How to Buy a Farm
Set a budget., Get prequalified for a loan., Talk to your realtor., Make an offer., Enter into a contract., Hire an inspector., Close escrow.
Step-by-Step Guide
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Step 1: Set a budget.
Your budget should reflect the cost of the land, realtor fees, zoning or construction permits, mortgage payments, and the operational costs for your farm.
The cost of land will depend on the land’s location and whether it has any structures on the property.
A plot of land with a newly built barn will be more expensive than a same size plot with no barn or an older barn.In the United States, farmland is an average of $3,020 per acre.
However, this figure varies depending on your region.
For example, farmland in the Mountain region is $1,100 acre and in the Corn Belt it is $8,000.Talk to an experienced farmer in the area to learn more about the costs associated with operating a farm.
Go to your country’s Department of Agriculture website and see what resources they have available to help you budget. -
Step 2: Get prequalified for a loan.
Most people will need to secure a loan to help them finance a farm.
There are a number of leasing companies that offer agricultural financing to help you buy a farm and operate it.
You should talk to your bank to see if they offer financing for land purchases and for their recommendations for agricultural financing.
In the United States, the USDA Farm Service Agency can help you get a loan, especially if you have low credit or a low income.Pre qualifying for financing can help to speed up the process of actually buying the property. , Now, if you have retained a realtor, you will need to contact your representative.
The guidelines for submitting offers will differ based on your area, but in general you will submit an offer to your realtor who will then forward that offer to the seller’s representative.
The seller will either accept, reject, or make a counteroffer. , Along with your real estate agent or lawyer, you can now submit a bid.
If your bid is accepted by the seller, you can go through the escrow process and become the official owner of your new farm.
You should try to gather information about recent farm sales in the area to make sure you are getting a fair price for the property., Make sure that your offer is contingent upon you being able to secure a final mortgage (if necessary), that the property and any structures pass inspection, and a guarantee that you can do a final walk through inspection 24 hours before closing.
You may need to make a good-faith deposit with the seller.
This is usually 1% to 10% of the purchase price and goes into an escrow account.
If the deal falls through, you get this money back.You will need to make a down payment on the property.
The size of the down payment will vary, but it is typically 10-20% of the property’s appraised value. , Since your offer is contingent upon the property passing inspection, you will need to hire an inspector who will make sure any structures on the property are up to code.
If the property does not pass inspection, you will need to decide whether you want to spend more money to renovate the structures so they meet code regulations, or to walk away from this property.
If the property passes inspection and you are satisfied with the results, you can move to close the escrow process. , The escrow closing process varies by state and country, but generally you will need to complete paperwork that both you and the seller will sign.Once the paperwork is signed, the escrow officer will draw up a new deed to the property, you will receive the title to the property, and you will pay your down payment. -
Step 3: Talk to your realtor.
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Step 4: Make an offer.
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Step 5: Enter into a contract.
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Step 6: Hire an inspector.
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Step 7: Close escrow.
Detailed Guide
Your budget should reflect the cost of the land, realtor fees, zoning or construction permits, mortgage payments, and the operational costs for your farm.
The cost of land will depend on the land’s location and whether it has any structures on the property.
A plot of land with a newly built barn will be more expensive than a same size plot with no barn or an older barn.In the United States, farmland is an average of $3,020 per acre.
However, this figure varies depending on your region.
For example, farmland in the Mountain region is $1,100 acre and in the Corn Belt it is $8,000.Talk to an experienced farmer in the area to learn more about the costs associated with operating a farm.
Go to your country’s Department of Agriculture website and see what resources they have available to help you budget.
Most people will need to secure a loan to help them finance a farm.
There are a number of leasing companies that offer agricultural financing to help you buy a farm and operate it.
You should talk to your bank to see if they offer financing for land purchases and for their recommendations for agricultural financing.
In the United States, the USDA Farm Service Agency can help you get a loan, especially if you have low credit or a low income.Pre qualifying for financing can help to speed up the process of actually buying the property. , Now, if you have retained a realtor, you will need to contact your representative.
The guidelines for submitting offers will differ based on your area, but in general you will submit an offer to your realtor who will then forward that offer to the seller’s representative.
The seller will either accept, reject, or make a counteroffer. , Along with your real estate agent or lawyer, you can now submit a bid.
If your bid is accepted by the seller, you can go through the escrow process and become the official owner of your new farm.
You should try to gather information about recent farm sales in the area to make sure you are getting a fair price for the property., Make sure that your offer is contingent upon you being able to secure a final mortgage (if necessary), that the property and any structures pass inspection, and a guarantee that you can do a final walk through inspection 24 hours before closing.
You may need to make a good-faith deposit with the seller.
This is usually 1% to 10% of the purchase price and goes into an escrow account.
If the deal falls through, you get this money back.You will need to make a down payment on the property.
The size of the down payment will vary, but it is typically 10-20% of the property’s appraised value. , Since your offer is contingent upon the property passing inspection, you will need to hire an inspector who will make sure any structures on the property are up to code.
If the property does not pass inspection, you will need to decide whether you want to spend more money to renovate the structures so they meet code regulations, or to walk away from this property.
If the property passes inspection and you are satisfied with the results, you can move to close the escrow process. , The escrow closing process varies by state and country, but generally you will need to complete paperwork that both you and the seller will sign.Once the paperwork is signed, the escrow officer will draw up a new deed to the property, you will receive the title to the property, and you will pay your down payment.
About the Author
Raymond Peterson
Writer and educator with a focus on practical lifestyle knowledge.
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