Marketing Fundamentals

By understanding the critical characteristics of the market place, the agricultural land professional can create the most effective property presentation.

5-1

Objectives

Systematically study a property’s attributes Main categories of agricultural land use Difference between a market analysis and appraisal Reading and interpreting property’s legal description Using mapping resources to analyze property Data needed to properly analyze property

5-2

Systematic Property Analysis

Land market professionals increase market efficiency Traders need only to have access to information Professional land broker save time, money, and reduces risk Land uses vary from farming to grazing Broker must refine list of potential uses Uniform Standards of Professional Appraisal Practice (USPAP)

5-3

Typical Agricultural Land Uses

Dryland Farming Irrigated Farming Grazing Horticulture (orchards, etc.) Timberland Recreation/Conservation preserves

5-4

Group Activity 5-1

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Potential and Limits

Good and bad features of its location Location fixes land Constrains the physical potential Impacts practical land uses Social influences further define property Effective broker anticipates questions

5-6

Potential and Limits (cont.)

The broker focuses on the most prevalent uses Farming and ranching practices vary widely Shifts occur infrequently Broker must know technical aspects of farming Broker must know technical aspects of ranching The quest for expertise is never ending

5-7

Potential Limits (cont.)

Participants search the market An analyst must monitor sales Identify important aspects of properties sold Generate an estimate of income producing potential Ignore income potential from recreational operations Must know about agricultural productivity

5-8

Potential Limits (cont.)

Must know about government programs Must know about potential wildlife habitat Convert physical and economic factors Consider the cost of improvements

5-9

Property Identification (Legal Description)

Unique legal description Rectangular survey system

– System of perpendicular survey lines– Territory divided into townships

Metes and bounds system– Describes the tract in distances and directions– Many contain small flaws

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Example of Metes and Bounds

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Group Activity 5-2

5-12

Organizing the Facts

Maps are essential to analysis of property Physically inspect the property Inspect improvements Obtain attractive photographs photographs Locate and note condition of drain tiles Cover all physical characteristics

5-13

Organizing Facts (cont.)

Acreages of:All soil classes (I-VIII) All dedicated uses (cropland, grazing, etc.)Typical crop rotation (wheat, corn, soybeans, cotton,

peanuts, etc.)Easements or other land use limitations Varieties of orchards or vineyardsTimber in each stage of growth

5-14

Organizing Facts (cont.)

Buildings and their conditions Improvements to the land Installed drain tilingTerracingRoads

Lakes Mineral rights and water rights

5-15

Organizing Facts (cont.)

Proximity to important services SchoolsCities and towns Agricultural markets

Property financial data Income information Government payments received Lease terms (right of first refusal?)Normal property tax and potential for a roll back

5-16

Organizing Facts (cont.)

Maintain specific property-related data Maintain general property-related data Assessed values and tax rates should be monitored Farm Service Agency (FSA) local historical production USDA Economic Research Service (USDA/ERS) Monitor breaking new through periodic publications

5-17

Module 5 - Review

Understand how to systematically study property attributes to establish its potential Potential property uses Constraints on property Anticipate buyers wants Monitor sale prices, income potential, and costs

5-18

Module 5 - Review

Know the main categories of agricultural land use

Most agricultural activities fit into one of six main categories

5-19

Module 5 - Review

Explain the difference between a market analysis and an appraisal

State licensed professional appraiser Uniform Standards of Professional Appraisal Practice (USPAP)

5-20

Module 5 - Review

Understand how to read and interpret property legal descriptions

Rectangular survey Metes and bounds

5-21

Module 5 - Review

Know which mapping resources will assist in analyzing the facts about a property

USGS NRCS FSSA Local assessor's office

5-22

Module 5 - Review

Understand what kind of data is needed to properly analyze the property

Soil types Physical features Establish tax-related issues

5-23

Self - Assessment Questions

The major categories of agricultural land uses include all of the following except for

Important property use-defining physical attributes include

A legal description that refers to the NE 1/4 of the NW 1/4 of the SE 1/4 of section six

5-24

Self - Assessment Questions

A metes and bounds legal description

GIS, DeedPlotter, and ESRI

Data required for a complete market analysis

includes

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