One ranch broker’s perspective | TSLN.com

One ranch broker’s perspective

Rob Pfister
Pfister Land Company, LLC

Courtesy photo

Due to the state of our economy, whatever state that may be, I am continually asked how sales of land are being impacted, and whether or not our land sales are diminishing along with 401Ks, self-directed IRAs, annuities, banks, insurance companies, and all the other businesses and investments that purportedly made the world go round. If you are addicted to the news and media, all ships are still sinking with the tide. On the other hand, if you put your head down, work and do not pay much heed to the daily panic, the world from this ranch broker’s desk doesn’t appear that gloomy.

In fact, on average 2008 was a great year for us. Pfister Land Company, LLC closed $34,077,133 in 2008, involving 12 transactions from farm, ranch or recreational parcels. Despite our success we are not entirely unaffected by the ripple effects of market events and forces. I lost two sales with proven, qualified, buyers in the last six months due to market erosion. These sales were in the 1.3 million to 2.4 million dollar range. The prices on both ranches were basically agreed on by buyer and seller, but during the due diligence period, the buyers lost significant money in the stock market and voided the contracts.

These lingering questions remain: Are we at the bottom of this market? Is now a good time to buy and/or sell? Well, the ball is somewhere between the hand and the floor, and the question of the hour is “How far down is the floor?” As with all things, the true answer will only reveal itself in the rear view mirror. In the meantime, however, it is safe to say the market was running uphill too fast and everyone was running to catch it instead of pacing themselves for the long mile ahead. Now that we are running the long mile, the real question to ask is what market are we in, and is this the best market to buy and sell?

Like all things in the world today, the raw land market has changed and the market of today is not the market of yesterday. For the first time since the mid-80s, sellers are realizing that the raw land market has peaked, perhaps 18 months ago, and the values have not maintained the same steady incline experienced in recent years. The inclining land values maintained consistent upward trend even through 9/11 and the tech-market crash in 2001. I would argue that the price per acre has simply flattened out to a more practical value. We are constantly bombarded with listing price reductions as sellers attempt to remove the “blue sky” from their listing prices to a value that is more realistic and a more accurate and substantiated representation of value. It is not the price at which properties are selling that has dramatically decreased but instead the volume of sales. To avoid long shelf lives and dramatic price reductions later, sellers are also listing their properties at more realistic asking prices. Whereas, two years ago, they were set on a listing price of $2,000 per acre, for example, they are now more inclined to list at $1,685 per acre, and are holding on this price as a firm number. Reaching for a little “blue sky” as a listing tactic, on the notion that “you can always come down, but you can’t go up” does not pay proper respect to the psychology of the buying marketplace.

Due to the state of our economy, whatever state that may be, I am continually asked how sales of land are being impacted, and whether or not our land sales are diminishing along with 401Ks, self-directed IRAs, annuities, banks, insurance companies, and all the other businesses and investments that purportedly made the world go round. If you are addicted to the news and media, all ships are still sinking with the tide. On the other hand, if you put your head down, work and do not pay much heed to the daily panic, the world from this ranch broker’s desk doesn’t appear that gloomy.

In fact, on average 2008 was a great year for us. Pfister Land Company, LLC closed $34,077,133 in 2008, involving 12 transactions from farm, ranch or recreational parcels. Despite our success we are not entirely unaffected by the ripple effects of market events and forces. I lost two sales with proven, qualified, buyers in the last six months due to market erosion. These sales were in the 1.3 million to 2.4 million dollar range. The prices on both ranches were basically agreed on by buyer and seller, but during the due diligence period, the buyers lost significant money in the stock market and voided the contracts.

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These lingering questions remain: Are we at the bottom of this market? Is now a good time to buy and/or sell? Well, the ball is somewhere between the hand and the floor, and the question of the hour is “How far down is the floor?” As with all things, the true answer will only reveal itself in the rear view mirror. In the meantime, however, it is safe to say the market was running uphill too fast and everyone was running to catch it instead of pacing themselves for the long mile ahead. Now that we are running the long mile, the real question to ask is what market are we in, and is this the best market to buy and sell?

Like all things in the world today, the raw land market has changed and the market of today is not the market of yesterday. For the first time since the mid-80s, sellers are realizing that the raw land market has peaked, perhaps 18 months ago, and the values have not maintained the same steady incline experienced in recent years. The inclining land values maintained consistent upward trend even through 9/11 and the tech-market crash in 2001. I would argue that the price per acre has simply flattened out to a more practical value. We are constantly bombarded with listing price reductions as sellers attempt to remove the “blue sky” from their listing prices to a value that is more realistic and a more accurate and substantiated representation of value. It is not the price at which properties are selling that has dramatically decreased but instead the volume of sales. To avoid long shelf lives and dramatic price reductions later, sellers are also listing their properties at more realistic asking prices. Whereas, two years ago, they were set on a listing price of $2,000 per acre, for example, they are now more inclined to list at $1,685 per acre, and are holding on this price as a firm number. Reaching for a little “blue sky” as a listing tactic, on the notion that “you can always come down, but you can’t go up” does not pay proper respect to the psychology of the buying marketplace.