Thread: Buy the farm, don't inherit it
01-31-2013 02:37 PM #1
Buy the farm, don't inherit it
[URL="http://www.agweb.com/livestock/dairy/article/author_gives_advice_many_dont_want_to_hear_sell_th e_farm/"]Agweb article on selling the farm instead of giving it away.[/URL]
This is how our family has always done it. Never has one generation given anything to the next (aside from knowledge, patience and love). The next generation has always been responsible to come up with a viable business plan to purchase the farm from the prior generation. It has worked well for our family and I believe there is a lot of merit to doing it this way.
02-01-2013 06:29 AM #2
Your link does not work... When most fathers sell their farm to their son they basically are giving it away. I challenge your father to auction off your farm and see if you are the high bidder or if it's some China man or a man with a Chinese bank behind him.
There is no way you will take the challenge.
02-01-2013 06:51 AM #3
Well verb, I am paying appraised value for everything. Will an auction bring a higher value? Maybe, maybe not. Ask my uncle or JR. Both tried to auction their farms recently, neither received market rate. Auctions don't always bring the highest dollar, often the private market will do better. I guarantee you the amount the farm was valued at when I purchased was not a "family discount."
02-01-2013 07:01 AM #4
- Join Date
- Jan 2009
The first property we bought was from an aunt..which was owned 50 50 with my dad. Paid appraised value, not many would have
wanted to partner with dad, but I did. Then after time, and his death, we hear, you only paid appraised value, you stole it.
My reply has always been, if you had wanted it with the same provisions I bought it, why didn't you say something them?
02-01-2013 07:59 AM #5
- Join Date
- Nov 2007
The first tract that I purchased, I was the 5th guy with my last name to have a mortgage on that tract. I of course purchased from a relative.
Since then I have purchased farmland from relatives 5 more times. Most of these transactions were based on estate appraisals or auction prices.
It is a bit hard to compete with those families who have a tradition of all in the family keeping their inherited/purchased farmland with the nonfarmers renting their acres to their farmer relatives but my nonfarm relatives don't owe me the opportunity to farm their land forever.
The best thing about the above is that I was kinda forced into making some farmland purchase decisions that- sooo faarrr- have a good deal for me due to timing. The other good thing is that each and every one of the tracts above were somewhat modest in size (which reduced the risk) and adjacent to other land that I farmed.
02-01-2013 08:46 AM #6
- Join Date
- Nov 2012
When the time comes for me to take over the farm (hopefully) i dont want a freebee, i want to buy it cuz then my siblings cant say that they got ripped off and didnt get anything!! I have a SIL who scares the he!! outta me cuz i think that she thinks shes gonna get millions when the farm gets sold!! Golddiggin 8itch she is!!!!
02-01-2013 09:01 AM #7
I think the greatest advantage to buying it v inheriting is it forces you to be a more savvy businessperson and to put the pencil to the paper more. There is a reason that inherited farms tend to perform more poorly... Sure it is a short term disadvantage to not inherit the farm, but long term I think you are better off if you are forced to learn how to run a tight ship.
02-01-2013 12:46 PM #8
- Join Date
- Dec 2008
Actually some times it is a disadvantage to have to buy from family some times. I saw a recent deal that way. Western Iowa real estate and family wanted a realtor that dealt in land in Des Moines to appraise it. It is a long ways to reality some times!
02-01-2013 06:26 PM #9
02-01-2013 10:15 PM #10
- Join Date
- Dec 2012
- Eastern Pennsylvania
I purchased my first farm from starting off farming from scratch. I'm number five of seven kids. My dad had a dairy farm he wanted to sell he was tired of feed prices being to high. I asked him to buy it. He asked a certain high figure for it, also I made him ask all of my siblings if they cared it gets sold. Not knowing I'm the buyer my siblings say "If anyone is willing to pay that sell the farm". Anyways it appraises for 150k less than he wants. We settled for 60k more than it appraises. If you can't buy a farming operation and make it u might not be able to operate one handed to you. I custom farm for nearly 300 dairy farmers mostly family farms. Someof the most successful are the ones paying the mortgages. Some of the poorest managers had the farm handed to them.