Buying A Ranch?

Have you decided it is time to start looking for that ranch you have always wanted to own to create your lasting legacy and treasured moments with your children, family and friends? Searching for the perfect ranch is something that will take time and dedication along with a multitude of professionals to help you accomplish your goal with efficiency. In addition to a knowledgeable broker that knows the area, you will lean on your attorney for legal advice; a surveyor to confirm boundaries and discrepancies; and many buyers will need a financing partner to assist with financing the purchase. Out of all of these professionals, the financing partner is who I would recommend visiting with first and foremost, in order to get pre-approved and pre-qualified before you begin your search. I am a strong believer in the fact that you will know if it’s the ranch for you and your family when you drive up to the main entrance to open the gate – when you can picture yourself driving up to your own ranch each and every day that time allows. You do not want the gate shut on you by another buyer on the ranch that you love and want to purchase simply because you made an offer subject to financing and pre-approval while the other buyer submitted his pre-qualification letter.

One main item you must establish is a price range, which is essentially your budget. This will allow you to narrow your searches and allow your broker to determine what ranches are available in the market within your price range. Additionally, the budget would be determined by how much liquidity or access to immediate cash you have available to go towards your down payment. Especially if you are financing the ranch acquisition, it’s important to visit and discuss your goals with a knowledgeable lender that specializes in real estate finance. A knowledgeable real estate lender with flexible options could provide additional financing options for you should your cash position be marginal due to your self-disciplined approach towards reducing your overall debt or given the fact that you would like to preserve the current amount of cash saved in order to not withdraw funds from an investment portfolio earning a good return. Should you own other real estate, such as commercial real estate, second home, another ranch or rental property on the coast, the equity in these assets could be used as the source of down payment or equity in the acquisition of this new ranch. It is always a good idea to get pre-qualified as this lets both the buyer and listing brokers know that they have a buyer that has financing arranged and ready to close immediately on a specific ranch should the purchase price be negotiated and agreed upon by all parties. In some instances, it can be the difference between your offer being accepted versus an offer by another buyer being accepted as you were not prepared and pre-approved by a lender. Additionally, I have seen it occur many times over the last sixteen years of my career where a buyer has been enabled to negotiate a really good buy on a ranch by being organized and having a financing package in place prior to making an offer. With a pre-approval letter, it provides the buyer with an open ranch acquisition credit card in hand that lets them know their limit when they begin to look at various ranches in the respective price range. Also, a pre-qualified buyer may be able to expand their price range to an extent when initially searching. If you are pre-qualified for $1,800,000, you should be able to expand the search to look at ranches up to $2,000,000 as sometimes sellers are willing to negotiate their sales price. More times than not, sellers are motivated to sell for various reasons, as they have made the decision and come to the conclusion to sell their ranch. That should allow for a reasonable amount of negotiation. The pre-qualification amount helps the buyer’s broker to eliminate listings that may be one of a kind property but out of the price range for their prospective buyer. Since ranches continue to sell at a fairly fast pace, it could save a buyer and their broker some valuable time looking at ranches within their price range versus missing a ranch that has already sold. It could be the difference of securing the family legacy of ranch ownership for the next generation.


By: Roger W. Parker, Vice President
Crockett National Bank Private Banking