May 11, 2016 Author: Murray Wise Associates
For more than a decade, we saw Midwest farmland prices rising steadily, year after year. Farmers and farmland investors saw their net worth increase dramatically, and many realized their long-term profits by selling into a rising market. Others held back. Now, after two or three years of flat to falling prices, they’re asking if it’s too late.
My answer is a question: “Too late for what?” You may not get the price you could have gotten a year ago, but you can probably get a price that is very high by any sane historical standard. Land prices have held up surprising well given the sharp declines in commodities. Besides, the land you own has likely continued to provide you a solid return, especially based on the price you probably paid for it.
And what’s wrong with that?
There’s no doubt that farm profits will be harder to come by as long as we continue to see weakness in corn and soybean prices, and nobody knows how long it will be before prices recover. We could see improvement before harvest, or this could drag on for years.
You may not have years. You may be nearing retirement, with no heirs who wish to farm. The wealth in the dirt beneath you could provide a comfortable retirement. And when it’s time to divide your estate among heirs who have pursued other careers, it’s easier to divide money than land. Even if you’re not ready to quit farming, a sale and leaseback could allow you to realize your profits, farm a few more years and retire more simply.
If you plan to sell anytime in the next five years, this may be your best opportunity. Land values are still stronger than you’d expect given the decline in corn and soybeans. But the outlook is cloudy at best.
For those who decide to sell, it’s important to understand that today’s market differs markedly from the one a couple of years ago. When farmland was making double-digit strides, it was relatively easy to sell a farm. Today, it’s more of a challenge. The neighboring farmer who always lusted after your land may no longer be in a position to expand. That means you have to cast a wider net – one that includes investors who won’t necessarily notice your farm if you just put up some signs and pass out some fliers. You’re going to need a firm with a proven track record for bringing investors to the table.
A firm like Murray Wise Associates LLC.
Murray Wise founded the Westchester Group in 1986 after acquiring the Champaign, IL division of the Sandage Companies, a traditional farm management and brokerage firm…
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Murray Wise Associates LLC
1605 South State Street, Suite 110
Champaign, IL 61820
800.607.6888 (Toll free)
Real Estate and Farm Management
Murray Wise Capital
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