American farmers are growing older. In fact, recent statistics show that the average age for farmers has been trending sharply upward for more than thirty years and now a large number are at or very near retirement age. In part, this has occurred because the children of farm families may not be staying on to take over their parent's farms as often as they once did.
Farmers who have no immediate family member willing to take on the responsibilities of raising crops or livestock as a career may find themselves with little option but to sell when they need or want to retire. While selling the farm for cash is always preferable, it can be difficult to find this type of buyer for a large farming operation. This leaves some farmers opting to consider a land contract sale that younger farmers can more readily afford.
Understanding land contract sales
A land contract farm sale agreement, sometimes called a land sale contract or contract for a deed, basically puts the farmer in the dual position of being both seller and lender. Instead of taking out a mortgage from a traditional lender, the buyer will instead make a down payment to the farmer and then agree to make payments on a regular schedule, until the purchase price is paid in full.
Farmers benefit from land contract sale agreements because it greatly expands the pool of potential buyers for their property. Since every term can be negotiated directly between the seller and their buyer, land contract sales can be easily customized to include specific benefits for the seller, such as continuing to live in the farmhouse for a period of time or continuing to use a portion of the land.
While the benefits can be very positive for farmers who need or want to sell their farm, there are drawbacks to a land contract arrangement, as well. For one, this type of arrangement can become contentious, should the buyer be unable or unwilling to perform the duties of the land contract and go into default. When this occurs, it can put the farmer into the uncomfortable position of having to handle the legal process required to foreclose on their land contract buyer.
Land contract sales for farms can be an excellent way for farmers to make the sale they need while also helping a younger farmer become established. Before moving ahead with any land contract offer, farmers will want to discuss the matter in detail with their real estate agent or broker to determine if it is a good option for their particular situation.
For more information, contact a real estate professional like Gloria Jones - Re/Max Real Estate Experts today.Share