Jacob Hart - ALC

The Realities of Selling Inherited Farmland You did not ask for 80 acres in Iowa. You got them anyway. The paperwork came in the mail three weeks after the funeral, and now you own something that feels half like a burden and half like a family obligation. This happens more than people think. Someone plants corn on land you never see. Property taxes arrive in December. You wonder if keeping it makes sense or if you should just sell and split the money. Farmland is not a house. It does not have bedrooms or a fresh coat of paint. It has soil ratings, tenant leases, and harvest cycles. Most people who inherit farmland have no background in agriculture, no idea what CSR2 ratings mean, and no clue how to handle a tenant who has been farming that ground for 20 years. This guide walks through the process of selling inherited farmland without losing money to bad decisions. Should You Keep It or Cash Out? The first decision is binary: Do you want to be a landlord, or do you want the cash? The Case for Keeping (Rental Income) Some people keep inheriting farmland because it generates rental income. If the land is already leased to a farmer, that cash comes in once a year. Potential Income: Average cash rent in Iowa runs between $250 and $350 per acre depending on soil quality. The Math: On 80 acres, that could mean $20,000 to $28,000 annually. The Case for Selling (The Reality Check) Rental income is not free money. You still have liabilities: Property Taxes: You pay these every year. Maintenance: If the fence breaks or drainage tile collapses, the farmer calls you. Market Swings: If grain prices drop and the tenant wants to renegotiate the lease, do you know the market well enough to push back? Why Selling Wins for Most Heirs: Selling provides immediate liquidity. Cash splits cleanly among siblings. Dirt does not. There is no ongoing management, no property tax bill next year, and no need to learn about crop yields. For people who live out of state, selling is often the only way to avoid the stress of being an absentee landlord. The Tax Elephant in the Room: Capital Gains Capital gains tax is the biggest financial fear when selling inherited farmland, but the rules actually work in your favor. Understanding "Stepped-Up Basis" When you inherit land, the IRS applies a Stepped-Up Basis. You do not pay taxes on the appreciation that happened during the previous owner's lifetime. You only pay taxes on the difference between the value at the date of death and the sale price. Example: Grandpa bought it (1970): $500/acre. Value at death (Today): $12,000/acre. You sell it for: $12,500/acre. Taxable Amount: You only pay tax on the $500 gain, not the full $12,000 profit. Vital Tax Definitions Date of Death Appraisal: This is critical. You must establish the land's value on the day the previous owner died to lock in your tax savings. Short-Term vs. Long-Term: If you sell within one year of inheriting, you pay short-term rates. If you wait more than a year, you pay long-term rates (0-20%). Estate Tax: In 2026, the federal exemption is $15 million per individual or $30 million per married couple. Unless the estate is massive, you likely won't pay federal estate tax. Dealing With Multiple Heirs (The Family Dynamic) Co-ownership is the fastest way to ruin Thanksgiving. One sibling wants to keep the farm for sentimental reasons, another needs cash for a down payment, a third lives in California and just wants out. The "Nuclear Option": Partition Action If heirs cannot agree, any co-owner can file a Partition Action. What it is: A lawsuit forcing the court to sell the property and split the proceeds. The Cost: It burns relationships and racks up massive legal fees. The Outcome: Courts usually favor the sale, so the person wanting to sell typically wins. The Better Option: Buyout or Unified Sale Buyout: If one heir wants the land, they can buy out the others at fair market value. This usually requires a loan. Unified Sale: All heirs agree to sell. Tip: Move quickly. The longer the land sits in co-ownership, the more likely disputes will arise. Timing: Sell after harvest (Fall) or before planting (Spring) for the cleanest timeline. Getting the Dirt Ready for Market You don't "stage" a farm. Nobody cares if the grass is mowed. Buyers care about the paper trail. 1. The Title Search Verify who actually owns the land. Check for liens, easements, or clouded titles. If there is an outstanding mortgage or unpaid property taxes, those must be cleared before closing. 2. The Lease Agreement (Critical!) If a farmer is currently working the land, they have legal rights. The Cycle: Most farm leases run from March to March. The Law: You often cannot kick a tenant out mid-season. Buyers need to know exactly when the current lease expires. 3. Professional Appraisal Online estimates (Zestimates) are useless for farmland. You need an appraisal based on Soil Productivity Ratings (like CSR2 scores in Iowa). Why it matters: A CSR2 rating of 85 is significantly more valuable than a 60. Soil quality drives the price, not the view. Valuation and the Sale Process Farmland valuations work differently from residential appraisals. Realtors who sell houses in town look at "price per acre" without context. A specialist uses a Comparable Market Analysis specific to agriculture, factoring in drainage systems (tiling), soil acidity, and proximity to grain elevators. To get an accurate number, you need a specialist. You can learn more about how professionals handle inherited farmland from an estate to see the difference between a general realtor and a land expert. Auctions vs. Listings Auctions: Create urgency. Bidders compete in real-time, often driving the price higher than a private sale. It also guarantees a specific closing date. Listings: Good for unique properties, but can drag on. 1031 Exchanges: Some buyers are investors looking to defer their own taxes. They often pay a premium for good land to meet strict IRS deadlines. Why High Point Land Company Wins General real estate agents sell kitchens and bathrooms. Land brokers sell soil productivity and return on investment. The skills do not transfer. High Point Land Company focuses on Farms For Sale, hunting land, Recreational Land for Sale, and residential acreages across Iowa, Minnesota, Missouri, and Wisconsin. The company uses live auctions, sealed bid auctions, and traditional listings depending on what fits the property. Marketing includes professional videos, drone footage, and direct outreach to farmers and investors who actively buy Land For Sale in the region. Working with a specialist means getting accurate valuations based on soil data, understanding lease contracts, and reaching buyers who know the difference between tillable acres and pasture ground. It also means avoiding mistakes that cost tens of thousands of dollars, like underpricing land because the agent used suburban comparables. Do not leave money on the table by using someone who treats farmland like a residential lot. Sources Iowa Farmland Cash Rental Rates (2025): Iowa State University Extension - Cash Rental Rates for Iowa 2025 Survey Understanding CSR2 Soil Ratings: Iowa State University Extension - Computing the Iowa Corn Suitability Rating Iowa Farm Lease Termination Laws: Center for Agricultural Law and Taxation - Iowa Farm Lease Termination Stepped-Up Basis Rules: IRS Publication 551 - Basis of Assets Partition Actions (Legal Definition): Cornell Law School - Partition Definition Federal Estate Tax Exemptions: IRS Estate Tax Information

Understanding the Factors Affecting Land Value Before You Sell Land value is a calculation based on utility, scarcity, and demand. A 40-acre parcel can sell for $4,000 per acre or $15,000 per acre, depending entirely on what it can be used for and who is competing to buy it. Value is subjective to the user. A farmer calculates value based on yield per acre. A developer calculates value based on the number of buildable lots. A hunter looks for timber density and bedding areas. Understanding the specific mechanics behind these price drivers helps landowners avoid the common mistake of overpricing their property based on emotion rather than data. This guide details the seven primary factors affecting land value and how they influence the final sale price. 1. Location and Access Factors Location is the single most significant driver of land value, but it is defined by access rather than scenery. Land without a legal, physical way to reach it is heavily discounted in the market. Road Frontage vs. Deeded Access Direct entry from a public road ("road frontage") creates the highest value because the owner controls the entry point. This eliminates disputes and allows for easier utility connections. In contrast, "deeded access" relies on an easement across a neighbor's property. While this provides legal ingress and egress, it often lowers the value because it limits privacy, restricts road maintenance options, and can complicate future development. The "Path of Progress" Proximity to growing infrastructure is the second location variable. Real estate professionals use the term "path of progress" to describe land located in the direction a city is expanding. A cornfield located three miles from a growing suburb often trades at a premium over a similar field ten miles out, simply because speculators are pricing in future residential or commercial development potential. 2. Physical Characteristics of the Land The physical attributes of the dirt determine its specific utility and, therefore, its price. Topography and Usability The shape of the land dictates its use. Flat ground generally commands a premium in agriculture because large machinery can operate efficiently. Steep topography drives down value for both farming and building due to high costs of grading, erosion control, and retaining walls. However, in the recreational market, rolling terrain with timber is often preferred over flat ground because it provides better hunting property habitat for wildlife. Soil Productivity and Perc Tests For agricultural land, value is directly tied to soil data. In Iowa, this is measured by CSR2 ratings. High-scoring soils (80+) generate more income and justify a higher price per acre. Drainage also affects productivity, and tile drainage systems can add substantial value to farms by improving yield consistency. For residential buyers, the soil metric is the percolation test. This test determines if the soil drains well enough to support a septic system. If land does not perk and city sewer is unavailable, the property is essentially unbuildable for a home, which drastically reduces market value. 3. Zoning and Legal Restrictions Zoning regulations determine the "Highest and Best Use" of the property. This is an appraisal concept referring to the most profitable legal use allowed by the county. A change in zoning classification usually triggers the largest immediate change in land value. Agricultural zoning typically carries the lowest tax burden but restricts development density (often one dwelling per 40 acres). Residential zoning increases value by allowing subdivision, while commercial zoning generally yields the highest price per acre due to the income potential of retail or industrial operations. Zoning Classification Primary Value Driver Typical Density/Use Agricultural Soil Productivity (Yield) Low (e.g., 1 house / 40 acres) Residential Buildability (Lot Count) Medium (e.g., 1 house / 1-5 acres) Commercial Traffic & Visibility High (Retail, Office, Industrial) Easements and Deed Restrictions Beyond zoning, specific restrictions on the deed can limit value. Conservation easements, for example, prohibit future development to protect wildlife or open space. While this preserves the land, it removes the "development premium" from the price, leaving only the recreational or agricultural value. 4. Utilities and Infrastructure Costs The presence of utilities is the defining line between "raw land" and "improved land." Buyers view the cost of bringing utilities to the site as a direct deduction from the land's value. The Cost of Connection "Power at the road" is a standard listing phrase that implies a low cost of connection. However, if electric lines are a mile away, the cost to extend service can range from $15,000 to $30,000 per mile. Similarly, water access is a major variable. A connection to city water or a rural water district adds stability to the value. Relying on a well introduces risk; drilling costs average $30 to $60 per foot, and there is no guarantee of hitting a potable water source. 5. Environmental Factors and Risks Environmental constraints are often non-negotiable deal killers that prevent financing or development. Flood Zones and Wetlands Land located within a FEMA-designated 100-year floodplain carries significantly higher ownership costs due to mandatory flood insurance requirements. Building restrictions apply, and many lenders will not finance construction in flood zones. Federally designated wetlands (mapped by the US Fish and Wildlife Service) cannot be drained or filled. If a 40-acre tract contains 15 acres of wetlands, the buyer effectively only pays for 25 usable acres, lowering the overall price per acre. Soil Contamination Old fuel tanks, agricultural chemicals, or industrial use can leave soil contamination that requires environmental remediation before the property can be sold or developed. Testing and cleanup costs can exceed the value of the land. 6. Economic Market Conditions External economic forces shape the buyer pool and pricing dynamics. Interest Rates Raw land loans typically require higher down payments (20-50%) and carry higher interest rates than residential mortgages. A high-interest environment reduces the number of eligible buyers and puts downward pressure on prices. Commodity Prices Commodity prices act as a lever for farmland values. When corn and soybean prices are high, farm income rises, and operators have capital to expand. This increased demand drives up the price per acre for tillable land. Supply and Scarcity Land is finite. They are not making more of it. Building structures depreciate over time, but land does not wear out. This makes it a store of value that tends to appreciate over decades, particularly in areas with development pressure or strong agricultural economies. 7. Why Accurate Valuation Matters Pricing land correctly requires more than looking at the average price per acre in the county. It requires a granular analysis of soil maps, flood data, zoning ordinances, and access rights. A general real estate agent may not account for the $20,000 cost of running power or the premium associated with a high CSR2 soil rating. Professional land appraisers use market data and physical characteristics to determine accurate values. High Point Land Company uses a data-driven approach to valuation. By analyzing soil maps, flood data, zoning ordinances, and access rights, we determine market value based on facts rather than guesses. This ensures property owners receive fair market value for their specific asset. Accurate pricing means faster sales at the right price. Overpricing keeps land for sale on the market for months with no offers. Underpricing leaves money on the table. Sources Iowa CSR2 Soil Ratings & Productivity: Iowa State University Extension - Understanding Iowa Corn Suitability Ratings (CSR2) Wetlands Mapping & Restrictions: U.S. Fish & Wildlife Service - National Wetlands Inventory Mapper FEMA Flood Zones & Insurance: FEMA Flood Map Service Center - Definitions and Portal Agricultural Land Values & Economic Drivers: USDA Economic Research Service - Farmland Value Septic System & Perc Testing: EPA - Septic Systems for Homeowners

Choosing a real estate agent ranks right up there with the biggest decisions you make when buying or selling property. Pick the right one, and the transaction goes smoothly. Pick the wrong one and you deal with missed deadlines, poor advice, and thousands of dollars left on the table. The stakes change depending on what you are selling or buying. A standard home sale in town follows a predictable process. An inherited farm split between three siblings who cannot agree on anything? That takes someone who knows what they are doing. Land sales, farm transitions, and estate property do not fit the usual playbook. What a Real Estate Agent Actually Does A real estate agent handles the nuts and bolts of property transactions. They list your property with professional photos and marketing. They screen potential buyers and schedule showings. They present offers, negotiate terms, and manage the closing process. Good agents save you time by knowing what paperwork to file, which deadlines matter, and how to keep deals from falling apart. The difference between a general agent and one with niche expertise matters more than most people realize. An agent who sells suburban homes all day does not automatically know how to price 200 acres of tillable ground or navigate probate court for an inherited property. Land sales require knowledge of soil quality, water rights, zoning restrictions, and agricultural income potential. What to Look For Experience With Your Property Type Ask how many properties similar to yours they have sold in the past two years. An agent who has closed 50 residential deals may have never touched a land sale or farm transaction. Vague answers like "I can handle anything" signal that they have not done it before. Local Market Knowledge They should know recent sale prices, current market trends, and what buyers in your area actually want. For land and farms, this means understanding local zoning laws, crop history, and land values by soil type. An agent from the next county over who does not know your local market will price your property wrong. Strong Communication Your agent should respond within a few hours, not a few days. They should explain what is happening at each step without making you chase them down for updates. If they ghost you during the interview process, they will ghost you during the sale. Client Reviews That Check Out Look for patterns in online reviews. One bad review happens to everyone. Ten reviews complaining about the same issues mean running in the other direction. Ask for references from recent clients with situations similar to yours and actually call them. Questions to Ask Before Hiring How many clients with properties like mine have you represented in the past year? Listen for specific numbers, not generalizations. An agent who has sold three farms knows farms. An agent who mentions they "love working with land" but has never done it will fumble your sale. What is your valuation strategy for my property? For land and farms, they should account for soil quality, tillable versus pasture acres, water access, and mineral rights. Residential agents often miss these factors and price property wrong by tens of thousands of dollars. How do you communicate with clients? Find out if they handle showings themselves or send an assistant. Ask how quickly they respond to calls and texts. Agents who cannot give straight answers to these questions will frustrate you for months. Can you provide references from recent similar transactions? If they hesitate or make excuses, that tells you something. Good agents have happy clients who gladly vouch for them. Red Flags That Mean Walk Away Takes days to return calls or sends confusing emails. Cannot answer basic questions about your property type or local market. Pressures you to list immediately or discourages getting a second opinion. Refuses to share references or past sale results. History of representing both buyer and seller in the same transaction (dual agency over 10% of deals). Farms and Inherited Property Need Different Expertise Most real estate agents have never dealt with the complications that come with farms and inherited property. These transactions involve estate tax exposure, multiple heirs with different goals, probate court requirements, land appraisals, and farm income projections. An agent who lists residential homes has no framework for handling these issues. Inheritance Property Challenges Three siblings inheriting a farm rarely agree on whether to sell, who gets what, or how to split proceeds. Probate court adds deadlines and documentation requirements that delay closings if not handled properly. The wrong agent makes these situations worse by missing court dates or failing to communicate with all parties involved. Land Valuation Is Completely Different Residential agents use comparable home sales in the area. Farm and land sales require understanding tillable acreage, crop history, soil types, water rights, hunting potential, and future development possibilities. Price a farm wrong and it sits on the market for months or sells for far less than it should. Coordination With Attorneys and CPAs Farm families often need help structuring sales to minimize tax exposure, timing transactions to align with estate plans, and finding buyers who want to continue farming rather than develop the land. This requires agents who regularly work with estate attorneys, accountants, and land appraisers. Most residential agents have never done this. What High Point Land Company Brings to Farm and Land Sales High Point Land Company works with farm families and landowners throughout the Midwest who need more than a standard real estate agent. We handle the situations other agents avoid, like inherited property with multiple heirs, farm succession planning, land sales requiring coordination with estate attorneys and CPAs, and probate court transactions. Our team knows how to value land based on soil quality and crop history, not just recent home sales in town. We connect serious buyers with quality farmland and recreational property through live auctions, sealed bids, and traditional listings. When you work with us, you get professional land appraisals, help navigating multi-heir situations, and straight answers about what your property is worth. Contact us for a consultation about farms, inherited property, or land anywhere in the Midwest.