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Choice is a marvellous thing. When it comes to selling a farm or some land it is important to choose an agent that not only knows the market, but can also offer advice on the most appropriate method of sale, the once that suits your own individual needs. Amongst national and regional farm agents, Stags Farm Agency believes it is one few that has achieved success with the different sale methods when it comes to selling farms, smallholdings and land.
So far in 2014 Stags Farm Agency has used three main methods to sell property: private treaty, public auction and informal tender. Private treaty provides the most flexible option, giving sellers control over the timeframe of a sale, price and the ultimate purchaser. The method is not without its drawbacks as any offer is subject to contract, meaning that either vendor or purchaser can withdraw without penalty. Indeed, RICS figures suggest that up to 30% of sales fall through in the time between an offer being accepted and exchange of contracts, sometimes for the most trivial reasons.
Nevertheless, most farms and land that come to market are sold by private treaty. In July Town Parks Farm, a 108 acre farm on the outskirts of Paignton, was sold by Stags Farm Agency by private treaty at considerably above the guide price of £1 million. Having been place to the market in April, the vendor was keen to fetch the best price for the property, and was delighted with the result.
Public auction sets out to conclude the sale within a fixed timescale. This gives the vendor peace of mind that the sale is legally binding once the gavel has fallen and is perhaps the single biggest positive: there is no nail-biting period between when an offer is accepted and exchange. Security for the seller comes from the setting of a reserve price ahead of the auction, while offers received prior to the auction can be accepted if deemed satisfactory by the vendor. One downside to auction is that it limits the buying audience to those with cash in the bank or those with pre-arranged finance. Moreover, there is no opportunity to vet your buyer: he who raises his hand last is the winner, whether the vendor likes him or not. On the flip side, some buyers actually prefer auction to other sale methods as it gives them a clarity not associated with the other options.
Woodhay Farm, a 148 acre commercial farm on the edge of Exeter, was sold at auction by Stags at the end of June. The farm attracted strong interest from local farmers, as well investors from as far afield as the Netherlands. On auction day the eventual winner was an award winning dairy farming family, the gavel falling at £1.3 million off of a guide of £1 million. Later this month Stags will also be auctioning some 22 acres of arable and grassland at Clyst St Mary with a guide of £225,000.
Informal tender is often recommended where strong interest is anticipated from neighbours or the wider market, and is designed to extract the best offers from interested parties within a fixed timeframe. This method of sale is in effect a ‘best bid’ system, and gives the vendor the ability to choose which purchaser he will sell to. Like a public auction, informal tenders can put off some buyers not least those who are nervous of over paying for an asset.
In May this year we advised one of our clients that informal tender would be the best option for 4.88 acres of land on the edge of the picturesque Mid Devon village of Shobrooke. Having been used as allotments for the village, a market garden and a pasture field, the four individual lots attracted a lot of interest and multiple bids were received at the closing date. The vendor, with Stags assistance, was able to assess the offers on their individual merits and as a result choose the successful bidders.
The final, though much the least often used, method of sale is formal tender which achieves the sale by a fixed date and legally binds those that offer. As for a public auction, a solicitor is required to produce a legal pack prior to the closing date, with purchasers submitting their best bids along with a deposit. The method dissuades all but the most bullish of buyers, and as a result is rarely opted for.
While speaking about the sale of farms and land it is worth noting the hotly debated issue of lotting. The division of farms, whether family owned or not, is often contentious. The primary positive of lotting is that it widens the market audience, often enabling land parcels to be acquired by neighbouring and local farmers who are seeking economy of scale. Not every farm is suitable for lotting, however, and there is still a premium for ring fenced farms which offer privacy and protection.