An * in the left margin indicates a change in the statute, rule or text since the last publication of the manual.

I. General

A large segment of the Colorado economy is devoted to agriculture. A wide variety of products are produced on property ranging from irrigated land to mountain hay meadows to fruit farms. It is a complex pattern that is both an opportunity and a challenge to the real estate licensee. There is opportunity because tremendous wealth is involved. No other group values the ownership of land more than the ranchers and farmers of Colorado. It is a challenge because farmers and ranchers demand service for the commissions they pay. Service in this field involves much effort and knowledge. Rural real estate involves many problems that are not found in selling urban property. The successful person in this type of brokerage must know solutions to the problems and to understand all the factors involved in determining rural real property values.

The sale of a farm or ranch is also the sale of a business. This has become more obvious as the traditional family farm or ranch increasingly has been replaced by sophisticated corporate entities. Although a property may include land, personal property, and water rights, the marginal value of a farm or ranch is largely determined by the income produced. The real estate licensee dealing in farms or ranches therefore must have a strong knowledge of agricultural finance and economics in addition to an appreciation of the physical assets to be conveyed. Such knowledge can include areas as diverse as the price of winter wheat, changing developmental and demographic patterns, and new developments in fertilizers and pest control.

Successful farm and ranch brokers exercise a great deal of care in listing properties for sale. Many problems can be avoided by planning carefully in this phase of a real estate operation. Showing a farm or ranch involves much more than showing a house in an urban setting. Consequently, when a licensee accepts a listing of rural property, the real estate licensee must have a sound knowledge of the property and surrounding area.

In developing a list of farms and ranches for sale, it is well that a licensee consider specializing either in certain types of properties or in a given area. By restricting the area of operation a licensee can gradually become an expert in their field. If the real estate licensee becomes familiar with every farm and every farmer in the south half of the county they will be recognized as an authority and good listings will be the result. If the licensee learns about dairy farms and becomes acquainted with the owners of this kind of property, the licensee’s services will be in demand by those wishing to sell dairy farms. As the licensee becomes more experienced, he or she can expand their area of geographic expertise or may branch out into different specialties (orchards, wheat farms, etc.)

Before an owner signs an exclusive listing, a complete statement of all the important information concerning the property should be developed. Sample listing sheets appear in this manual. The licensee should go further and develop a brochure or brief that gives a

22. Farm/Ranch Brokerage

22. Farm/Ranch Brokerage

Colorado Real Estate Manual

complete description of the property along with pictures and charts. Some brokers even use aerial photographs to better present the qualities of the land to prospective buyers. The extent of the listing information will depend on the complexity of the transaction.

The following maps will help in the analysis of the farm or ranch:

1.Map showing all improvements, location and description;

2.Map showing all water, streams, springs, wells, lakes, water holes, etc.;

3.Map showing vegetation cover from the Bureau of Land Management;

4.Map of mineral ownership;

5.Plot of the ranch on a road map showing accessibility to roads, railroads, air fields, etc.

The listing broker must also obtain full financial data concerning operation of the property. In the past, financial records have often been incomplete due to resistance from owners or inconsistent record keeping. Today, this situation has changed to the point where a licensee often will be dealing not only with an owner but also with accountants, lenders and attorneys. Financial information must be maintained in strict confidentiality. Potential purchasers should be provided such information only after being fully qualified and with the consent of the owner.

Water rights should be carefully studied and described not only as to date of decree and amounts of water decreed, but also as to actual delivery of water year after year in both wet and dry years. Additional information on water rights may be found in the table of contents and index.

The precipitation and temperature figures should be developed for the past few years. These figures are important in determining winter conditions, winter feed needs, etc. Hay and grain production on the ranch for several years back should be determined. These figures tie into the wintering analysis that the broker is making.

All minerals should be checked, as the greatest asset of the property could well be the minerals. Also, in the sale of the property, the minerals can be sold separately to the purchaser of the land or to someone else.

Inquiries should also be made of the owner concerning the existence of possible hazardous waste sites. These could include abandoned fuel storage tanks or chemical dumps and could result in serious problems if not disclosed to potential purchasers.

A very important factor in the sale of a ranch is the carrying capacity. How many animal units will the ranch support? Sometimes this is a historical fact based on the number of cattle that have been run on the ranch over a period of years. If the ranch has BLM (Bureau of Land Management) lands within its boundaries, the BLM may have the A.U. (animal unit) figures for the ranch. Check to see if the carrying capacity has been increased by range seeding and by water hole development.

The farm and ranch expert looks for buyers in practically the same areas where they search for listings. The licensee keeps in contact with as many people as possible that are related to the industry, such as machinery companies and farm organizations. Probate judges and trust officers may often provide leads on prospective buyers. The real estate professional

Loan Information

Is there a loan (Yes - No) Original amt $

Int rate _____% Due When Made

How Payable

Present Balance $

Can it be Paid off

Mortgagee

Address

Other Indebtedness

Lender

LEGEND

Buildings

Fences

Railroads
Streams
Wells
Windmills	X
Reservoir
Ponds
Timber
Deeded	(Red)
State Lease	(Yellow)
BLM	(Blue)
Private Lease	(Green)

TownShip: Range:

6	5	4	3	2	1
7	8	9	10	11	12
18	17	16	15	14	13
19	20	21	22	23	24
30	29	28	27	26	25
31	32	33	34	35	36

Date___________________

The foregoing statements are substantially correct.

(Owner)

Owner)

Address