Missouri Farm and Land Real Estate - Leon R Miller Co

The Leon R. Miller Co, represents sellers in the following counties—Warren, Montgomery, Callaway, Lincoln, Pike, Audrain, Franklin, Crawford)
 
 
Land Market:  The reports of land sales in the east central Missouri have been mixed.   Real estate agents who use only the Realtor’s Multiple Listing Service tell us they have no lands sales during 2011.  On the other hand, real estate companies who direct their marketing to buyers are selling land.  Also, there are sales between neighbors, friends and relatives seldom known to the public. 

The Leon R. Miller Company sales have been very favorable during the first half of the year.  Grain farm sales indicate prices to be firm.   Sale prices of 40 acre – 100 acre size properties have been stronger than our sellers expected.  The properties need to be well maintained to obtain top dollar.  That junked up or over grown property is hard to sell.

Cash Buyers: The buyers of our listings have either paid cash or had at least 30% down payment.  Banks are making land loans. 

How do buyers find land? Nearly all of our sales have been to buyers who found our listings on the internet. It is very unusual for a buyer to be represented by a real estate agent.  As one of our recent buyers said, “I enjoyed the thrill of searching on my own.” 

Won’t make offers!  Today’s buyers seldom make offers on properties that are significantly overpriced.  For example, if the property is priced more than 10% above what the buyer perceives as market value, they won’t make an offer.  In fact, they will seldom look at the property.  By the time the seller says, “Make an offer” the buyer has moved on to another website or driven down the road

Expect more land to be offered for sale:   Until recently, many potential sellers had held off selling, assuming that the down turn in the residential market had spilled over into the land market.  Sellers now realized this didn’t happen.  They’ll be testing the market this fall.

Expect more buyers in the market place:  We have seen an increase in buyer interest during the past 60 days. While the news outlets continue to report economic doom and gloom, many investors see land as a good as gold. 

Marketing is the key to selling today:   The most elaborate marketing plan will not sell properties if they are greatly overpriced. 
 

In 1951 George sold 80 acres to Titus. Titus was his neighbor and owned an adjoining 80 acres.  Well, he didn’t sell the entire 80 acres.  He kept a strip of land 15 ft x 1,320 ft along the north side of the land.  It was described in the deed as a “roadway.”   A few years later George died, but the ownership of this 15 ft strip remained in his name.  Here’s the chronicle of the 15 ft x 1,320 ft strip of land as well as a 1/100 of an acre that nearly kept a sale from closing.

In the 1980s Titus died and his two sons, Don and John inherited 160 which included the 80 acres purchased from George.  In 1997, Don and John divided their joint ownership and John became the sole owner of George’s 80 acres.   They prepared the deed themselves.  Their rationale was that this was a sale between family members, so why should they pay a title company?  Unfortunately, the new deed did not exclude the 15 ft strip and it was forgotten.    In May, I listed John’s 80 acres.  I obtained a copy of the most recent deed.  The county assessor’s aerial photo showed the county road to touch the northwest corner of the property.  

In early June I negotiated a contract on the eastern 40 acres with a cooperating broker who represented a buyer.  Soon afterwards, I had a buyer for the western 40 acres.  Just as we were ready to sign the final contracts, John remembered he had promised his nephew first chance to buy the land.   The buyer of the western 40 acres agreed to wait.  But the broker representing the other buyer was offended, accusing the seller of “using” his buyer just to force the nephew to buy.  But finally, his buyer agreed to wait for the nephew’s decision.

A few days later, the nephew informed his uncle that he was financially unable to buy the land.  He thought his uncle should sell the land to him for a lower price since he was “family.”  But John needed the money for retirement.  The property would sell for the highest  price possible.  I contacted the other buyers.  Contracts were signed with both buyers with each contract contingent upon both properties selling at the same time. The contract from the buyer of the eastern 40 acres was contingent upon his ability to obtain financing.   Both properties were to be surveyed, but each buyer would use different title companies.  Earlier I ordered a title report and learned of the 15 ft strip of land  owned by the late George,  

A few days later the survey confirmed that the 15 ft strip of land was between the county road and the 80 acres.  John’s 80 acres was landlocked!  Without legal access, the bank would not make the loan.  So we reviewed possible solutions.  George was dead and left no heirs.  So there was no one from whom the 15 ft strip could be purchased. The only solution to the problem would be for John to file a quiet title suit against the late George or any living heirs.  If no one made a claim then a quiet title judgment would probably be granted by the judge to John. 

 In the meantime, the loan commitment for the buyer of the eastern 40 acres was about to expire.  If the bank did not renew the commitment, the buyer would not be able to close. And if he didn’t close, the sale of the western 40 acres would also be voided.  After a few anxious days, the bank agreed to extend their loan commitment another 60 days.

John hired an attorney to file a suit to quiet the title.  The notice would have to be published in the newspaper for 45 days..    All seemed to go well, until the 44th day when the attorney noticed the publication was incorrect.  The process would have to start all over.  Publication began again.  On the 34th day a gentleman in his 90s called the attorney. He was a distant relative of George and Iona, but had no interest in establishing a claim.       

The survey had revealed another problem.  Even if John acquired the 15 ft strip of land, the northwestern corner would be 8 feet short of the county road, or about 400 square feet.     The 15 ft had the property closer to the road, but not close enough.  The solution was either to buy or to acquire an easement from the owner of the 400 sq ft.  And that owner was the nephew who was still miffed that his uncle had not sold the property to him.  If he said no, the sale was dead.  Sure, the uncle could sue for access, but that was not a desirable alternative.  

To John’s surprise, the nephew agreed to grant an easement over the 400 sq ft under one condition:  He would have the right to use the 15 ft strip as a field road twice a year.  One of the buyers agreed but the second wanted the nephew to share in maintenance.   That was not going to happen.  Finally the buyer realized that this would be a “deal breaker” and withdrew his demand. 

 The 45 days passed with no one coming forth and the judge signed the quiet title judgment.  John now owned the 15 ft strip of land.    But both title companies stated that even though the judge had signed the document, they would not insure access until another 30 days passed. During that period, the buyer of the eastern 40 acres had to request a new loan commitment. This time the banker was not as cooperative.  They wanted a higher interest rate.  

 A few days later the buyer had a new loan commitment, but he wasn’t pleased.  The survey of the 1/100 of an acre or 400 sq ft was completed, the easement deed was prepared and the nephew signed.  Since there was a loan on the nephew’s property, his lender had to agree to release the 400 sq ft from their collateral.   The seller paid the survey costs, preparation of the easement deed, the partial deed of release from the bank, recording fees, and attorney’s fee.  (That was probably the most expensive 1/100 of an acre rural land ever sold in Missouri.)   The sale contracts had been signed in June and were scheduled to close in August.   

 The sale didn’t close until February of the following year, six months beyond the original closing date.   The seller was lucky. Very few buyers would wait six extra months or endure the ups and downs that occurred with this sale.  The strip of land and 400 sq. ft amounted to less than one half acre and it’s value was less than $1,000.00, but it nearly derailed the sale of a $320,000 tract of land and John’s retirement fun.     

The Land Market:  In 2010, demand was strong for prime farm ground, “mixed” on most hunting and recreational ground and weak for development land.

Farmland:  A few reported sales came in above $4,200 per acre on prime farm ground.   The general view is that farm land prices increased 3% -5% this past year.  Nearly 65% of the buyers were neighboring farmers.

Hunting land: The number of sales of large hunting tracts (over 150 acres) was down. The perception is that prices had dropped from last year; however, there were very few tracts offered for sale.  Demand for 40 – 80 acre hunting tracts and sale prices seemed about the same as 2009.

Development land:  This is land located in eastern Warren, Southern Lincoln, and Eastern Franklin Counties.    Some sales were bank owned properties.  Many sellers took a 50% - 60% loss.

Who bought and sold in 2010?Sellers:  Most sellers had no loans on their properties;  therefore they were not financially pressured to sell.  Unless they were selling farm ground,  many realized that  their  property had not increased in value over the past three years, so they adjusted the price and sold.

Buyers:  They were few in numbers but strong in buying power.  They had cash or the ability to obtain a loan.  The internet continued to be their source for finding properties.   Very few haggled when properties were clearly overpriced.   

What to expect in 2011:   Land prices will remain steady in most of the areas that the Leon Miller Company works.  While there is a demand for good hunting, don’t expect any increases in price.  Sellers need to be sure that their agent is placing their property on the major land websites accessible to buyers.  Exposure is the key to selling land for top dollar.

Jane Smith who is married to Joe Smith inherits a farm.  At this point, Jane has both an equitable interest and a spousal interest in the farm.  Even though her husband Joe did not inherit the farm, he does have a spousal interest.  Now when Jane sells the farm, the title company will require that Joe sign the deed because of his spousal interest.  The title company will issue the check to just Jane Smith because she is the only one who has an equitable interest.   As long as Jane and Joe stay married and both are mental and physically able to sign documents all is well, but divorces, illness, etc have a way upsetting the apple cart.  For example: 
  
In the mid 1900’s, I met with two married sisters and their single brother who had inherited 120 acres of Franklin County land.  On the day of the meeting, both husbands accompanied me during the land inspection.  One bragged about his deer hunting experiences.     Afterwards, the sisters, brother and I sat down at the kitchen table while the husbands stayed in the living room.  As I was explaining that the title company would require all spouses to sign the deed, a loud voice came from the living room, “I’m not signing a thing!”  It was the deer hunting spouse!  There was dead silence, so I repeated my point.  And the response came back from the other room: “If selling this farm depends on my signature, then it ain’t selling.”      I thanked them for their time and left.  During the following weeks the other sister and her brother tried to reason with the brother-in-law.  They even offered to sell their share to him, but he said no.  Then the next year, his wife died.  Now his spousal interest changed to an equitable interest.  He was one-third partner with his brother-in-law and sister in-law.  I doubt that this was the intent of their late parents.

Many years ago I represented two brothers and their sister who had inherited land in Lincoln County.  All three were married.  The sister’s husband was in the advanced stages of Alzheimer and was not physically or mentally able to conduct business.  She told me that before he became ill, they had prepared a trust that would allow her to sell their real estate without his signature.   All seemed in order until a week after we successfully negotiated a sale contract to sell the land.  The title company called.  There was a problem! 
  
 After the attorney had prepared the trust, the sister and her husband had failed to deed their ownership interest in this land into the trust.   This meant that the title company would require the signature of both she and her husband before the property could be sold.  But, since the husband was unable to transfer his spousal interest was put on hold.  Fortunately, I was able to work a solution with   another title company and the sale closed a few weeks later.  They were lucky.   
   
In the late 1980’s, I sold a Warren County farm that had been inherited by 10 children.  After the contract was signed by 10 children and 9 spouses, I was told that one of the heirs was getting a divorce.  His wife refused to sign the deed until she was guaranteed 50% of his inheritance. He argued that this was his inheritance and not hers.  He was right.  He had the equitable interest and she had only a spousal interest, but she and her lawyer saw it differently.   The closing was delayed.  After weeks of haggling and considerable pressure from his siblings, the husband agreed to her demands.  But the wife wanted the money before she would sign the deed and the title company would not give her a check until the deed was signed. Finally an agreement was reached. 

The title company divided the proceeds into twenty checks, rather than ten.  Each couple would get two checks made payable to both husband and wife.  Both husband and wife would have to endorse both before either check could be cashed.  At the closing, the husband, the soon to be ex-wife and their lawyers sat across the table from each other.  The closing agent with the title company gave the deed to the husband, which he signed.  The deed was then handed to the ex-wife along with one of the two checks made payable to her and her husband.  She signed the deed and endorsed her check.  The husband endorsed his check after both lawyers gave their approval.  Then each slowly slid their endorsed check across the table until their hands were on both checks.  Then they slowly pulled back the exchanged check and their lawyers verified that the checks had been properly endorsed. 

Driving away from the closing that day, I had to laugh, but, I’m sure their late parents would not have found this to be a laughing matter.       

Consider seeking the advice of an attorney, if you intend to leave your land to the kids or if you are about to inherit land from your  parents.  Legal expenses to prevent a problem are far less than the legal expenses of solving a problem.

False rumors and misinformation can circle the earth 10 times  before the facts can travel to the end of the road.  This is especially true in the rural land market. Here’s why. 

Accurate real estate sales information is not available in most Missouri county public records.  So the only reliable sources for a sale price is from the buyer, the seller, or the real estate agent.   And if these people are not available or are not talking, then the rumors and  half truths start mounting. Here’s a few recent examples:
 
Example #1:  Last week I saw an acquaintance who had “information” on a farm sale that he couldn’t wait to tell: “Have you heard about the 120 acres that sold for $5,000 per acre?  Yep, All farm land in this area is going to be selling for $5,000 per acre from now.” 

If his information was correct, then this could indicate that land prices in this area had gone up $1,000 per acre in less than a year.  I called a reliable source and found out his information was only half correct.  The 120 acres had sold but the price was $3,800 per acre and not $5,000 per acre.  So  how did this misinformation get started?

I asked my acquaintance where he got his information. With reassurance he told me that when he said to the buyer that he bet he had to pay $5,000 per acre, he didn’t say a word, so he assumed the price was $5,000 per acre.  
 
Example #2:  Last week a seller told me he wanted $3,500 per acre for his land.  He was basing the price upon a neighboring property that had sold for $3,500 per acre.  His information was only partially correct.  True, the property had sold and yes, the total price was accurate; however, the land had several buildings.  When the price adjusted was made for these improvements, the value of his vacant land was far less than his expectation. 

Example #3:  Last spring a gentleman called about selling his Warren County property. His St. Louis business had become a victim of the down turn in the residential market.  The bank was forcing him to sell his rural property to pay his business loan.  His previous listing agent, a residential salesman had listed the property at $6,000 per acre. The agent had arrived at the price by relying on unconfirmed sale information of a nearby property.  His information was     incorrect. The neighboring property had not sold! Furthermore, he ignored two comparable properties in the $4,000 per acre range.  With this information the seller’s  property was re-evaluated.  We listed and sold the property within a few weeks.  The seller paid off the bank loan a month before foreclosure was to begin, put cash in his pocket, and restored his peace of mind. 

Example #4:   In July, a landowner from California called about his family’s 293 acres Missouri farm they needed to sell.   He had spoken to a friend of the family who lived in the area.  The friend had told him that no one was buying land and that their farm would only sell at a “give away price.”  I explained to the landowner that to say “no one” is buying land was not true.  I had information of area sales and none of these sales indicated a “give away” price.  He listed the   property and by the end of the year, the farm sold.  The price was higher than he expected and much higher than the family friend had told him he could expect.     

Example #5:  This fall a landowner called, desperately needing to sell her land because of family illness.  The sale had to be made quickly.  It sold in less than 6 weeks for $2,350 per acre.  Two years earlier, a buyer offered  $3,500 per acre, which the owner refused to accept..  She heard   rumors that land in her area was selling for $4,500 per acre.  Sadly for her, she chose to believe the misinformation rather that seek the facts.  This decision cost her over $130,000.     
     
Here’s what George Washington had to say about the consequences of using misinformation in a letter to John Jay on May 8, 1796: 

“Serious misfortunes, originating in misrepresentation, frequently flow and spread before they can be dissipated by truth.”

Price and Value are words used interchangeably in normal conversation, but in the real estate world they have distinct meanings.  They have more specific meaning when linked with “sold” price and “market” value.

The Selling Price is what someone actually paid for a property.  This is usually the best indication of value, but not always.  There are many reasons why buyers pay more for a property than its theoretical market value:
          They are replacing land in a tax deferred exchange to save tax dollars
          They own land adjoining their property
          They “fall in love” with the land
          They exchange higher price for favorable financing
          They are uninformed.

On the other hand, there are many reasons why sellers sell below the theoretical market value. The seller may be under duress and will accept a low offer because of:
           Divorce and/or death
           Impendent foreclosure
           Loss of job or/lower pay
           Liquidation of estate
           Cash needed for alternative investment
           Lack of good information (uninformed)
 
The sales comparison approach is the most frequently used approach of estimating value by comparing the subject property to comparables sales, called “comps.”  This approach is based upon the economical theory of substitution:  A buyer will NOT pay more for one property than for another that is equally desirable.  But, there are several problems that occur when using sold prices as the only estimate of value:
           Sometimes there are no comparable sales
           Sometimes the available sales are totally different from the subject property.
           Sales information from MLS is only available to real estate professionals
           Sales Information from sources such as MLS is not always correct 
           Sales information not in MLS is not readily available even to professionals
           Motivation that influenced the sellers and buyers is seldom known

(The best way to find out the sale price is by talking to the buyer, seller or real estate agent.  A personal interview reveals information that may have influenced the price such as motivation.)

 The Asking Price is the most available type of real estate information to the general public.   This data is found in newspaper ads and from real estate offices.  For the past few years, the Internet has become a major provider forasking prices… but not selling prices.

Land owners seldom have access to sale prices; therefore, they rely on the asking prices of other properties as a gauge in pricing their land.  This can be a big mistake, especially when these asking prices are unrealistic “dream prices.”  Others may make similar mistakes by setting their asking prices based upon incorrect information about recent sales. This explains why over priced properties are more common in rural than in urban areas. 

Market Value is a simple, theoretical concept based on complex human behavior.  Unlike price, value is always expressed as an opinion or estimate rather than a material fact.  Value is more accurately described as range rather than a precise number.  The process of estimating introduces an initial margin of error.  Buyers and sellers add another margin of error because they make decisions based on emotions and personal preferences, not just rational thought.

Determining the value of land is complex.  While this process can be ambiguous, a professional land broker with experience and knowledge can remove much of this uncertainty. 

Question: We are planning to sell our land.  When is the best time? We heard that most people look in the spring.
 
Answer:  Sellers of wooded land believe their land will sell best when leaves are on the trees and the flowers are blooming, but our experience has shown that many buyers of wooded land would rather look at land in the late fall or winter when the leaves are off the trees.  Blooming flowers and green leaves seldom influence serious buyers.
 
Farm buyers purchase any time of the year, but some delay the closing until late fall or winter.  Since farm loan payments are due annually, the farmer may want to coincide the fall harvest with the payment due date.  On the other hand, many successful farmers spread the sale of their grain over the enter year; therefore closing the sale in the fall in not as crucial.  Another reason for a fall or winter closing is to allow the new owner 100% possession of the land.  If the new owner is a farmer, he does not want to buy the land subject to a lease.
 
Developers buy anytime of the year, but prefer to delay closing until the weather conditions are favorable.  Several years ago a developer from California was buying our clients’ land.  The closing was set for October, but when the developer realized that freezing  weather in the St. Louis area could delay development, he wanted the closing postponed until May.  For tax reasons, the buyers wanted the closing in that year.  The sale nearly fell part until we suggested that the sellers carry back a large loan, interest free until May. Both parties agreed and the sale closed.  That winter was one of the coldest on record. 
 
In reality, land priced right will sell any time. We’ve sold land covered with three feet of snow.  We’ve sold bottom cropland during a flood when there was 10 feet of water covering the ground.  We’ve even sold land on Christmas Eve.  In every case, the seller had priced the land right and the buyer was ready, willing and able.

Let’s say you have three kids and are planning to give them the farm.  If all three are married, did you know you are really leaving the land to six people?  How? 

The Missouri courts have made in clear that a spouse has “ownership” in real property inherited or gifted to their spouse.  There name does not have to appear in the will or on the deed.  There are few exceptions and your lawyer can tell you about them.   Here are a few incidents involving inherited property that turned bad.  
In the mid 1900’s, I met with two sisters and who, with their brother had inherited 120 acres of Franklin County land.  On the day of the meeting, both husbands accompanied me and during the land inspection.  One bragged about his deer hunting experiences.   Afterwards, the sisters and I sat down at the kitchen table while and the two husbands stayed in the living room. 

The sisters and I talked about the property and as I explained that the title company would require at spouses would need to sign the deed, a loud voice came from the living room, “I’m not signing a thing!”  It was the deer hunting spouse!  His wife appeared embarrassed and didn’t say a word.  I repeated my point and again I heard, “if I have to sign the deed, then it ain’t selling.” I thanked them for their time and left.  During the following two weeks the other sister and her brother called me several times.   They desperately wanted to sell.  They had tried to reason with the brother-in-law and even offered to sell their share to him, but he said no.  Time past and a few years later his wife.  Now he owned a full one-third interest in the property  Today, the remaining sister and her brother are joint owners with the brother-in-law in a much damaged relationship.   This was not the intent of their late parents.

Two sisters signed a contract to sell 80 acres in Montgomery County they had inherited from their mother.  A few days before closing, the title company notified me of a problem.  One of the sisters had divorced after she had inherited the property and the ex-husband had not deeded over his spousal interest in the land at time of the divorce.   Since the sister and her former husband were not on good terms, the attorney for the title company agreed to contact him. The next day a lawyer representing the ex-husband notified the title company that her client would not transfer his spousal interest to the land.   Finally after two years and several thousands of dollars of legal expenses, the ex-husband agreed to “give up” his spousal interest for a price.     In order to sell the land, the sister had to meet his demands.  At the time of the divorce, the sister believed that since the 80 acres had been inherited, her husband had no interest; therefore she had not told her lawyer about her ownership in the land.   Big mistake.
Many years ago I represented three married brothers who owned land near Foristell.  Unfortunately, one of the brother’s wives was in an advanced stage of Alzheimer. When we met he showed his brothers and me a copy of the trust agreement that had been prepared and signed by him and his wife.  The agreement gave him sole right to transfer real estate without his wife’s signature.  All seemed in order until a week after we successfully negotiated a sale contract to sell the land.  The title company called.  There was a problem! 

  
Apparently the brother and his wife had failed to follow their attorney’s advice.  They had not transfer the real estate into the trust. This meant the three brothers could not sell the land unless all the wives signed the deed.  And one could not.  Eventually, the problem was solved but not without a great deal of anxiety and legal expenses.   
In the late 1980’s, I sold a Warren County farm that had been inherited by 10 children.  After the contract was signed by 10 children and 9 spouses, I was told that one of the heirs was getting a divorce.  His wife said she was not signing a deed until she was guaranteed 50% of his inheritance. He argued that this was his inheritance and not hers.  The closing was delayed. After weeks of haggling and considerable pressure from his siblings, the husband agreed to her demands.  But the wife wanted the money before she would sign the deed and the title company would not give her a check until the deed was signed. Finally an agreement was reached. 
The title company divided the proceeds into twenty checks, rather than ten.  Each couple would get two checks made payable to both husband and wife.  Both husband and wife would have to endorse both before either check could be cashed. 

  
At the closing, the husband and soon to be ex-wife sat across the table from each other.  The title company gave the deed to the husband, which he signed.  The deed was then handed to the ex-wife along with one of the two checks made payable to her and her husband.  She signed the deed and endorsed her check.  The husband endorsed his check.  Then each slowly slid their endorsed check across the table until their hands were on both checks.  Then they slowly pulled back the exchanged check and verified that the other had actually endorsed the back.  This could not have been what the late parents would have wanted!

All of these problems could have been avoided.  If you are planning to will your real estate to the kids, consult with an attorney. 

 Among little known facts about the state are laws that are or have been on the books of the state or localities within the state. Here are a few of those that are most interesting.

• A law enacted in 1820 charged a tax on all single men between the ages of 21 and 50. The tax was $1 per year. At that time, that would have been a lot of money. Maybe the purpose of this law was to encourage the single Missouri men to get married and have families.

• Missouri is one of four states with an official “State Dessert.”  The State Dessert is the ice cream cone, so honored in 2008. Ice cream cones were introduced and became very popular at the 1904 St. Louis World’s Fair.

• One of the nicknames of the state is “The Cave State.” The March 2000 issue of The Missouri Conservationist (published by the Missouri Department of Conservation) says that there were more than 5700 caves listed in the Missouri Speleological Survey files in Rolla. It also states that about 125 caves are discovered each year. Graham Cave State Park shows evidence of human habitation going back 10000 years. McDougal’s (McDowell’s) Cave became famous through the story of Tom Sawyer told by Mark Twain,  Today it is known as Mark Twain Cave and became the first “show cave” (tourist attraction) in Missouri in 1886.

• Another interesting fact about Missouri’s caves is that many of them were turned into fallout shelters in the 1950s, the height of the Cold War, when people feared the real chance of nuclear war
  

Listing with a Friend, Relative, or Neighbor is Risky

When business decisions are clouded by personal relationship, bad things can happen. Last week, I received an email from a landowner who wanted advice on how to sell his land. The land had been listed for two years and no offers had been received. He ended his email with “… the real estate agent is a good friend and I would never consider listing with anyone else.” Ironically, a few weeks earlier I had spoken to his broker.The broker said he didn’t know how to tell the seller that the land was over priced without jeopardizing their friendship. Their friendship was interfering with the broker’s need to be candid with his client.

A few months ago I got a call from a gentleman telling me of his dilemma. He and his wife’s brother bought 150 acres about ten years ago. Then five years later they decided to sell. His brother-in-law insisted that the land be listed with his wife, a St. Louis residential agent. This gentleman felt obligated and agreed; however, when the wife’s marketing efforts fell short, he suggested that the property be listed with a real estate agent who was more qualified. Unfortunately, his brother-in-law and his wife took the request “personal” rather than “business.” Since then, the families haven’t spoken and this has created tension among other family members. This problem was created because the arrangement was based entirely upon agent’s personal relationship rather than the agent’s qualification to sell land.

I recently met with a potential client who is the executor of an estate which included a125 acre farm. About two years ago, they decided to sell, so he listed it with his next door neighbor. After a few months of no activity, they asked the agent if they should lower the price. The agent’s response was, “You’ll have to tell me what you want because you might be angry if I suggest a price and since we are neighbors I don’t want that to happen.” When the listing agreement expired, the executor would not renew. The agent/neighbor was offended. Now a few of the other heirs are angry with the executor because he listed with the agent only because he was a neighbor. There is even a greater problem here. A good argument could be made to the court that the executor had failed to perform his fiduciary responsibilities.

 To avoid similar pitfalls here are questions to answer before listing with a friend, relative and/or neighbor:

Does the person have the knowledge/experience to sell my property?

Do I feel obligated to list because this person is a friend, relative and/or neighbor?

Do I really want this friend, relative or neighbor to know my business?

Will my information remain confidential with my friend, relative or neighbor?

If this person was not a friend, relative and/or neighbor would I still list my land with them?

What will be the consequences if I am dissatisfied and must terminate this person as my agent?

It’s not always easy to say “no” to a friend, neighbor or relative who wants to list your land. On the other hand, if the answers to any of the questions above make you uneasy, then the word “no” may be the best for all parities. (In the end, you might learn that they didn’t want the listing but only asked because they felt obligated to do so.)