Our founder, Chad Polk, had the opportunity to set down with Hall & Hall’s Jeff Buerger recently for an interview. Listen in as Jeff unpacks some incredible insight into pricing mega ranches and rare assets in the ranch real estate business.
Thank you for joining us. I’m Chad Polk with REALSTACK and ….
Today with us we have Jeff Buerger, partner at Hall & Hall. I’ve had the pleasure of working with Jeff on several projects throughout the years and I know by the end of our conversation the audience will know he is passionate about this work.
Jeff, thank you for joining us today!
Jeff: You bet, thank you.
Chad: For those of you who may not know, Jeff and Hall & Hall have made a name for themselves marketing and selling an asset class that often times is top in the market. For example, Jeff recently closed on the sale of Great Western Ranch which was marketed at $60MM. Jeff, if you can explain how you even begin breaking down the amenities, improvements, and value on a mega ranch.
Jeff: Sure Chad. Not an easy question to address obviously. Especially the asset classes that we operate in. Each deal is unique to the market and needs to stand on it’s own merit. Great Western Ranch was 176,000 deeded acreas and 116,000 of state and BLM lease land which is pretty unusual in the market. 457 square miles. So in reference to your question, our model at Hall & Hall is relatively simple. Our goal is to represent largest investment quality properties out there.
As an example, the primary drive of Great Western Ranch was it’s size. The rarity of a property like this will always drive the value for the market segment …the one-percenters of the one-percenters. The buyers can afford something like this begin the primary driver of its size. Also helpful that the ranch was not heavily improved. The area of a ranch possessing abundance of improvements, in my opinion, has really faded.
I personally think land owners are trending away from investing too much capital in infrastructure. Basically today, less is more.
Chad: Interesting you make note of too many improvements. We see that trend as well because you don’t know what the next owner has in mind. Too many buildings, facilities, and improvements can often times narrow your market.
Jeff: Thats exactly right. No matter what you do to a property, the next owner is going to want to do something different. The days of 10,000-12,000 sq ft homes has all but gone away. People are looking to be sustainable and protective of the environment. Buyers are more discerning now about improvements on a property. Over improvement simple creates diminishing value.
Chad: We’ve come into an age where I define the land market as becoming efficient. Efficient meaning that buyers are as equipped with as much information as sellers and their brokers. How has this changed your role as ranch broker in the last decade?
Jeff: You know. I think what you ultimately see is from a brokerage perspective. What is too much information and what is not enough. As technology continues to advance rapidly as it does, the accessiblity of information becomes easier to acquire. We take the disposition to providing the most information to both buyers and sellers as possible.
A buyer can now adequately research a properly and truly study it prior to coming on property. This has value in saving everyone time and money.
Also, now fully equipped on a property with information, all parties can make informed decisions. It creates a streamline process.
Chad: You put a lot into marketing a property …effort, outside resources, and market dollars. What characteristics does a ranch have to have for you to consider taking the listing and does salability factor in?
Jeff: Great question. I’d tell you in my line of work. One of the reasons why I like being Hall & Hall is we are synonymous with doing the best of the best ranch deals. When you look at our online presence and properties we are offering, you can see we developed that reputation.
One is the acreage. We want to represent prominent deals in the Western US and Internationally. Great Western Ranch served to fits a combination of models, but certainly fits the acreage criteria.
Others would be a significant water resource, privacy and seclusion, resident herds of wildlife …as a whole, I look for what surrounds the property and what physical characteristics stand out.
Chad: Often times within your asset class of listings, you don’t have an actual comparable listing recently sold or on the market. What forms of models and exercises do you go through to price a property?
Jeff: Pricing a property is both an art and science. Throughout this process if we have a seller that will sell if “I get this amount of money”. That typically doesn’t work. There has to be a provable model for value.
If we are valuing a ranch that has 50% of the sub surface mineral estate. If there is an opportunity to sell those rights, that’s going to impact how a ranch is valued on a per acre basis.
Let’s say it has both banks of a significant water resource, I’m valuing that property on a per river mile basis. Is it a tailwater fishery, what are the flows, has their been enhancements.
In terms of farmlands, we can use a lot of data with lets say water applications, how many head of cattle can be run per acre, hunting tags …the Great Western Ranch had 130 elk tags …that could be a quarter of a million dollars in revenue annually from this ranch just on hunting rights. Livestock production ranches is directly tethered to livestock market and how it’s performing.
Reality of it is, we deal in very complex assets that have influence of external forces and data from income opportunities. Each deal us unique and different in terms of how it’s priced. Comparable sales are only 1 dimension.
I recently listed a property that owns 3 1/2 miles of both banks of the San Miguel River. That value is directly tethered to its rarity. What that really means is the profile of buyer understands only something like this is really hard to acquire.
Chad: The common thread among all those amenities is: water. Water drives production, wildlife, livestock, fishing, and on …
Jeff: Good point …
Chad: Marketing and selling in the ranch industry has substantially changed … most important though marketing on the internet. Now we have electronic maps, digital photos, smart phones, videos, and now aerial video. At the end of the day has this made it easier for ranch brokers to get more qualified buyers on property?
Jeff: I’m biased towards an answer. I’m very much in favor in the advances of technologies in the land business. Reality is we are not going to change how technology evolves. It’s a double edge sword. Informational flow, advances in technology if used properly are advantageous to everyone involved.
For example, what better tells a story of investment properties than an aerial perspective. The number one goal here is to educate perspective buyers and to educate them with as much information as possible on the front end. It simply helps them make a decision. The story and information help save the seller and broker immeasurable amounts of time and draws in the most qualified buyer.
The one caveat though. Nothing replaces boots on the ground. So we use a combination of all these marketing efforts to help tell a story, be informative, be creative, and hopefully will be influential for buyer to come look.
Jeff, you’ve packed a lot of insightful information into a very short period of time. YOu are certainly an expert at your craft. Thank you for the insight.
Jeff: Always a pleasure talking with you Chad. Thank you.
To learn more about Jeff Buerger and Hall & Hall, visit hallhall.com. They provide incredibly great service to both buyers and sellers of farm and ranch land. Thanks for listening in.
To learn more about REALSTACK, visit realstack.com.