Farms | Agricultural Property Investments

Guide to buying a farm

Guide to selling your farm

Buying a farm is not something you do every day, so Agrisell has developed a guide to familiarise buyers with the process. A farm can be a valuable asset, with a huge influence on your lifestyle and financial future.

1. Make contact with your bank (if finance is required)

Pre-qualification as a buyer at a bank or financial institution will give you an indication of whether you qualify for a loan and for which amount. Pre-qualification indicates that you are a serious buyer.

2. Make contact with an agent

There are various benefits in contacting an agent when you are interested in buying a farm. Discussing your requirements, such as envisioned farming activities, area, soil types and so forth, as well as your budget will enable the agent to search for a suitable farm.

Agrisell agents work closely together in matching buyers and sellers through our network of agents in all areas. Often the agent can inform you directly before a suitable farm comes on the open market. Your Agrisell agent will be your trusted partner in obtaining the most suited farm.

3. Request information

Upon identifying a farm you are interested in, your Agrisell agent will provide you with more information to determine whether it would be worthwhile to schedule a visit.

4. Schedule a farm visit

Contact your Agrisell agent to arrange a farm visit with the owner, at a convenient time. You and your Agrisell agent will visit the farm together. It helps to take notes and photos for consideration afterwards.

5. Sign an offer to purchase

Once you have decided to go ahead with the purchase, you should inform your Agrisell agent, who is mandated to sell the property, to prepare an Offer to Purchase for you to peruse and sign.

Agents are obliged to verify buyers' details in terms of the FICA Act. The offer will usually only be valid for a couple of days for acceptance by the seller. The seller can accept your offer as is, or make a counteroffer with adjustments on their terms and conditions.

You can then accept or reject the counteroffer and make your own counteroffer. The Offer to Purchase becomes final and binding once the parties have agreed to all the terms and conditions and it is duly signed by the relevant parties.

Your knowledgeable Agrisell agent is essential when negotiating the terms and conditions of your purchase.

6. General Offer to Purchase

Examples of suspensive conditions include financial approval, the sale of another property or the requirement of a due diligence report on the farm.

7. Signing of transfer documents

The seller has the right to appoint the conveyancer that will attend to the transfer. Once all conditions of the Offer to Purchase have been met, the transfer and bond documents, if applicable, are drafted by the conveyancer.

Both parties will then sign the respective transfer documents and the buyer will sign the bond registration documents (if applicable). The buyers is responsible for all the relevant transfer costs.

8. Rates clearance / transfer duty receipt / Municipal receipts

The seller pays the rates, including advance rates if required. The conveyancer applies for a transfer duty receipt from SARS, a rates clearance certificate and makes the necessary payments on behalf of the seller and purchaser.

9. Compliance certificates

The seller is now required to provide the required compliance certificates (e.g. electrical, gas or electric fence as applicable). These costs are for the account of the seller.

10. Guarantees

The conveyancer obtains guarantees from the buyer or his bank or financial institution for the purchase price, or the balance of the purchase price, if a deposit is paid. The seller's existing bond on the property is prepared to be cancelled, if applicable. The conveyancer requires FICA compliance as a protective measure against fraud or money laundering.

11. Deeds Office

When all documents are signed, costs are paid and certificates obtained, the documents are prepared by the conveyancer for lodgement at the Deeds Office.

12. Registration and proceeds

The conveyancer lodges the necessary documents at the Deeds Office to register the deed of sale. Ownership passes from the seller to the purchaser.

The buyer's bond is registered and the seller's existing bond is cancelled (if applicable). The guarantees are paid to the conveyancer, where after the seller receives the net proceeds less the estate agent's commission. The new owner takes occupation of the newly bought farm.

13. Congratulations, you are now officially the new owner!

You are now officially the new owner.

14. Handover procedures

It is important to plan for a smooth handover to the buyer on the date of transfer to ensure that farming operations are not disrupted and all relevant licences, service/supplier contracts and movable assets are transferred into the new owner's name.

15. General pitfalls to avoid

a. Ensure you are pre-qualified for a loan as financial approval usually takes a long time for agricultural properties.

b. Determine whether the seller is a VAT registered entity and the farming enterprise can be purchased as a going concern.

c. Familiarise yourself with the existing Title Deed to ensure there are no existing restrictions and limitations on the farm.

d. Find out if there are any registered servitudes on the farm or in favour and to the benefit of the farm.

e. Make sure the farm is zoned for the purpose that you will be using it for.

f. Ensure that the water rights are duly registered when irrigation forms an integral part of the farming.

Selling your farm can be a tricky and sometimes even traumatic experience. A farm is often a seller's biggest asset and, therefore, has a huge influence on their financial future. Agrisell would like to take the stress out of the sale with our guide to the fundamentals of this process.

1. Contact your agent

Contact your local Agrisell agent to discuss the sales process. A number of factors need to be taken into consideration, such as the sales timeframe, the applicability of VAT to the transaction, whether the farm is a going concern, the harvest and movables included or excluded from the sale, and so forth. It is important to appoint a professional, knowledgeable agent, who can give you specialist advice.

2. Determining a price

Let Agrisell assist you with a market related assessment to ascertain the current value of your farm. It is vital to use an agency that understands the agricultural sector, as this is a specialised area that differs significantly from residential valuations. The local market is competitive, so farms need to be priced correctly to facilitate a timeous sale.

3. Listing your property

Your Agrisell agent needs to obtain all the relevant information about the farm to highlight its positive features to prospective buyers. The agent will need to visit the farm in person to take marketing photos and to familiarise himself with the farm, especially in terms of matters relating to water and water rights, soil types and farming infrastructure. Agrisell will use this information to prepare a professional prospectus to present to prospective buyers.

4. Farm viewings

Presentation is easily overlooked on a working farm. The once trusted but now rusty tractor in the yard does not make a good first impression. Your agent will discuss ways of presenting your farm to make it more appealing to buyers. Viewings with potential buyers will be scheduled at reasonable and convenient times.

5. Accepting offers

Upon receiving an offer, you need to evaluate the terms and conditions, including the validity period, when determining your response. Important considerations include the amount offered as well as the payment terms - whether it is a cash offer or any suspensive conditions. Examples of suspensive conditions include finance and/or bond approval, the sale of another property or the requirement of a due diligence. You can either accept the offer as is, or make a counteroffer with your terms and conditions. The contract becomes binding once both parties have agreed to all the terms and conditions and both have signed the agreement or deed of sale.
Your Agrisell agent is crucial in negotiating the most favourable terms and conditions for your
sale.

6. Signing of transfer documents

The seller has the prerogative to appoint the conveyancer to attend to the transfer. Once all
conditions of the contract have been met, the transfer and bond documents, if applicable, are
drafted by the conveyancer.
Both parties will then sign the respective transfer documents and the buyer will sign the bond
registration documents. All relevant transfer costs will be paid by the buyer, on request of the
conveyancer, before the transfer date. These costs include VAT or Transfer Duty, whichever is
applicable, transfer fees and bond registration costs (if applicable).

7. SARS rates clearance / transfer duty receipt / Municipal rates receipt

The seller is responsible for paying the rates, including advance rates if required. The conveyancer applies for a transfer duty receipt from SARS, a rates clearance certificate and the
makes the necessary payments.

8. Compliance certificates

The seller should provide compliance certificates, that might be required for electrical, gas, electric fencing and others that might be applicable. These costs are for the seller's account.

9. Guarantees

The conveyancer obtains guarantees from the buyer or his bank for the purchase price, or the balance of the purchase price if a deposit is being paid. Notice should be given to the seller`s bank that the existing bond on the farm should be cancelled to avoid penalty cancellation fees. The conveyancer requires FICA compliance as protective measure against fraud and money
laundering.

10. Lodgement at the Deeds Office

Once all documents are signed, costs paid and certificates obtained, the lodgement documents are prepared by the conveyancer for lodgement at the Deeds Office.

11. Registration and proceeds

The conveyancer lodges the necessary documents at the Deeds Office for registration. After registration ownership passes from the seller to the buyer. The buyer's new bond is registered and the seller's existing bond is cancelled, if applicable. The guarantees are paid to the conveyancer, where after the seller receives the net proceeds
less the estate agent's commission. The new owner takes occupation of the newly bought farm.

12. Congratulations, you have now officially sold your farm!

You have now officially sold your farm.

13. Handover procedures

It is important to plan for a smooth handover to the buyer on the date of transfer to ensure that farming operations are not disrupted and that all relevant licences, service/supplier contracts and movable assets are transferred into the new owner's name.

14. Tips when selling your farm

a. If possible, continue farming while your farm is in the market. A farm is more appealing when there are crops or livestock visible and in good condition.

b. Continue general maintenance.

c. Arrange in advance with an agent to take professional marketing photos when crops are at their peak or when the veld or crops are lush and green.

d. A lost Title Deed will delay transfer, so ensure you are in possession, or know where the original Tittle Deeds are secured.

e. Obtain soil and water analysis, if relevant, as this can help buyers make informed decisions.

f. By giving a sole mandate to one agency you encourage buyers to compete on price, whereas multi-mandates often lead to agents dropping prices to close a deal.

g. Choosing the best agency for your specific needs:

you will benefit from Agrisell, as we are the leading agricultural real estate agency in the Western Northern Cape, with a national footprint of knowledgeable agents,

you can benefit from our diverse marketing platforms to get maximum exposure,

benefit from Agrisell's network of more than 50 agents working closely together to match buyers sellers, and

with Agrisell it is all about customer service.