17 Things, Buyers, Sellers, & Their Realtor Should Consider When Negotiating a Land or Farm Purchase Agreement

negotiate

  1. Purchase price (the obvious!)?
  2. How much earnest money is to be deposited by the purchaser? What happens to the earnest money? What’s a fair amount of earnest money?
  3. Where will the closing take place? (the title/escrow company is normally determined by the seller but can be negotiable)
  4. Closing date & Possession of the property? (buyer & seller should take into consideration any existing farm or hunting leases and tenant rights)
  5. Is the offer contingent upon an appraisal? Is there a deadline to have the appraisal completed? What happens if the property doesn’t appraise for enough?
  6. Is offer contingent upon financing? Is there a deadline to obtain financing? What happens to my earnest money if I can’t obtain financing?
  7. Who’s paying for the “Title Commitment” to issue a ALTA owner’s policy of title insurance (seller, buyer, or are the costs to be split between seller/buyer)? Is there a deadline for seller to deliver title policy?
  8. Proration of taxes? (normally prorated to the time of closing but can be negotiated)
  9. Is purchase contingent upon buyer review of Farm Service Agency (FSA) documents that govern the farm?
  10. Is offer contingent upon the sale or closing of another property owned by the purchaser? What happens if another buyer makes an offer with no contingency? Is there a kick-out clause in the contract?
  11. Does the property require a survey? Who pays for the survey? Will the sale price be adjusted up or down, if the number of surveyed acres is more or less than the number of acres agreed to in the purchase agreement?
  12. If applicable, how are CRP payments, cash rent payments, or hunting lease payments to be prorated?
  13. Will mineral, wind, and energy rights pass to the new owner?
  14. Is there personnel property items on the farm; e.g. coral, machinery, livestock? Are there terms in the purchase agreement discussing possession of these items?
  15. Does the property have existing farming or hunting leases in place and how are these addressed in the purchase agreement?
  16. Who’s paying the Real Estate Company’s commission?
  17. Always ensure an offer to purchase has an expiration date!

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