Why Do We Buy Ranches? Why Do We Sell Ranches?
Part 2
By John S. Baen PhD
G. Brint Ryan College of Business
University of North Texas
For every ranch sale, there are sellers who have decided or have a situation that they “must” sell, and a buyer who perceives value for money and appreciates LAND as an asset class.
Every family or person worth their salt, would really love to keep their LAND as a legacy asset. However life, LAND and death can be complicated, particularly if there are multiple owners, beneficiaries or circumstances that add up to a desire, if not necessity, to sell their LAND.
I call selling factors the “Dr. BAEN ‘Ds’” The more ‘Ds’ a family or LAND is subject to, the more likely the tough decision to sell will occur.
Dr. BAEN ‘Ds’ include but are not limited to the following:
1. Death… The passing of a family member that owned LAND often is a trigger for the remainding family members to decide to keep, add to, or sell the ranch. Complications and chaos can occur if the land owner passes without a will and the LAND passes to several people by the laws of descent. There can be a disaster of multiple owners, personalities and trouble. If remarried, 1st spouse, 2nd spouse, 1st family member, 2nd family members, kids, step-kids and kids conceived out of wedlock. Surprise!! and Son-in-Laws and Daughter-in-Laws need to stay the hell out of the discussion!!! the more people involved in a major decision, the more likely of Chaos.
Land without a will and many owners is trouble and puts the property at risk of a partition lawsuit, family squabble and grief. Best advice! Have a will and designate separate tracts of land to individual people. Do not leave a ranch “to all my loved ones” on an individual ownership basis. What a mess!
2. Divorce…. Life happens. People fall in and out of love and marriage. But the land remains and unfortunately is ordered sold or divided and is often later sold. Some of the greatest ranches in Texas are sold due to this BIG Divorce factor.
3. Disease…. Enough said. Unfortunately, this however can include elderly having cancer, dementia or other factors shortening life and requiring a sale to pay for hospitalization, care, etc.
4. Debt and Debt Default (triple ‘Ds’) Today it is my opinion that many LAND transactions are for cash. However, other personal or business debts can cause the playthings to be sold. So, even if the ranch is paid for, it stands as a safety valve to sell if needed capital is required.
5. Dysfunctional Family and splintered ownership with some family members benefiting or perceived to be benefiting unfairly, “sister and her husband are living on the ranch house free” or “brother is running cows out their without paying market grazing rents” or “her son has all his friends out their hunting and camping while we could lease out the rights”, etc. etc. etc….
6. Delayed or Due IRS Taxes…. Yep! When there is a disagreement with the US Department of Treasury, IRS liens on our lands can occur, often requiring a sale of the LAND (can be in conjunction with #3… “I forgot to file my taxes or claim all my income?” dementia?). And the innocent wife that “knew nothing” doesn’t work anymore with the IRS Agents!
7. Deployment of Derelicts, Dishonest and Crooked Ranch Forman, not all but some. They rob us blind after we give them a salary, a new pickup truck every 3 years and a nice house to live in.
There are many other D’s. but enough said… sometimes we need to sell… but hate having to sell the ranch.
The following editorial composition is written to cast perspectives on both selling and buying LAND.
Generally, it is much more fun to buy than to sell. Our ranch became a part of us and who we are. Our hunters, foreman and helpers love us and appreciate us, and we them. And we live vicariously through them and wish we could be them. The foreman dreams and wishes he could be the owner, while the owner dreams of being a cowboy and living the ‘foreman’s life’, rather perceived life, of the foreman. That is why foreman and owners get along so fabulously, both think and admire the other and neither is trying to impress the other around the camp fire.
Only owners know or understand that sometimes, when we are with the hunters who lease our lands, chase our game and have so much fun without ownership responsibilities and duties, we wish we were “on the lease” and just one of the “Boys” have a great time and no responsibilities!!!! No:
- Insurance
- Fence repair
- Property taxes
- Improvement and their repair
- Accounting and the IRS issues
- Estate planning
- Keeping insurance from hazards and liabilities
- Life insurance to pay inheritance taxes to avoid a force sale after our life is snuffed out like a candle
- Maintaining AG or wildlife exemption
After selling a ranch, it is both a relief and grief that we actually sold. We imagine what the new owner must be like and what they are doing on the LAND. We long to visit the ranch, one more time and actually meet the new owners to see if they appreciate the secrets of the place and form an opinion if they are worthy to own it. Which, is really no longer any of our business or concern, but we still care and wish the new owners good times and good fortune with the LAND that once was “ours”.
We remember riding over the land on horseback or in a four-wheelers or walking those brushy areas or canyons in search of those feelings of freedom, a bit of wilderness, getting lost or turned around. Lost, and feeling happy about it, laughing at ourselves.
Holding a Folsom arrowhead point that is 11,000 years old in our hand, looking down at it and realizing that at 35 years per generation, we are the most recent of 350 generations to be on this land. Some 11,000 years ago they owned that land.
Deciding to sell our LAND is a humbling experience! We chose Texas Ranch Sales to market our ranch of 10,800 acres. Their TEAM was helpful, the transaction was complicated and of course there were many owners who needed to get along. And so, the Firm was patient, professional, motivated and appreciated during the whole process. Did I say that I miss the Ranch? yep, but it lives in my heart and soul….
John S. Baen Phd
G. Brint Ryan College of Business University of North Texas
John S. Baen PhD, Professor of Real Estate, at the G. Brint Ryan College of Business at the University of North Texas, Box 310410 Denton, Texas 76203. He received all his degrees from Texas A&M University. BS ’70, MS ’72, and PhD in Land Development ’82 He is a practicing commercial Real Estate Broker, Certified General Appraiser (Texas) and Certified Right of Way Agent. He has published 3 books, 70 journal articles and is and expert witness in many Federal and State Courts. He does not win lawsuits, however justice nearly always prevail to his professional opinion because he tells the truth and is ethical. To inquire about UNT Real Estate Student Scholarship contributions contact John.Baen@unt.edu.
