The Farms and Estates Market Expected to Prosper in 2014

The Farms and Estates Market Expected to Prosper in 2014

From the time of the earliest colonists, farms and estates have played a pivotal role in Virginia’s history and economy. The first settlers cultivated food crops to feed their families and early on adopted tobacco as a major cash crop, which continued to grow in importance until well into the 19th century. It was Virginia colonists in the 17th century who first introduced tobacco to England, opening what may have been the first foreign market for this commodity.

Over the years our state’s economy has become more diverse and urbanized, but the rural areas continue to dominate. The Virginia Department of Agriculture reports that farming is the state’s largest industry by far, generating $52 billion annually and creating over 350,000 jobs.

However, farming is not the only reason people move out to the country. Many buyers like the privacy and the ability to take long walks on their own property. Others want to own and ride horses or tend large gardens free from the prying eyes of well meaning neighbors.

Regardless of the reasons, farm and estate properties continue to be popular. While the market slowed some during the down turn of the last few years, it is coming back to life today as more and more people take advantage of lower prices and interest rates to enjoy all of the benefits that come from living in Virginia’s rural areas.

Farms vs Estates

While we often group farms and estates together, they are not necessarily the same, although they may share some characteristics.

“Estates are on a large tract with a significant house,” said Justin Wiley with Frank Hardy Inc., who added that farms often lack this kind of grand dwelling. In addition to their size, estates may have historic significance and be listed in the National Register of Historic Places.

Donna Patton, with Better Homes and Gardens Real Estate III, suggested a property could have as few as 20 acres, but should have at least 6,000 square feet to be considered an estate. She added that while estates are typically priced in the millions of dollars, you may be able to buy a farm for several hundred thousand.

Steve White, with Roy Wheeler Realty Co., explained that while many estates may be considered farms, the opposite is not necessarily the case. He described a 4,300 square foot house on 14 acres he once sold. Although it had a generous amount of square footage, the property would more appropriately be called a mini-farm rather than an estate because of the home’s contemporary style and its relative newness; it was built in 2008.

Bunny French, with Loring Woodriff Real Estate Associates, described a farm as a “working facility.” This means you would expect the owners to be raising crops or animals such as chickens, llamas, horses or cattle for the market. An estate can also be a farm, but will be distinguished by having a grand house.

In some cases rural properties don’t fit either category. Murdoch Matheson, with Frank Hardy, Inc., described an historic rural property, which (while it boasted 150 acres), had a house that was too small to fit the estate category, yet it was no longer a farm.

Farms and Estates Buyers

Rural properties have appeal to a broad range of buyers, French said. She has worked with relatively young people in their early 40s who purchased large parcels of land. Others are families who appreciate the rural lifestyle. They like the quiet, French said, and particularly enjoy the privacy. These are also the people who love to go out every day and enjoy a long walk knowing they never have to leave their own property.

Often the buyers are local families who want enough property to subdivide amongst various children and grandchildren, White added. They 
aren’t all local, though. He described a recent buyer who came from the northeast looking for just this kind of property in the $3 million range.

“We see a scattering of people from all over,” Wiley said, and that includes DC and Florida as well as the northeast. However he has also worked with families from both California and Texas. The topography of our area appeals to the Texans, he explained, and they also appreciate the weather and the seasonal changes.

Wiley added that traditionally the largest group of farms and estates buyers from out of the area came from the northeast. However, that changed after the financial crash in 2008, as the northeast was particularly hard hit by that event.

Farms and Estates Market

Like the rest of the real estate market, the farms and estates sector has seen some recent improvement.

The market has “picked up some,” Wiley said. He explained that it is improving from the lower price ranges and up. A year ago the biggest improvement was in the $1.5 million price range, but today that extends up to $2 million. Larger properties are also selling, said Wiley who cited a recent sale for $8.5 million.

“We have never been this busy,” said Rick Walden with Virginia Estates, who had negotiated five successful contracts by the middle of January. One recent contract was for a $5 million historic property in Augusta County on over 600 acres, which is also a dairy farm. His other listings are “all over the state,” he said, and buyers come from everywhere.

Some of Warren’s recent clients include local people from as far away as Colorado and New York, all of whom are in the market to buy wineries. He is also working with someone from India looking for a country inn north of Charlottesville, and someone from England looking for an historic home.

The $1 million buyers are out and about, White said, and properties are selling but frequently they require lots of negotiation. He recently sold a $1.7 million property, his only piece of land sold in the last four years. Before the deal was concluded, the parties negotiated a lower price as well as the addition of several acres to the piece to make it an even 100 acres.

White described another situation where a seller turned down the first offer he received as well as the buyer’s counter offer. The buyer waited awhile and was rewarded for his patience. After a period of time, the seller changed his mind and decided that the offer was a good one after all. White cautioned that negotiations today require more patience, but added that when the parties are willing to participate, the sales are happening.

French agrees that the farms and estates market is improving. The prices have adjusted downward, she explained, and “quite a few of the larger parcels are moving.”

“There is also more stability in the market,” White added. He explained that it’s no longer a market that favors either the buyer or the seller, but reflects an overall stability which benefits everyone.

Marketing Farms and Estates

Compared to more conventional homes, farms and estates are larger and more complex. The market is also much narrower as there are many fewer buyers who can afford these properties. As a result, their marketing is somewhat different from what may be done for other kinds of homes.

These days everyone has an online presence as the vast majority of buyers, and especially those out of the area, start their searches there. “We use a combination of Internet marketing and hard copy ads in glossy publications,” Wiley said.

White uses a professional photographer to take the photos he needs to display his farms and estates listings in the Multiple Listing Service (MLS). The photos then become a visual tour for visitors to the MLS and also to multiple websites, which automatically pick up and display new listings as soon as they are entered.

Like many farms and estates agents, White takes listings in our area and around the state. To help with marketing and showing properties that are further away, he often teams up with a local agent who can help extend the marketing effort and be available for showings.

Marketing of farms and estates is on a “larger scale,” French said. She added that she always includes lots of pictures and multiple views to show off not only the house but also the barns, outbuildings, the land and any views. Her company has a marketing program that includes an Internet presence but also involves ads in bigger publications such as the New York Times and the Washington Post. “We target where our buyers are, and many of them are in the northeast,” she continued.

Unlike his competitors, Warren explained that his company relies “100 percent on the Internet,” for their marketing and doesn’t do any media ads.

Both Warren and French acknowledged that there are always farm and estate sellers that don’t want splashy ads. Warren frequently lists properties that have active businesses, such as wineries. In those cases the owners often are concerned about keeping the sale of the business a secret.

French said sometimes sellers are concerned about the vulnerability associated with strangers coming onto their property and into their homes. For that reason, agents also don’t do open houses for these kinds of listings, she added.

Land Conservation
A special feature of the farms and estates market is the potential to conserve the land and protect resources, such as water or migration routes, by using conservation easements. These easements are legally binding agreements that continue at the sale or inheritance of the property. The result is large areas that are guaranteed to remain country properties, assuring the continuation of this rural lifestyle.

Conservation easements are a benefit to the community because they keep the land “beautiful and open,” French said, “and protect the integrity of Mr. Jefferson’s village.”

“The conservation easements protect the land and impact value,” White said. They also offer a “huge tax advantage,” he added, which appeals to property owners. On the other hand, by definition, they limit subdivision even for family. This means when there are multiple heirs it is likely they can’t each receive a piece of a family farm if the property is under a conservation easement. The ultimate result may be that a multi-generational farm can’t stay in the family as the heirs may be forced to sell to assure that everyone receives their share of any inheritance.

Wiley described the conservation easement as “a great tool for selling farms.” He cited the tax credits and the preservation of the property. He added that Virginia is one of only three states where the state tax credits can be sold to someone else. That means if the owner of the property can’t use them, they still benefit from putting their land in an easement.

While conservation easements are found everywhere, Albemarle County is especially well represented. Walden explained that you will find just about every large property protected this way in Albemarle.

Celeste Smucker is a writer, blogger and author. She lives near Charlottesville.