Issues that should be addressed before considering the sale of a rural property to avoid an extended sale period

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Consider carefully the following issues before putting a farm or piece of land on the market if you don’t want to experience delays, which can cause the property to become stale and develop a negative reputation.

Legal and Administration Issues

Most importantly, for properties with multiple ownership, all shareholders must be on the same page regarding selling and the expected price level achievable based on an independent valuation ( don’t ask brokers competing with each other for the listing for that information as it will be inflated). Shareholders/Stakeholders should agree on one individual representing them during the sale process and agree not to involve themselves in parallel conversations with potential buyers. Failure to do this will extend the sale process and likely devalue the property’s potential value when sold.

All owners should be prepared to sign a sole agency with a brokerage with a profile and experience to sell the property offered. Owners should look for a comprehensive marketing programme targeted at potential buyers, covering both local and external ones.

Land Titles should be checked, ensuring no impediments to a clean sale.

Boundaries should be identified ideally by GPS. Important in Brazil.

Local laws should be studied to sell if the property restricts who might buy it. ( Brazil and Argentina ). Restrictions lower the potential value and time to sell.

The owners must provide enough information for potential buyers upfront.

When preparing to sell a farm, you should provide comprehensive information to a level that, if a buyer were to inspect it, is precisely as marketed. This is especially true when the farm or land sold has commercial value or is sold as a business or going concern. The buyers are usually experienced and expect detailed information about an asset they might consider buying. Wealthy active investors typically look at the range of property options and only choose the best-presented ones to consider.

Confidentiality: Vendors and agents often prepare Secure Cloud Storage options so buyers can easily access all the details they need for sales once a qualified NDA (non-disclosure agreement ) is signed. Once an NDA is made, these data rooms allow the buyer’s lawyers and agronomists to perform due diligence while reviewing information. Incomplete information can slow down the sale or turn buyers off.

Loose ends that should be addressed before listing

Many historic agreements a vendor may have with third parties, such as contracts with lessors, can be made on handshakes or outdated legal contracts. Formalising or updating such agreements may cost money; however, it could save time and effort compared with the complications or delays if this was done later in the sale process. It is important to note that while incomplete contracts may be acceptable for the current owner, they are not likely to satisfy a buyer, mainly if bank finance is involved.

Ensure a successful marketing strategy.

You should choose an agent representing you during sales with a tactical and comprehensive marketing plan aimed at the most logical buyer source. Before launching the deal, issues such as the date, marketing strategy, and the presentation of the assets should be addressed.

Sale options that are too restrictive or complex

The decision to choose a sales option for a farm could be one of the most significant decisions a seller and their agent make. It is essential to have a flexible sales process that allows maximum interest while not complicating the situation by offering too many choices or outcomes. After the sale option has been agreed upon, it is essential to draw up accurate plans that clearly outline all the options available to a buyer. The possibilities can range from Fixed Price, Tender, Auction or a hybrid like VendeRAPIDO.  If there are a lot of question marks over its potential value, then selling without a price would be the best option.

Complicating the Sale by keeping the most attractive area out of the sales process

Selling the most valuable assets, such as land on the edge of a village that may have future development potential and any other high-yielding assets, like renewable energy or commercial rentals, is appealing. However, buyers are currently looking for diverse assets. They want to make sure these assets are part of the sale. They can’t force an owner to sell these assets, but they may be less interested in purchasing a farm if these are included.

Crucial first impressions

First impressions are what buyers will use to judge a farm, initially from the marketing material and later by inspection. To ensure the best possible appearance of your farm, ensure that all drains, irrigation units, fencing, gates, and hedges are in good condition.

It may be worthwhile to demolish any asset, such as a dilapidated building or barn, which is unlikely to be affordable to repair, made safe and has no future development potential. A buyer might not want to buy a potential liability.

And last but not least

Selling too quickly or moving too slowly to decide can damage the sale price.

To ensure an effective marketing campaign, it is crucial to plan the timing of a sale. In the opposite direction, taking decisive action is vital once your strategy ends. It is essential not to appear desperate for a deal, even though the truth is quite different.

This can be revealed by apparent mistakes, such as lousy sale timing or poor photo quality (say, in winter, when the farm doesn’t look its best).

Do not share private information with anyone except the agent handling the sale. If you don’t trust them, don’t employ them.

The buyers will be aware of the tight deadline and take action accordingly.

Once a sales campaign is over, it is essential to make quick and decisive choices and to ensure that your legal team has the capacity and knowledge to act quickly to affect a smooth settlement.

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.

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About Geoffrey W W McRae

With a highly distinguished career spanning more than three decades across five different countries, New Zealander Geoffrey McRae has established himself as a leading authority on South American real estate, agricultural, and commercial matters. As the founder of Gateway to South America – a real estate consulting group specialising in six South American countries – Geoffrey has developed a reputation for discretion, expertise, and experience that has seen him represent some of the most prestigious clients in the region. His deep knowledge and experience of South American markets have placed him at the forefront of the industry and given him the opportunity to guide and advise with confidence and surety. His long and successful career – which continues to evolve and expand daily – is a testament to his talent, tenacity, and ambition.

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