5 Factors Influencing Land Values

August 12, 2016

Every day we’re asked the same basic questions:  “Has the land market softened? What should I do? Buy, sell, or hold?”
While there are no easy answers to these questions, here are five factors to keep in mind:

1. Be realistic. Depending on location, quality, and condition of the land, we have experienced a 10-40% drop in land values. That said, you might be in a position where you’re considering selling or reevaluating your financial statement. If you are, lower your expectations, as there are fewer buyers in the market to purchase.
2. Do you play the waiting game? Should you sell now or wait for the situation to improve? As mentioned earlier, there’s nothing to indicate this downward trend will change unless we have a weather event and/or weakening of the dollar to reduce supply and/or increase demand for your commodities. I foresee no immediate relief in the future. Land values will adjust to the income produced, so if you want or need to sell, the critical decision is how long to wait, and what equity do you want to gamble.
3. Know buyer attitudes. Buyers are understandably hesitant. They are concerned if they buy now, land will go down another 20%. But just like in good times, there are still people willing to buy. We continue to sell property to operators who want to add to their operation as well as investors and individuals completing 1031 exchanges, but not at last year’s prices. Just as the stock market ebbs and flows, so do land values. There will be opportunities. Many are watching from the sidelines and continue to consider land to be a strong long-term investment, but at the right price.
4. Who are the sellers?  80% of our sales are a result of working with estates, siblings or individuals who inherited property as well as dissolving of partnerships or corporations. This trend will continue with the aging landowner population. Many who retained their land ownership because they were earning a high return will be considering selling before they lose equity. For some, the sale of property will be required to pay off debt. We will see an increased number of properties for sale than we have in the past.
 5. Auction or private treaty? Selling by auction is still our specialty but we also sell by private treaty. In times like this, more land will be sold by private treaty. We provide a CHOICE. We have unmatched experience with both methods, will share the pros and cons, and make a recommendation based on your situation.

Here’s the key takeaway: It takes patience and strong marketing to get your property in front of as many people as possible. Our database and marketing is second to none so you can rest assured we’ll get the word out to many qualified buyers. Now more than ever, it’s important to work with someone who is realistic, who has experienced almost every situation, and will work hard to get the highest price in today’s market. With Reck Agri Realty & Auction, you can put our proven track record to work.


Marc Reck
Reck Agri Realty and Auction