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Marketing Fundamentals

Marketing Fundamentals. By understanding the critical characteristics of the market place, the agricultural land professional can create the most effective property presentation. 5-1. Objectives. Systematically study a property’s attributes Main categories of agricultural land use

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Marketing Fundamentals

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  1. Marketing Fundamentals • By understanding the critical characteristics of the market place, the agricultural land professional can create the most effective property presentation. 5-1

  2. Objectives • Systematically study a property’s attributes • Main categories of agricultural land use • Difference between a market analysis and appraisal • Reading and interpreting property’s legal description • Using mapping resources to analyze property • Data needed to properly analyze property 5-2

  3. Systematic Property Analysis • Land market professionals increase market efficiency • Traders need only to have access to information • Professional land broker save time, money, and reduces risk • Land uses vary from farming to grazing • Broker must refine list of potential uses • Uniform Standards of Professional Appraisal Practice (USPAP) 5-3

  4. Typical Agricultural Land Uses • Dryland Farming • Irrigated Farming • Grazing • Horticulture (orchards, etc.) • Timberland • Recreation/Conservation preserves 5-4

  5. Group Activity 5-1 5-5

  6. Potential and Limits • Good and bad features of its location • Location fixes land • Constrains the physical potential • Impacts practical land uses • Social influences further define property • Effective broker anticipates questions 5-6

  7. Potential and Limits (cont.) • The broker focuses on the most prevalent uses • Farming and ranching practices vary widely • Shifts occur infrequently • Broker must know technical aspects of farming • Broker must know technical aspects of ranching • The quest for expertise is never ending 5-7

  8. Potential Limits (cont.) • Participants search the market • An analyst must monitor sales • Identify important aspects of properties sold • Generate an estimate of income producing potential • Ignore income potential from recreational operations • Must know about agricultural productivity 5-8

  9. Potential Limits (cont.) • Must know about government programs • Must know about potential wildlife habitat • Convert physical and economic factors • Consider the cost of improvements 5-9

  10. Property Identification (Legal Description) • Unique legal description • Rectangular survey system • System of perpendicular survey lines • Territory divided into townships • Metes and bounds system • Describes the tract in distances and directions • Many contain small flaws 5-10

  11. Example of Metes and Bounds 5-11

  12. Group Activity 5-2 5-12

  13. Organizing the Facts • Maps are essential to analysis of property • Physically inspect the property • Inspect improvements • Obtain attractive photographs photographs • Locate and note condition of drain tiles • Cover all physical characteristics 5-13

  14. Organizing Facts (cont.) • Acreages of: • All soil classes (I-VIII) • All dedicated uses (cropland, grazing, etc.) • Typical crop rotation (wheat, corn, soybeans, cotton, peanuts, etc.) • Easements or other land use limitations • Varieties of orchards or vineyards • Timber in each stage of growth 5-14

  15. Organizing Facts (cont.) • Buildings and their conditions • Improvements to the land • Installed drain tiling • Terracing • Roads • Lakes • Mineral rights and water rights 5-15

  16. Organizing Facts (cont.) • Proximity to important services • Schools • Cities and towns • Agricultural markets • Property financial data • Income information • Government payments received • Lease terms (right of first refusal?) • Normal property tax and potential for a roll back 5-16

  17. Organizing Facts (cont.) • Maintain specific property-related data • Maintain general property-related data • Assessed values and tax rates should be monitored • Farm Service Agency (FSA) local historical production • USDA Economic Research Service (USDA/ERS) • Monitor breaking new through periodic publications 5-17

  18. Module 5 - Review • Understand how to systematically study property attributes to establish its potential • Potential property uses • Constraints on property • Anticipate buyers wants • Monitor sale prices, income potential, and costs 5-18

  19. Module 5 - Review • Know the main categories of agricultural land use • Most agricultural activities fit into one of six main categories 5-19

  20. Module 5 - Review • Explain the difference between a market analysis and an appraisal • State licensed professional appraiser • Uniform Standards of Professional Appraisal Practice (USPAP) 5-20

  21. Module 5 - Review • Understand how to read and interpret property legal descriptions • Rectangular survey • Metes and bounds 5-21

  22. Module 5 - Review • Know which mapping resources will assist in analyzing the facts about a property • USGS • NRCS • FSSA • Local assessor's office 5-22

  23. Module 5 - Review • Understand what kind of data is needed to properly analyze the property • Soil types • Physical features • Establish tax-related issues 5-23

  24. Self - Assessment Questions • The major categories of agricultural land uses include all of the following except for • Important property use-defining physical attributes include • A legal description that refers to the NE 1/4 of the NW 1/4 of the SE 1/4 of section six 5-24

  25. Self - Assessment Questions • A metes and bounds legal description • GIS, DeedPlotter, and ESRI • Data required for a complete market analysis includes 5-25

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