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Mon 4 September 2017
When is the sum of the parts greater than the whole?
We are frequently asked why so many of the farms Stags offers for sale are divided into smaller lots.
Lotting can undoubtedly be an emotive issue, but it boils down to what is usually our client’s main objective: to achieve the maximum possible sale price.
When a farm has been in the same family for multiple generations, it is never an enjoyable prospect to contemplate dividing it into lots, but by doing so we may immediately widen the appeal of the property. This allows us to target not only buyers that are looking to purchase whole farms, but also residential buyers who are looking for a house with a few acres, as well as those searching for bare land to add to their existing holding or indeed as an investment.
This creates competition between the different types of purchaser, which in turn can help achieve the best possible prices as well as speed up the whole sale process.
Often a house buyer will not want the responsibility or cost of 100 acres with a dwelling, if in reality they only require 5 or 10 acres for privacy. The additional land not only increases the purchase price and therefore their monthly mortgage payment, but also brings the headache of how to manage such a large acreage.
Meanwhile, a farming business may not want a house absorbing a large capital sum that could otherwise be spent on land that fits into their existing business.
Of the farms sold by Stags so far in 2017, 72% were sold in lots. Bucking this trend were Binham Farm, Old Cleeve, Somerset (285 acres) and Sannacott Farm, North Molton (85 acres) which were both sold as a whole to buyers originating from outside the West Country.
It should be noted that lotting may not maximise the sale price for every farm. Sometimes ‘The Whole’ commands a premium. Also, if there is limited demand for land in the local area, or if road access is not suitable, offering a farm for sale as a whole may achieve the best outcome for the vendor. This is where Stags’ expertise in the local market comes into play, and where our knowledge of buyers in any given locality helps us to offer the best advice.
Please contact Andrew Dodds on 01769 572263