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You've found a farm to buy. Now what?

The method of your purchase shapes the offer process.

The offer process may vary depending on whether your purchase is through a real estate agent or private sale.

Going through a real estate agent simplifies the process a bit for buyers and parallels a home purchase. Typically, the agent prepares the necessary documents, such as a standard offer form, puts your down payment into a non-interest-bearing escrow account and works with a title company to clear the title.

Now suppose your  landlord unexpectedly passes away and his heirs want to sell the farm ground you have been renting for years. This process is tougher to work through than a listing from a real estate agent because you will need to do more of the legwork, beginning with negotiating an offer and handling the details of an offer to closing on the deal.

Negotiating the Offer

Negotiating a purchase price can be intimidating. A real estate agent can guide you through the price or range listed on the farm. If you are not working with an agent, you will negotiate the price directly with the seller. In cases where the land isn’t listed, you may need to call the seller and have a conversation about price. Usually, neither party likes to be the first one to throw a number out. However, as a buyer, you can be prepared by researching land values in the area or other appraisal data that may be available near that location. But keep in mind, each property is different, so it may not be a perfect comparison.

When making an offer, be transparent about how you arrived at your number – the data you looked at, the process you followed. This will give you better leverage for negotiating.

If there is an established relationship with the seller or emotions are involved, be aware that negotiations can be tough. No one wants to insult a seller or ruin an existing relationship.  In these cases, it’s more important than ever to do your homework and be informed.

Preparing the Offer

Once you agree on a price, it’s a good idea to have an attorney draft a purchase agreement. If the seller has a purchase agreement drafted by an attorney, have your attorney review the agreement.

You’ll also want to work closely with your lender on the financing side in order to feel confident about making an offer and executing a purchase agreement.

A title company will help handle the details of the closing. All title companies are different, and some have more experience in farmland than others. It’s a good idea to get a recommendation from your lender or another person you trust.

Closing Documents

Several people will be involved in your closing process. This includes the seller, real estate agent (if applicable), title company and/or attorney as well as your lender.

The title company or attorney handling the closing should notify you of the closing date and what you will need to bring. Typically, there is a settlement sheet, which outlines who is responsible for the various fees outlined in the purchase agreement. There may also be a document that shows the proration of real estate taxes (e.g. who’s responsible for what part). A real estate form will also be provided and signed at closing (this makes sure the taxes get transferred over to the right person). The title company will let your lender know how much the mortgage or deed of trust needs to be made out for. Finally, if you’re putting money down, you will need to bring certified funds to the closing.

Transaction Period

If both the seller and buyer are motivated and serious, a transaction can move quickly and be completed in 45 to 90 days. But many factors will determine how long it takes to complete your transaction. For example, selling a farm in August with a crop on it can complicate things. You may do your negotiating in August. But closing might not happen until December or January and the buyer would get possession for the next crop year.

Possible Roadblocks

There are several situations that could delay or derail the process. Here are a few:

  • The title company discovers a lien on the property that the seller wasn’t aware of.
  • A previous lien wasn’t released by the bank when a loan was paid off.
  • The seller has past-due taxes that need to be brought current before closing.
  • An appraisal condition must be satisfied before closing.
  • Something happens with the buyer’s financing. It’s a good idea to put in the written offer that the purchase is subject to financing. This protects you by giving you an out in case your financing falls through.


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FCSAmerica serves farmers, ranchers, agribusinesses and rural residents in Iowa, Nebraska, South Dakota and Wyoming. For inquiries outside this geography, use the Farm Credit Association Locator  to contact your local office.