In our previous article, Guide to Finding and Buying Hunting Land: Part 1, we tried to help the reader find what kind of hunting land would suit them asking pointed questions. These questions were asked to try and create a personal image of the ideal property for you when you are trying to find hunting land. These questions are focused on wildlife, terrain, climate, and pre-existing animals, as well as upkeep, accessibility, regulations, drawing statistics, and trophy animal potential. In this Finding and Buying Hunting Land Guide Part 2, we will focus more on the steps taken once you have found a suitable property that will be taken to insure you are making a good purchase.
I suggested in Part 1 that you consider obtaining buyer representation. To jog your memory, buyer representation is having a third party protect your best interest throughout the buying process. It is always a good idea to have buyer representation regardless if you are negotiating with a realtor or a private party. Once you have buyer representation you can start to proceed with the rest of the buying process in order to buy hunting land.
Step 1: Funding Hunting Land
The first step in buying hunting land is figuring out how you are going to fund the purchase. This is especially true when it
comes to buying any form of property. There is a wide range of different ways to fund your hunting land purchase. The most common, of course, is to take out a loan to purchase the property. If you want to take out a loan to buy the land, shop around for a loan that has a favorable rate, monthly payment you can afford and is the correct type of loan for your purchase.
One of the best ways to get an understanding of what your loan may look like is to go to the bank and get prequalified. By providing some financial information such as income and current assets, a bank can review the information and give you an estimate on how much they can lend you. All of us would love to be able to afford a ranch like the Vermejo Park Ranch but we aren’t all Ted Turner. Getting prequalified for a loan helps you determine which hunting properties you can afford and which ones you can’t. You can take it one step further and get preapproved which looks great to sellers. To them, having a pre-approved buyer is a signal that the buyer is serious about purchasing hunting land and that the chance of the deal falling through is much lower. If you have never purchased land you might want to consider also inquiring about loans from an Ag Lender. Many times there are programs or reduction of interest rates that a commercial bank may or may not have available to them. Please feel free to contact us to get a couple of names to call.
Step 2: Due Diligence
Due diligence is making sure you are purchasing hunting land in the right condition and if there are issues finding out the costs involved to either mitigate or lessen the impact on the land and value. It may mean negotiation of sales price or repairing the flaw that has been found.
Another component to evaluate before purchasing a property is noxious weeds. Noxious weeds are a growing problem in Montana, but efforts are being made to remove and prevent noxious weeds. Almost all land in Montana has some noxious weeds on it. Noxious weeds kill and displace native plant species which leads to erosion and negatively impacts wildlife. When looking at hunting land, identify what types of noxious weeds exist and then do your best to manage them. A great resource to assist with the process of removing noxious weeds is The Department of Agriculture. Along with their extensive resources, MDA has a Noxious Weed Trust Fund Grant Program that will help fund noxious weed removal efforts up to $75,000 in Montana. It is crucial to understand what efforts need to be made to have a plan to manage existing noxious weeds before purchasing hunting land.
Quantify the Boundaries
One of the important things to investigate before purchasing hunting land is property lines. Property lines are the legal boundaries of your property and if they are wrong, anything placed or built outside of those lines can be taken or removed. Or, even worse, can lead to a lawsuit. I recommend where economically feasible that you have the property lines of your hunting land verified. Many times it won’t be feasible and the lines should be walked and checked with a GPS and previous owner so as few surprises come up.
The best way to verify property lines is to have the hunting land surveyed. This will ensure that all existing fence lines or property lines are close to correct. Hiring a surveyor will cost you money, but having correct property lines before you purchase hunting land is a good thing to have. If the lines are not correct, decisions have to be made. Are they far off or is it something you can live with? Most all property in Montana if it has been owned for generations will have some fence lines that are off. You may be able come to an agreement with the seller to resolve the incorrect property lines if it is a big enough issue. Most transactions on bigger parcels will most likely not survey the property due to costs. Knowing where the hunting land starts and ends will also ensure that you are hunting on your own property and not illegally on other property.
Water Rights are not a new discussion here at Venture West Ranches. Several of our past articles go in depth about water rights and why they matter. Water rights are the legal right of a landowner to use water for a variety of uses. Depending on the stipulations outlined in the water rights, landowners may be entitled to use the water for commercial uses, irrigation, water for livestock, or for recreational use. Some water rights give you possession of full bodies of water, whereas others only give you ownership of the land that meets the historic high water mark. Water rights are becoming more and more valuable as water is viewed as one of the most valuable resources. There are countless stories of people selling water rights for several times their initial value. Water rights come from many sources and also are dictated by when the use of the water started. There are senior and junior water rights and the water rights can be affected by the start of use, where you are inline for the use of the water and drought conditions and certain timeframes of the year.
Mineral rights are another issue to understand when preparing to purchase hunting land. The owner of the mineral rights to a property as the dominant estate has the right to extract or produce any of the minerals lying under the surface of your property. That being said, if minerals are found on your property and you do not own them, the owner of the mineral rights is legally allowed to extract the minerals regardless of your consent. The best way to prevent this is to purchase the mineral rights whenever available. If that isn’t a possibility, consider having soil test done on the property. The soil tests will tell you what minerals are in the soil and give you a good base of the chemicals in the soil. This is helpful if there is ever an issue with extraction of minerals and the chemicals used in the extraction.
In part one, we discussed the importance of finding and buying hunting land that is legal to hunt on. Before you purchase any hunting land, make sure you consult the hunting and fishing regulations for the area where the hunting land resides. The Montana hunting and fishing regulations can be found at:
For nonresidents, look closely at the regulations to make sure that you are legally allowed to hunt in the same district as your hunting land. Also look at the drawing opportunities for the district to see if you are eligible to enter for a drawing even as a nonresident and what the success % of those that put in for the draw. Also, look at landowner preference tags. In the state of Montana, some drawing tags are set aside for landowners both resident and nonresident. Now, not all hunting districts have the opportunity to draw for special tags, but those that do are good areas for resident and nonresidents to own land.
Price Per Acre
Price per acre is another area to look at when preparing to purchase hunting land. According to the USDA, the average price per acre for farm real estate was $3,020 nationwide in 2015. However, the average price for Montana farm real estate was $890 per acre. This means that, on average, price per acre in Montana is lower than the national average. This is great news for prospective buyers of hunting land in Montana but also be aware that these averages vary greatly depending on a number of factors. Geography, water rights, mineral rights, topography, wildlife, agricultural productivity are some of the factors that will affect price per acre.
You can also purchase land in Montana that abuts or encloses private land giving you the use of more acres than you are actually purchasing.
Step 3: The Offer
Next, you will submit an offer to the seller. If they accept, first, great job, next, you will start to finalize all the formalities and paperwork associated with buying hunting land. However, if they do not accept your offer, they may come back with a counteroffer. There’s no saying how many counter offers between you and the seller will happen, but remember that this is a negotiation and there has to be some give and take. Be prepared to
Before you submit another offer to the seller make sure that you ask yourself these questions:
- Do I really want this property?
- Can I afford to offer a higher price?
- Can I qualify for a loan in the same amount as the price of the property?
- Do I have enough saved for the down payment on the property?
You should have an idea of the maximum you will pay for the land and don’t exceed that amount. Setting limits for yourself is the best way to make sure you don’t overpay for a property.
Try not to fall in love with the hunting land before you purchase it. There is no guarantee that the seller will accept your offer. If a seller doesn’t accept an offer and doesn’t counter offer, don’t get discouraged. Keep looking and offering on other desirable hunting properties.
The next step in the buying process is to create the purchase agreement. The agreement is a legally binding document that can outline things such as:
The purchase price portion of the purchase agreement states the purchase price, the deposit of Earnest Money upon signing of the contract, the amount of the mortgage, and the balance to be paid at closing of the title. It is critical to understand all the terms in the purchase price portion of the purchase agreement so that you pay the correct amount for the hunting land. Knowing the size of the Earnest Money deposit required at signing of the contract is also critical. Earnest money % vary but the seller will want 5-10% or more depending on size of parcel and sales price.
Time & Place of Closing
The purchase agreement also explicitly states the time and place that the Buyer and Seller agree on closing. It further states that the buyer and seller agree that time is of the essence. This is to ensure that each party does their best to meet the terms of the contract.
Transfer of Ownership
This portion of the agreement states that the seller will transfer ownership of the property to the buyer at closing. The buyer will, in turn, provide previously agreed upon finances for the property. Ownership will usually transfer either at the mutual signing, recording of the Deed or at time of funding.
Physical Condition of the Property
Under this section, the buyer and seller state the condition the property shall be in at the time of the purchase. In many cases, the property is being sold “as is” which means it is up to the buyer to make the offer in full reliance on their own investigation and judgment of the condition of the property. Understanding the condition of the hunting land you are buying is critical. If you are unsure of the true condition of the hunting land, you need to do your own investigation. This will unearth any areas of concern before agreeing to purchase the land.
Risk of Loss
The risk and loss portion of the contract binds the seller to be responsible for any additional damages to the property except for normal wear and tear. If substantial damages do occur, the Seller has the right to cancel the contract and refund the deposit to the Buyer or negotiate a new contract. Whether you are buying or selling, understanding this portion of the purchase agreement is critical. You need to identify what qualifies as normal wear and tear and what qualifies as exceeding normal wear and tear for your piece of hunting land.
Arguably one of the most important parts of buying hunting land, or any land for that matter is property lines. In the purchase agreement, the seller does not have to survey the property and does not have to make any representation that all structures on the property are within the boundary lines. If a survey is cost prohibitive, walking the land with a GPS and seller is a good way to understand what you are purchasing.
Assessment of Municipal Improvements
As a buyer and a seller understanding the assessments for municipal improvements section is crucial. Under this portion, the seller is responsible for paying all unpaid assessments against the property for work completed before closing. However, if the work is not completed before closing, then the buyer is responsible for paying for the improvements. As a buyer or a seller of hunting land, it is incredibly important that you understand when any work on the property will be completed. If you are responsible for paying for improvements, consider negotiating all or some of the expenses into the final price. This can be road or bridge improvements from a government entity that is scheduled to be paid off over years.
Adjustments at Closing
The adjustments at closing section of the agreement, details out buyer and sellers expenses such as real estate taxes, rents, or water and sewer charges as they change during the purchasing process. This allows for the purchase agreement to be as accurate as possible with current costs of the expenses. As a buyer or seller, you should understand that the rates and expenses listed in the initial purchase agreement can change. Don’t be too shocked if they do in fact change. Most likely, the amount of change will be small.
The Broker’s Commission section of the agreement is most critical for the seller and the broker involved in the sale of a property. The commission fee the seller must pay the broker is outlined in this portion of the agreement. Commission fees are not to be paid until the title is transferred to the buyer and the purchase price has been paid. A commission is taken out of the seller’s earnings and does not impact the buyer. Understanding the process as a buyer or seller is important. Read carefully through this portion and make sure that the commission rate between the seller and broker is correct.
As a buyer, you will first present your offer to the seller. If the seller agrees, first of all, congratulations, now you can start to figure out all the formalities with the acquisition. These formalities include filling out all the necessary paperwork, tranferring the title, and exchanging money. If the seller does not accept your offer, they will have the option to present a counteroffer or move on to the next buyer. To prevent the latter, offer a realistic amount of money for the hunting land you want to buy. Be honest with the seller and offer them close to what you are willing to pay for the property. This process can go back and forth several times so be ready for it to take some time.
Step 4: Enjoy Your Hunting Land
Finding and buying hunting land is a lengthy process. By using our two-part guide, you should be well on your way to the knowledge to purchase your own hunting land. Hunting land or any land for that matter is possibly one of the best investments you can make. In today’s world, volatility is the norm. With the national debt hovering just under $20 trillion and the National Deficit estimated to be $443 billion, now couldn’t be a better time to invest in land if you believe in inflation.
Despite the uncertainty in today’s market, land still remains to be one of the few areas that is truly market driven. Independent of outside factors, land possesses great potential from an investment point of view. However, what many people don’t see is the other benefits of owning land. Often, land produces additional incomes such as an outfitting business on hunting land. Additional sources of revenue can be found in our article about Montana Ranch Real Estate: Revenue Opportunities
Besides being a great investment opportunity, the enjoyment that comes from owning your own piece of land is incomparable. I can’t tell you how many memories have been made with my family on our ranch. Owning hunting land isn’t just about the investment opportunity. It’s about owning a piece of wilderness that you get to nurture and protect. It’s about having a place where you can make memories that will last a lifetime. Purchasing hunting land is the best thing you can do for financial gain and for pure enjoyment.
If you have a need we would love to talk. Feel free to Contact Us. You will find us as low pressure who try and have our clients interest at heart. If you want some further reading on the subject of owning a ranch you might want to read What is the ROI on Farm and Ranch Investments? or Montana Land for sale Values and Factors Affecting Values.
Buzz Tatom is a Partner at Venture West Ranches. He moved to Montana 6 years ago and still owns the 5T ranch in Texas. He has a BBA from Texas Tech and an MBA from SMU. He and his wife are involved in a number of business ventures. He also enjoys being a part time professor at MSU in the business school and mentoring students.