Are you about to start looking for that ranch that you have always dreamed about having?
If so, there are a few things to think about before you start the process. First of all, you should determine the budget you have so you can search for ranches in a relative range to your budget. While sellers are often willing to negotiate, do not count on the sellers always reducing their prices because you are trying to buy a ranch that is way out of your price range. If your budget is $1,000,000, you probably should be looking at ranches up to the $1,200,000 range and below. That allows for some negotiation within a reasonable amount. Anything over that, and there is a good chance you are wasting your time and the broker’s time.
The amount of budget you have available will be determined by available cash is you are a cash buyer, or by the amount that you can borrow if you are planning on financing the purchase. If you are planning on borrowing the money, it’s important to visit your lender and get pre-qualified for your loan so you know exactly how much you can borrow. Often brokers and sellers will require a pre-qualification letter prior to seeing the ranch if you are planning on getting a loan for the purchase. The pre-qualification process is a good idea for a couple of reasons. First it determines what your budget will be, and second, it demonstrates to the broker that you are a serious purchaser. Brokers have grown weary of buyers that are planning on getting a loan for the purchase but have not taken the time to even get pre-qualified by a lender. Remember, that not all lenders are set up or have the expertise to make farm and ranch loans. It is somewhat of a specialty, so you may have to check with lenders in your area that are in the business of making such loans. Lenders such as Capital Farm Credit are in the business of making rural land and ranch loans, and the process is much simpler if you are dealing with a lender in the business of making these types of loans and are thus much more experienced about the nuances of farm and ranch lending.
When you contact a broker about seeing a property or to ask questions, be sure to tell them that you are pre-qualified if you are going to finance the transaction as this will result in the broker considering you a legitimate buyer that’s ready to buy. Speaking from the broker’s perspective, buyers would not believe the amount of time, money, and energy that is wasted spending time with clients that are not ready or able to purchase at the time they start looking. I would estimate that at least half if not three-quarters of the calls a broker will get will be from buyers that are not in a position to purchase when they start looking.
There is no sense in starting your search prior to being able to purchase the property since ranch properties are continuing to sell at a fairly fast pace.
If you aren’t going to be ready to purchase until say a year from now, the inventory will entirely different so anything you are looking at now, will most likely be unavailable a year from now. If you are starting your search because you are about to receive money or think you are about to receive some money from an outside source, it’s good business to validate that you are indeed going to receive your funds on a timely basis relative to when you are starting your search.A good broker will usually ask you if you are a cash buyer or if you are borrowing the money.
If you are borrowing the money, they’ll ask for a pre-qualification letter. A good broker will also ask you if you are ready to buy now if you find the right place, or if you are waiting on some event to happen before you are able to purchase. You should not be alienated by these questions since you should not expect the broker to take his time and money to show properties to someone who is not even ready or able to purchase. Examples of waiting on outside events to happen prior to purchase could be such things as a legal settlement, a divorce settlement, subsidies from the government, group funding, or something as quirky as the revaluation of the Iraqi Dinar. You would be surprised how many brokers have taken calls or shown properties to prospects that are waiting on the Dinar revaluation, and that have been waiting on the revaluation for the last 10 years! If you expect good results from your dealings with the brokerage community, make sure you are able and ready to buy a property before you start the search process. It’s not only good business, but it’s also a fair business. So be sure to be upfront with your broker as that will go a long way to creating a good working relationship and will save both you and your broker time and money.