessions that essentially create a buffet of knowledge. You can pick and choose from numerous choices and tailor your conference experience to expand your knowledge in just the right places.

Nashville was a prime example. I went into the conference wanting to learn more about reaching different types of buyers, other than those I have grown accustomed to. Because of the numerous breakout options available at NLC, I was able to do just that. On one day of the conference alone, I learned about working with foreign buyers on land acquisitions, understanding what motivated institutional investment groups and how to better position myself on social media to appeal to a broader base. Keep in mind I was able to attend all of these sessions in an eight-hour window of time. There isn’t anywhere else I could cover that range of topics in depth in such a short period of time. Over the course of three or four days, the quality of options to learn is incredible.

Allison: Just as Luke was able to acquire new knowledge to help him as a land broker, I was able to expand my knowledge on topics that help me better market our company and address some operational challenges we’re facing. I either participated in a session, met with an exhibitor, or swapped strategies with other attendees on the following topics, and more:

  1. Tools for tracking sales leads and processes within the sales cycle
  2. Tips for how to motivate our brokers and measure their performance
  3. Social media tips and tricks – when to post, what platform to use, how to engage the audience
  4. How to improve our online footprint
  5. Tips for becoming more effective and efficient

For at least three of those topics, I had signed up for various webinars over the past year and cancelled at the last minute because something came up at work that made it fall on the priority list (not RLI webinars, of course – those are can’t miss!). Participating in the National Land Conference allowed me to pull away from the day-to-day so that I could finally devote uninterrupted attention to topics that will help to grow our business.

Public Relations

Allison: You might be surprised to read that Public Relations is one of the value-added benefits we identify for the National Land Conference. But, hear me out. Anything you do to develop yourself professionally is an opportunity for you to demonstrate to landowners, lenders, attorneys and others with whom we all share the agribusiness space, that you embrace the notion of lifelong learning within your craft. That you aren’t just someone who operates solely off of intuition in your little corner of the world.

Tactfully slide into conversation that you just got back from the National Land Conference and that you learned about XYZ topics, compared land market trends with brokers in neighboring areas and invested in developing yourself to the benefit of those whom you serve. In our market in Central Illinois, after Luke returns home from a work conference, I often contact the local radio station and offer him up for an interview on their farm programming show. They usually jump on the chance to fill a timeslot, and it’s a great way to position ourselves as thought-leaders within the ag realm, so it’s a win-win for everyone. Write about what you learned at the conference on your blog and/or company newsletter. Post a photo from the conference on your social media pages.

Make the most of any conference you attend, leadership role you hold or award you win. You can bet your next commission check that I leveraged Luke’s ALC-to-ALC Networking Award to his advantage! It’s okay to toot your own horn (in a humble, high-integrity way of course) about awards you earn. More than just a plaque in your office, industry awards are tangible ways to show potential clients and business partners that you have the credentials and experience they’re looking for in a land broker.

And for goodness sake, get your ALC designation! Talk about good publicity!

Can you tell that we’re big fans of the National Land Conference?! Taking time out of your territory might seem like a costly endeavor, whether financially or procedurally. But we assure you, it is an investment that pays for itself. If you’ve never been, what are you waiting for? Let’s meet up in Albuquerque for NLC19!

 

1 For those of you who know Allan, rest assured, he hasn’t retired. We honestly don’t think he ever will – he loves the land business too much! He’s just tired of dealing with the headaches of business ownership.

This article originally appeared in the 2018 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

 

About the Authors: Luke and Allison Worrell own Worrell Land Services, LLC, specializing in land brokerage, farm management and land appraisals across Central Illinois. Luke is an accomplished Land Broker who has earned the Accredited Land Consultant (ALC) designation. He is also an Accredited Farm Manager (AFM) who manages 84 farms across Central Illinois. Luke is an active leader in many ag-industry organizations, both nationally and locally. Allison leads the company’s strategic marketing and communications efforts. She brings to the business a unique blend of professional experiences from her background with a national pharmaceutical wholesaler, as well as non-profit work.

 

 

 

Getting to The Top: Finding The APEX of Success

The REALTORS® Land Institute recently presented the 2017 APEX Awards Program, sponsored by the internationally recognized magazine The Land Report, to identify and recognize the nation’s top producing land real estate agents. Over $1 Billion in property sales were recorded by RLI’s top 50 agents in 2017. That’s an amazing accomplishment to say the least, and this success again demonstrates the knowledge, work ethic, and power of the collective brokers within the RLI organization. Clearly, RLI partnerships are a force to be reckoned with.

At this year’s APEX Awards Ceremony, Michael Murphy and I of M4 Ranch Group were honored to be recognized with four APEX Awards, including a tie for 2017 APEX Top National Producer, a tie for 2017 APEX Broker of the Year Recreational Land Sales, both as a 2017 APEX Top Twenty Producer, and both as part of the 2017 APEX Producers Club. First, I want to pass on my deepest appreciation for the blessings our clients, our company, and our team experienced in 2017. We had “one of those years” that all of us in RLI work diligently to produce.

In 2017, the M4 Ranch Group Team was able to close over 95,000 deeded acres in 35 transactions. You, the top professionals in this industry, clearly know that just does not happen every year. You also know it has a much better chance of happening when you build the right platform, establish the right avenues for success, and most importantly, associate your company with the right performers in the industry.

We at M4 Ranch Group have worked tirelessly to do just that, working daily towards building a platform that couples time-proven tools with the newest technologies. We are both challenged and excited with learning new technology as well as with refining the ancient art of human relations. Being successful in this business is a never-ending quest for knowledge from understanding the details of an ALTA survey, easements, and water rights to understanding the history of a property and the biology of its wildlife.

M4 Ranch Group has been fortunate to capitalize on the neverending opportunities for education through our RLI Colorado Chapter. In our RLI Chapter, we focus on the needs of the industry, the needs of our chapter as a group, and the everchanging needs we as professionals face daily to better ourselves and our companies.

Each of us in the industry knows that “we only eat what we kill.” This industry makes no payment for a second place finish. If the transaction does not close, we don’t get paid. Our success at M4 Ranch Group in 2017 is without fail directly tied to the strength, intelligence, and the never-quit attitude of Team.

While Michael and I were recognized by RLI for the fantastic success in 2017, that success would not have happened without the back up of our partner, Michelle Murphy, as well as the rest of our amazing team. If there is one path to success, it is to build on peoples’ strengths within your organization and allow them to flourish in their niches.

We are all faced with what seems to be insurmountable challenges in the industry, including marketing, meeting our clients’ needs, and budgeting so that we get the most bang for our buck. Marketing alone presents an almost-bewildering array of decisions, from a virtually limitless list of print opportunities to working every technological angle to develop the highest web rating for listed properties, from full page banner ads and web listings to drone tours, from multi-page brochures to 3-D property imaging, from the highest standards in mapping to the local chambers of commerce. It seems no one person or firm has the perfect answer here. I do know that those who rise above never quit, and they never take the easy path. Nevertheless, many of these top firms are very humble in their success. If not, they only have to wait for a down year to regroup with humility!

It is easy to get tied up with statistics: where did we get the most results, what drove the most traffic, tracking web hits, social media clicks, direct leads, direct mail, etc. We can be consumed with questions. “Are we in the right market?” “Did we spend those dollars wisely?” “Will this work?” However, in the midst of our continuous data gathering at M4, we have recognized that the single biggest avenue for success has been relationships. In particular, we can attribute success after success directly to the personal relationships built within our RLI Chapter.

Without these friendships, partnerships, and working relationships, M4 Ranch Group would not have seen the success we experienced in 2017.The bottom line is that the RLI Colorado Chapter is, simply put, something special. The Chapter is built on the philosophy of “A Rising Tide Raises All Ships.” If you don’t have the answer you do have someone to call within this group who does. The level of integrity is extremely high. You just flat out can trust those you work with, something not said often in many industries, and sometimes even less in ours.

Building on the past outstanding years of effort from National RLI we are entering into a new era. With the appointment of Aubrie Kobernus, CEO, and the drive and tenacity she and her team bring to the table, this organization is rising at a rocket rate. The rest of National RLI and the nation’s chapters are working daily to build that same level of integrity into everything from the ALC Designation and LANDU Education Program to the National Land Conference. RLI continues to work to help each of us better understand the strengths of those we work with, better understand the knowledge base of our partners, and better understand how they can share that knowledge base to help us all succeed.

Knowing the professionals in our industry is a major key to success. That’s one of RLI’s main benefits. We at M4 Ranch Group are honored to work with each of you, we are honored to call many of you friends, but most of all, we are thankful.

This article originally appeared in the 2018 Summer Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

About the author: Dan Murphy has experience running restaurants, a guest resort, owning and operating a respected outfitting business in Colorado for twenty years, and as a current owner of M4 Ranch Group, a division of Team Murphy Realty, LLC. His company specializes in ranch and recreation properties in Southwestern Colorado and Northern New Mexico.

Ready. Aim. Fire! Strategic Planning for Your Land Real Estate Business

This article was originally featured in the 2018 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

Last January, I hosted a group of clients for a duck hunt on the Texas coast. Huge groups of redheads flock together during the late season, and when they commit to the decoys, the hunter who takes careful aim can fill his bag with drakes in a hurry! One of my companions, however, was not having a productive hunt. Opportunities were abundant, and he was shooting aggressively, but his shots rarely connected. When he did hit a duck, he was just as surprised as we were! But, more often we heard the words, “%$#@, I should have aimed better!” He failed to follow the proven “ready, aim, fire” model.

Unfortunately, this sounds too much like how many real estate agents approach the land business. Abundant opportunities, lucrative commissions, and time spent outdoors tend to attract these folks to the land business. But many operate their businesses in a reactive fashion, simply taking what the market gives them. While they may feel busy, their business is unpredictable and it leads to the high percentage of agents who fail to make it past five years in this business. Strategic planning for your land sales business boils down to a few simple steps: set clear, written goals (ready), identify the specific activities to get you there (aim), then execute the plan (fire). Top agents who do take time to strategically plan have a more predictable business and, consequently, they operate with more clarity. Core business and operational decisions become much easier with a predictable business. Hiring, debt, expansion, marketing, and scheduling are much easier if you can confidently predict the results you will likely achieve.

As you plan your business empire, you should start by considering where your leads will come from. Use a simple spreadsheet or one of the many software programs available online to track your lead sources by percentage and volume. By identifying your core sources of business, you can confidently plan your activities, make better marketing decisions and bring in the proper leverage to maximize the potential of these lead sources. Additionally, this will force you to calculate the cost of these leads, which will come in handy when doing your pro forma. Knowing the sources of your business is the first step to clear planning.

Now, let’s look at three basic components of a productive and clear business plan. Remember, this is a plan for you to follow, not a 50-page textbook that requires a Ph.D. to interpret! The idea of a business plan is to clearly lay out the specific steps and activities required to reach your goals, and to project profitability once you reach them. The three basic components we will look at are: the Financial Model, or pro forma, the Organizational Model (who does what), and a one-page plan with written goals and the clear steps to accomplish them.

Top business people know their numbers and track them closely. The Financial Model or pro forma is where you write down how much income you would like to net, and calculate all the costs associated with getting to that number. According to the Millionaire Real Estate Agent model, start with your desired net income, then back into the total sales required to support this goal.

For example, if I want to net $300,000 in annual income (before taxes), I would write down $300,000 + $87,600 (29.2% cost of sales) + $87,600 (29.2% operating expenses) to get my total required gross commission income (GCI) = $475,200. Now I know how much revenue I will need to bring in to support my income goal and I can calculate how I will get there. To do this, divide $475,200 (GCI) by your average commission rate to get the necessary total sales volume. In this example, I would need to close $15,840,000 in sales volume to reach my goal. Next, I will need to know my average sales price to calculate the number of transactions needed to reach my goal. My average sale has been tracking around $2,000,000. $15,840,000 divided by $2,000,000 tells me I need to close 7.9, or 8 transactions at my average commission rate to reach my goal. Now, I simply plug in the percentage of listings I expect to close (65%) from the appointments I expect to win (70%) to get the number of listing appointments I will need to set. In this example, I would need to go on 18 listing appointments in order to predictably win 12 so that I could expect to close 8 property transactions. If they average $2,000,000 and I earn my average commission rate that will determine my GCI. After expenses and cost of sales, I will reach my income goal of $300,000. *see chart on page 4 of the Millionaire Real Estate Agent Business Plan

The success of any sales business boils down to the right amount of quality leads. The Financial Model showed me how many leads I need to generate to reach my financial goal; now I can build a plan to get there. We have found a simple, single-page business plan to be the most effective way to do this. The COB and CEO of the largest real estate company in the world can fit theirs on a single page, so we can too! The single-page business plan requires extreme clarity on the goal and the specific things that must happen in order to accomplish the goal. In his book The ONE Thing, Gary Keller asks the question, “What’s the ONE thing I can do such that by doing it everything else will be easier or unnecessary?” This clarity allows you to line up your dominoes and start with the most important task first. Focus on the big rocks, the things that only you can do, and break them down into action items.

We start with a written five-year goal, a written one-year goal, three top priorities that absolutely must happen to ensure the one-year goal is met, and five strategies to accomplish each priority. We creatively refer to this exercise as the 1-3-5 goals sheet. Going back to my example from the Financial Model, I would write my one year goal of $300,000 net income and roughly $16,000,000 in sales volume. My five-year goal is a stretch goal, but for the purposes of this exercise it won’t matter unless I hit my one-year goal. Next, I need clarity on what the three things are that must happen to support my goal. These are my top three priorities, and I write them down as well. First, I know I will need $24,600,000 in listing inventory (12 listing agreements at a $2,000,000 average) to predictably close $16,000,000 (65%). Then I break down my five strategies to get there. Secondly, I know I will have to nail lead generation, and third, I will need a solid marketing plan. Each of these gets the same five detailed strategies. If I have clarity on these big rocks, I can dig into each of them and hold the activity (and the person attached to it) accountable for producing the results.

Now that I have completed my Financial Model and I have clarity on the core things that must happen to support it, my final step is the Organizational Model. This is where I bring in leverage and assign who does what in the business. I cannot do everything, and in fact I shouldn’t. There are things I do poorly, like administrative work and bookkeeping. There are others who do those very well, and by delegating to them, I am released to do the things I do well – like lead generation and interacting with clients. Leverage is freedom for business owners. It allows you to scale by staying in your strength zone and working on the business, rather than in the business. Leverage could be defined as strategically removing yourself from every aspect of your business based on your skill set and the value of your time. For most real estate agents and business owners, the logical first hire is an executive assistant, followed by a buyer agent and maybe a second assistant. Draw a simple org chart with clarity on who does what and who they report to. As your business grows, you add future hires under them and build a job description or “missing person’s report” for these future hires. Hiring for the future with a big goal in mind changes the way you hire and lead people. Success through people is one of the hardest things for most entrepreneurs to master, but for most, it is the single largest factor in their ceiling of achievement.

If you own or operate multiple businesses like I do, then simply do these steps for each business and combine the results. With multiple businesses, you would also consider shared resources, shared employees, and weigh any direct ancillary benefits of one business to another. For example, a farm management company and a land sales company might complement each other quite well by maximizing the client opportunity and sharing administrative expenses.

Lastly, you will likely not nail this on the first or even the hundredth try! So inspect what you expect, monitor your progress regularly with good accountability, and make adjustments as you go. What you focus on expands. Have a predictable written plan and focus on the detailed activities that will produce the results you desire.

Go get ‘em!

 About the Author: Kasey Mock is the Director of KW LAND division at Keller Williams Realty International. Mock is a member of the REALTORS® Land Institute now serving his second year on their Future Leaders Committee. Make sure to check out his break out session diving further into this topic at the 2018 National Land Conference in Nashville, TN, in March.

The Intersection of Environmental Factors and the Valuation of Rural Properties

The value of rural properties can be affected by an interplay of forces, which are continually changing, often in a cyclical pattern. These forces include social trends (population); economic circumstances (supply-side economic indicators); and environmental forces (potential contaminants).

There is a growing need for potential consideration of hazardous substances and their impact on property value. The consideration of environmental conditions is fundamental to the appraisal of rural real property.

Environmental Factors

Some situations where contaminants and hazardous substances may be involved in the appraisal of rural properties include soil contamination due to an abandoned industrial plant, groundwater contamination due to a leaking underground storage tank and pesticide runoff from farmland to rivers and streams. According to The Appraisal of Real Estate, 14th Edition, potential contaminants and hazardous substances may include asbestos, polychlorinated biphenyl (PCB), dioxin, trichloroethylene (TCE), radon, petroleum hydrocarbons, and lead.

Environmental liabilities associated with industrial plants are well known, but many other liabilities may be present in rural properties. Farmers once commonly used long trenches filled with DDT-treated fuel oil, called “cattle vats,” to rid cattle of mites and other insects. Once this practice fell out of use, the trenches were simply filled in. Farms often have aging underground storage tanks that held gasoline for farm machinery, and farmland also may be contaminated from an accumulation of fertilizers and pesticides.

In most cases, all environmental forces that effect land value must be considered. These issues can be specific to a property or considered external to a property. Appraisers should determine the type of detrimental factors present on the property. These include potential hazardous wastes.

Specialized Methods And Techniques

Over the past 25 years, the valuation profession has developed a set of recognized and generally accepted specialization techniques for estimating the effect of possible contamination and environmental risks on prices, markets, and values. These specialized methods are based on the three traditional approaches to value which include the sales comparison approach; the income capitalization approach; and the cost approach. These methods involve one or more of the following:

Paired Data Analysis Of Impacted and Potentially Impacted Areas

In paired data analysis, prices paid for properties that sold in an impacted area are compared to prices paid for otherwise similar properties that sold outside the impacted area to estimate the effect of the location on the sale price. More than one pairing is typically necessary to understand the effect of the location in the impacted area on the prices paid.

Analysis Of Environmental Case Studies

Environmental case studies are typically useful when a source site is being appraised or in a situation involving an impacted neighborhood or area where there are insufficient sales to understand the effect of the environmental issue on prices and values.

Multiple Regression Analysis Of Property Sales In Potentially Impacted Area

When property is specified and developed, a multiple regression model can be used to determine if the environmental issue is affecting the sales prices. The model can be designed to interpret the effect of issues such as remediation status, location in a contaminated area, distance from the site source, and other factors.

 The Role Of The Appraiser

Engaging the most competent appraiser is key in achieving a reliable, credible opinion of value for rural properties. Effort should be made to find a valuation professional with experience in rural valuations, particularly if there is a possibility of contamination. Appraisers are not required or expected to have the knowledge or experience required to detect the presence of hazardous substances or to measure the quantities of such substances. Like buyers and sellers on the open market, appraisers typically rely on the advice of others in matters that require special expertise.

Appraisers must be, at a minimum, licensed or certified for Federally-Related Transactions. If the client is a federally-regulated institution and the intended use of the appraisal report qualifies as a FRT, the appraiser will have to conform to the Uniform Standards of Professional Appraisal Practice and the Federal Institutions Reform and Recovery Enforcement Act.

For complex assignments, it may be prudent to engage a more experienced or credentialed appraiser. At the Appraisal Institute, for example, Designated Members have demonstrated a higher level of education and experience and received designations that include MAI and SRA.

 Key Steps

There are five key steps in an appraisal assignment involving possible contamination.

 Step 1: Determine the location of the possible contamination.

In determining the source of the potential contamination, appraisers identify whether it is from:

· A source site: A site on which the contamination is, or has been generated;

· A non-source site: A site onto which the contamination, generated from the source site, has migrated;

· An adjacent site: A site that is not contaminated but shares a common property line with a source site; or

· A proximate site: A site not contaminated and not adjacent to the source site, but that is near the source site.

The distinction is especially important in determining who is responsible for investigation and remediation costs, and whether that responsibility accompanies ownership of the property being appraised.

 Step 2: Determine the type of contaminant and the regulatory requirements.

The appraiser considers the type of contaminant and applicable regulatory requirements (permitted or accidental discharge, level of required cleanup); migration (soil contamination confined to the source site, groundwater contamination spreading off site); and remediation (soil removal, installation of a cap, groundwater pumping, vapor removal) characteristics.

Step 3: Determine the status of the property in the remediation lifecycle.

A remediation lifecycle consists of three stages of clean up: before remediation or cleanup; during remediation; and after remediation. The appraiser determines the status of the property in the remediation lifecycle. A contaminated property’s remediation lifecycle stage is an important determinant of the risk associated with environmental contamination.

The effect of contamination and environmental risk on property prices and values changes over time, typically decreasing as a site works its way through discovery and investigation, remediation and post-remediation stages.

 Step 4. Consider cost, use and risk effects as of relevant date and point in the remediation cycle.

Appraisers consider the cost, use and risk effects as of the relevant date and point in the remediation cycle as they relate to the type of property (source, non-source, adjacent or proximate).

Step 5. Estimate the “as is” value.

Finally, appraisers estimate the impaired, or “as is,” value. In most assignments, appraisers also are asked to compare the impaired value to the unimpaired value under hypothetical condition that the contaminant was not present.

Standards of Professional Practice

Reaching a credible and reliable opinion of value when dealing with potential contamination of rural properties can be a complicated procedure. Among the tools available to valuation professionals are two Appraisal Institute guide notes that may be particularly useful in the valuation of potentially contaminated properties including Guide Note 6: Consideration of Hazardous Substances in the Appraisal Process and Guide Note 15: Assumptions and Hypothetical Conditions.

Guide Note 6: Consideration of Hazardous Substances in the Appraisal Process

The purpose of Guide Note 6 is to provide guidance in the application of USPAP in the appraisal assignment. It is not to provide technical instructions or explanations concerning the detection or measurement of the effect of hazardous substances.

An extraordinary assumption presumes as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property, or about conditions external to the property, such as market conditions or trends, or about the integrity of data used in an analysis. An example of an extraordinary assumption could be suspected but not confirmed that there may be underground storage tank contamination. An environmental assessment by a qualified environmental professional would be required for such conclusions or determinations.

Guide Note 15: Assumptions and Hypothetical Conditions

In an example of a hypothetical condition, the subject property is the former site of heavy industrial use and the appraiser is aware that it might be contaminated, but this isn’t known for certain. The value opinion reflects the property as though the subject site is not contaminated on the date of value, which is the current date. This value is premised on the special/extraordinary assumption that the site is not contaminated.

The appraisal report would need to include a clear disclosure of this special/extraordinary assumption, and state that its use might have affected the opinions and conclusions.

Conclusion

Rural properties can be impacted by environmental contamination resulting in the release of hazardous substances into the air, surface water, ground water, or soil. These factors may complicate real estate financing decisions. The ability for appraisers to accurately identify environmental issues, and factor them into property valuation can, benefit consumers buying and selling land, lenders, and the valuation profession.

This article originally appeared in the 2018 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

About the Author: James L. Murrett, MAI, SRA, is the 2018 president of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. Based in Chicago, the Appraisal Institute has nearly 19,000 professionals in almost 60 countries. Murrett will be hosting a break out session diving further into this topic at the 2018 National Land Conference in Nashville, TN, in March.

The Land Market: Current Conditions & Outlook

The latest economic activity shows clear signs of improvement ahead. Consequently, the demand for land, especially for construction of commercial and residential properties, will be solid and rising throughout 2018 and into 2019. The demand for agricultural land is more difficult to predict.

First, let’s take a look at the economic backdrop. Gross Domestic Product (GDP) grew at a three percent annualized rate in the third quarter. That is quite remarkable in light of the temporary standstill in activity in hurricane-impacted regions. The big contributors were the solid rise in business spending on equipment, which burst higher by 8.6 percent, and improvements in net exports (exports rose 2.3 percent and imports fell 0.8 percent). Software spending rose spectacularly by 24 percent. Such demand is undoubtedly being driven by the new world of digital information. Land in the middle of nowhere could soon be sought after as more data centers need to be built. Information from every Uber ride and Amazon sale are being stored digitally. Every piece of information from GPS units and the future self-driving mapping of automobiles will also need to be stored.

Consumer spending is the biggest share of the nation’s economy and grew in the latest quarter at a decent pace of 2.4 percent. This is a tad short of the near three percent growth in consumer purchases in the past three years but still implies enough power to avoid any recession.

Third quarter GDP growth was also partly boosted by inventory accumulation of goods. Sometimes this is a good thing, as companies are ramping up production in anticipation of stronger demand ahead. However, it also hints at a potential economic slowdown if the large inventory buildup requires cutting back on future production.

Government spending has been neutral, neither adding nor subtracting to GDP growth. Federal government spending rose one percent while state and local government spending fell one percent during the latest quarter.

The missing piston to the engine of economic growth is currently real estate construction. Private commercial building construction spending fell by 5.2 percent and residential real estate spending from new home construction and home sales activity declined by six percent. Commercial building vacancy rates have been steadily falling across all property types over the past several years, and that will continue to be the case as new construction is just not coming around. As to the residential market, it is undergoing some of the tightest inventory conditions ever seen, with the quickening pace of homes selling right after coming onto the market and with multiple bids not uncommon in the lower price brackets. Home prices have been moving consistently above workers’ wage growth for the past five years. However, unlike the housing bubble days of 2005 with easy subprime credit, today’s market conditions reflect tight mortgage availability. The market has the feel of a “bubble” because of insufficient housing inventory. For the past decade, the construction of new single-family homes has been far below the 50-year historical average. Soft construction activity assures continuing tight inventory conditions, and there is certainly no oversupply in either the commercial or residential real estate industry.

I am forecasting that housing starts will rise from 1.18 million housing starts in 2017 to 1.30 million in 2018. This growth will still be insufficient to fully satisfy rising housing demand. The long-term historical average has been for 1.5 million new homes constructed each year in the U.S. The low inventory conditions of near four months’ supply implies continuing rising in home values in most parts of the country. Homebuilders have indicated that, on average, it takes only 2.9 months to find a buyer of their spec-homes. It is a fast moving market, considering that just five years ago it took over an average of eight months.

Homebuilders need to ramp up construction. However, they have been hampered by skilled worker shortages in the industry and from the difficulty of obtaining construction loans by smaller builders. As to the latter, there could be more loans coming down the pike, as some of the financial regulations that arose from the Dodd-Frank legislation are likely to be loosened somewhat for small-sized community banks. In regards to construction workers, it is going to take some time to recruit to fully meet the requirements. Trade schools are just not seeing enough interested people entering the industry, especially among the younger cohorts. Moreover, the hurricanes that devastated the Houston region and Florida will require a large number of construction workers just to replace the damaged and demolished homes. An estimated 50,000 homes were damaged in Houston alone and around 70,000 in Florida. This work is not adding to the housing stock, but an attempt to maintain current levels. That means that demand for land development in other parts of the country will see delays because of the acute worker shortage.

Last year’s Land Markets Survey conducted by the REALTORS® Land Institute and the NAR Research Department indicated that half of the members were involved in recreational and residential land transactions, and the average increase in value of those sales was two percent. Given that home prices have risen five percent in 2016 and another five percent in 2017, the prospect for land price increases should have seen an increase of that magnitude. For those involved in timberland sales, the rising lumber prices (partly attributed to global economic expansion and from wildfires in the Western U.S. states and in Canada) will permit a higher price sale in the upcoming year. Those specializing in agricultural land will face tougher conditions. The crop prices that farmers have been receiving over the past three years have been in a rut with prices now more than 20 percent lower compared to the boom times in 2012. Therefore, the yield from agricultural land will be lower.

Risks to the Economy

There is very little risk of an impending economic recession. Job openings are at a multi-year high and the number of people filing for unemployment insurance claims remains at historic lows. Such conditions imply that job growth of around two million is nearly assured in 2018. However, one area of concern relates to international trade war. Experience shows that job cutting occurs when both imports and exports decline measurably, as happened during the recent Great Recession and at the turn of the century. Also of course, many economists blame the 1930s Great Depression for tariff hikes across most countries around the globe at that time. President Donald Trump’s rhetoric on trade has been “tough,” including the idea of ending NAFTA and a trade war with China. Protection of intellectual property rights must be assured, and fairness in trade needs to be constantly examined. However, a unilateral increase in U.S. tariffs will certainly invite retaliation. Such actions, depending upon the magnitude of the tariffs, could easily wreak havoc on global supply-chain production and send the economies of the world on a downward path. Agricultural exports would be particularly hard hit, thereby hurting agricultural land prices. This development, therefore, requires alert watchfulness.

A second risk is related to the tax reform without proper safeguards for real estate. If the mortgage interest deduction is no longer attractive and/or property tax deductions are no longer permitted, then the demand in home purchases and residential developable land will decline measurably. Changes to, or even a removal of, the all-important 1031 like-kind exchanges could also greatly hurt land values.

However, assuming there are no shocks to the system from international trade and that tax reform is pursued properly without hurting real estate, then investments in land will be on the rise making now a good time to be in the land sales business.

This article originally appeared in the 2018 Winter Terra Firma Magazine, the official publication of the REALTORS® Land Institute.

 About the Author: Dr. Lawrence Yun is chief economist and senior vice president of Research at the National Association of REALTORS®. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1.1 million REALTOR® members.