If you get an easement, you could be getting a big payment that is significantly more than what you paid for the ranch to begin with.
Kansas City, Mo. (PRWEB) November 21, 2016
Easements are becoming a popular consideration for many land owners all over the United States. With the help of real estate agents, buyers and sellers are educating themselves about easements as the demand for land, access to equity without hindering use and the increased interest in conservation drive a need to better understand the diversity of easement types and available options. United Country Real Estate brokers and agents are noticing that easements are playing a larger role in more and more of their real estate transactions. Whether it’s an access, utility or a conservation easement, it can have an effect on buyers and the selling process.
Conservation easements are one way land owners and investors are not only protecting their land and gaining access to equity, but they are also potentially increasing the value of their investments. Easements, defined by law, is a right held by one person or entity to make use of land or property of another for a limited purpose. In states like Montana and Colorado, conservation easements play a part in nearly 40 percent of ranch land transactions. Ranch owners are selling rights to all or a portion of their land to an outside entity, sometimes for a hefty price, for conservation or other purposes and not only get a large payment, but in some cases it doesn’t affect the value of the property. This provides added value to properties in some cases. Many times, entities like Ducks Unlimited or Rocky Mountain Elk Foundation will purchase ranch land to ensure healthy habitats for wildlife and still allow for full ranching use.
“Right now the most common in Montana are no plow and no drainage easements,” said Bob Sanders, manager for the conservation program for Ducks Unlimited in Montana. “If you’re a rancher, you don’t want to plow anyway and you don’t want to drain because that’s a water source for your cattle. If you get an easement, you could be getting a big payment that is significantly more than what you paid for the ranch to begin with.”
The word easements is a common term in the real estate world. Whether utility, conservation or other type, consumers will have a real estate transaction, or their currently owned property, affected by an easement during their lifetime. Unlike the many other types, conservation easements have gained positive momentum in the past several years. Land owners are seeking out entities who would be interested in placing an easement on their property. Ranchers can retrieve up to three quarters of the value of the land in a tax credit – which could mean millions of dollars for a large ranch.
While sellers of land with an easement attached are educated on the terms and conditions, buyers are sometimes uninformed or misinformed. For real estate brokers like Michael Krieg, it can be an uphill battle to show buyers that the land still holds its value. Many conservation easements have broad enough terms that it won’t restrict a future owner from doing what they want on the land, such as building an additional house. Krieg said it’s about educating buyers that the property still holds value.
“Let’s face it, there are some properties that are perfect for an easement,” said Krieg, broker for United Country Real Estate | Real Quest Realty in Grand Junction, Colo. “A lot of buyers even love the fact that a property has an easement. It’s all about educating them and it’s the seller’s and the buyers broker’s job to explain it. But I’ve never had a bad experience or a deal go south because of a conservation easement.”
Popularity of easements has increased so much that Krieg said many investors are also seeking out ranch land currently without an easement so they can purchase the land and seek out an entity who will place one. He said it’s changing the way people are investing in real estate, especially ranch land, farmland and recreational properties.
“I have big clients who are literally looking for an avenue to save them on taxes,” said Krieg. “They don’t care much about the ranch itself, but the tax credit value is attracting them for investment purposes. For example, I did an easement on a big ranch that had gravel reserves worth $100 million, but it was only a $4 million property. The buyer ended up with a $100 million tax credit after he put an easement on it.”
If you’re a ranch, farm, recreational property or land owner wanting to learn more about adding a conservation or other easement to your land, Krieg and Sanders offer some advice:
- Look around your area for entities that are able to hold an easement. Research is important and could take months doing it. Federal agencies, Rocky Mountain Elk Foundation, Ducks Unlimited, fish and game agencies, water mitigation firms and land trust companies are all places you can look into.
- Have a good financial advisor that can break down all of the tax benefits and options. Every state is different.
- Consult an experienced real estate agent or auctioneer familiar with real estate considerations for different easements.
- Landowners have the ability to customize the easement any way they want. Make sure to discuss options because once signed on the dotted line, it can’t be changed. Many times they offer a wide range of negotiation specific to each property.
- Be patient. Easements can take up to a year to process and become finalized.
“Overall, don’t rely on the rumor mill to guide you,” said Sanders. “Conservation easements are a viable tool, but it’s not a one-size fits all. They are definitely a good thing, but you need to surround yourself with experts who are educated and experienced with easements. That could be your real estate agent, financial advisor, or local wildlife organization.”
United Country Real Estate is the leading land seller in the United States, marketing ranches, farms, recreational and vacation properties nationally. It is the leading, fully integrated network of real estate professionals with nearly 500 offices and 4,000 agents, brokers and auctioneers nationwide specializing in lifestyle real estate.
For more information about United Country Real Estate, visit UnitedCountry.com.
About United Country Real Estate
United Country Real Estate –is the leading, fully integrated network of conventional and auction real estate professionals. The company has been an innovator in lifestyle and country real estate marketing since 1925. United Country supports nearly 500 offices and 5,000 real estate professionals across four continents, with a unique, comprehensive marketing program. The exclusive program includes the highest ranked and largest portfolios of specialty property marketing websites, unequaled national print advertising, the largest internal real estate advertising agency, an extensive buyer database of more than 650,000 opt-in buyers and additional proprietary programs to advertise local properties more broadly.
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