CJ Real Estate specializes in ranch, residential and commercial land sales. Whether you need to diversify assets quickly for top-dollar via auction or are prepared to list and wait for a buyer to come to you, the Cunningham-Johnson team provides comprehensive solutions and proven sales performance.

1031 Exchanges Grow Ranch Profitability

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Cattle ranching can be rewarding and challenging. One of the most significant challenges for many ranchers face is navigating the complexity of taxes. 1031 exchanges are a powerful tool you can put to work increasing profit while reducing your potential tax liability.

Understanding the 1031 Exchange

Named after Section 1031 of the Internal Revenue Code, a 1031 exchange allows you to sell real estate or a business then reinvest in new, “like-kind” property and defer capital gains taxes. So instead of paying taxes on the sale of a property, the profits can be reinvested into a similar but different asset, allowing you to defer paying those capital gains taxes.

Using a 1031 Exchange to Improve or Expand Your Acreage

A 1031 exchange allows you to sell your land and then use the proceeds to purchase a different piece of land without immediately paying taxes on the sale. So, you could potentially sell some or all of your existing ranch and then purchase a larger or better-located one, using the 1031 exchange to defer the taxes on the sale.

Using 1031 Exchange to Improve Herd and Equipment

Livestock and equipment are other assets that may qualify for a 1031 exchange. This means you could sell part of your herd or outdated equipment, then use the funds to invest in higher quality livestock or better equipment. By doing this, you can improve your herd quality or improve operation efficiency while postponing taxes on the profits from the sale.

Meet Jack and Will

1031 Exchange is a powerful tool

Let’s consider an example involving Jack, an Oklahoma rancher. Jack purchases a $1 million ranch and sells it several years later for $1.5 million. That’s a $500,000 capital gain tax liability. But, by utilizing a 1031 exchange, Jack invested the entire $1.5 million into a new ranch gaining more productive grazing land, rich with spring-fed ponds and healthy blue-stem, boosting his profitability and potentially better safeguarding his herd during drought years.

If Jack hadn’t used a 1031 exchange, he would face a capital gain tax liability of $123,750 – assuming a 24.75% total capital gains rate – and would only have $1,376,250 million at his disposal for the purchase of a new ranch.

1031 exchanges become increasingly remarkable as the value of the ranch continues to rise. Of course, it’s not all up-side. Anyone using a 1031 exchange must remember that there are specific rules and requirements and timelines that must be met. For example, there are strict timelines for identifying and closing on the new property. Always work with a tax, financial and/or legal professionals experienced in 1031 exchanges to ensure that you fully understand the potential risks, gains and liabilities and that all requirements are met.

The purpose of this article is to give an overview of the 1031 exchange, highlight key takeaways, and explain best practices for taking advantage of this financial tool. Learn more about in this 6-minute read:

What is a 1031 Exchange?

A 1031 Exchange, also known as a Like-Kind Exchange, is a tax deferral strategy under Section 1031 of the tax code. It allows individuals to defer capital gains on real estate profits by reinvesting the proceeds in another property of equal or greater value within a specific time frame. This exchange helps to maintain the productive use or investment nature of the property.

According to the Internal Revenue Code (IRC) Section 1.1031, if a real property is exchanged solely for real property of like kind, no gain or loss will be recognized. This means that the tax burden is deferred as long as the property is reinvested in another qualifying property. For more information on this beneficial strategy, you can refer to the Real Estate Tax Tip article on IRS.gov. It provides detailed insights into Like-Kind exchanges and their implications.

Benefits of a 1031 Exchange

Beyond the capital gains tax deferral that a 1031 Exchange can accomplish, there are several other reasons why astute investors favor this financial tool. The primary advantage of a 1031 Exchange is the ability to defer capital gains taxes. Through the “like-kind” clause of a 1031 Exchange, the up-leg property must be of the same nature (meaning it must be an investment real estate asset). Like-kind is often misinterpreted as meaning the up-leg property must be the same asset class (multifamily, industrial, net lease retail, office, etc.) as the down-leg property; however, that is not the case. Below are more advantages to executing a 1031 Exchange.

A 1031 Exchange offers various benefits that extend beyond deferring capital gains tax. While the primary advantage is the ability to defer taxes, there are other reasons why ranchers, farmers, landowners and investors favor this financial tool. The “like-kind” clause of a 1031 Exchange requires the up-leg property to be of the same nature, typically an investment real estate asset. Contrary to common misconception, it does not necessitate the same asset class as the down-leg property (e.g., agribusiness, raw land, multifamily, industrial, net lease retail, office). 1031 Exchange benefits include:

Off-Load Management Responsibility

Certain assets can become burdensome due to high maintenance costs, property taxes, insurance, and the need for employees. However, investors have the option to ease their workload by exchanging these properties for less time-intensive assets, allowing them to generate passive income. For instance, if a multifamily owner feels overwhelmed by property responsibilities, they can consider exchanging it for a net lease retail asset that requires minimal involvement.

Consolidate or Separate Assets

One of the exciting possibilities offered by a 1031 Exchange is the ability for investors to enter new markets in the U.S. with high growth potential. Let’s say an owner has an investment property in a highly appreciated market, such as California. With a 1031 Exchange, they could exchange that property for multiple properties in more affordable states, optimizing their cash flow. Additionally, investors can take advantage of income-tax-free states to avoid double taxation (although it’s important to note that some states require investors to pay state capital gains tax.

Depreciation Reset

A 1031 Exchange also provides investors with the opportunity to “reset” the depreciation schedule to a higher value by purchasing a property of greater worth. This strategy presents a significant tax benefit and serves as a valuable tool for increasing after-tax cash flow. It is especially beneficial for those who have fully depreciated their investment and are seeking ways to maximize their financial returns.

Grow Equity and Holdings

The 1031 Exchange is a powerful tool for investors looking to diversify their portfolio and generate higher returns. This tax deferral strategy allows investors to strategically realign their investment goals by exchanging one property for another or into multiple properties of higher value. By doing so, investors can lower their risk profile and minimize exposure to market disruptions.

Step-Up Cost Basis

Another key benefit is the step-up in cost basis that heirs receive when a real estate owner passes away. This means that the heirs inherit the property at its fair market value at the time of death. Not only does this eliminate the depreciation recapture and capital gains tax liabilities, but it also presents an opportunity for owners to exchange into a larger asset while they are still alive, effectively eliminating any built-in gain when passed through to heirs.

1031 Exchange Considerations

While the allure of avoiding capital gain taxes is appealing, there are important factors to consider when deciding if a 1031 Exchange is the right investment strategy. Let’s dive into these considerations and gain a better understanding:

Timelines

In cases where simultaneous closing is not possible (i.e., when the proceeds from the sale cannot be directly invested into the replacement property), investors have the option to delay the purchase of the replacement property. To take advantage of this option, investors must adhere to certain timelines:

  • Replacement properties must be identified within 45 days of closing.
  • Pruchase of replacement property must be made within 180 days of closing.

Failure to meet these deadlines can result in the proceeds from the initial sale being subject to capital gains taxes. To navigate these timelines effectively, a qualified intermediary assists you as they document and manage the process.

Capital Gains

Although a 1031 Exchange is touted as a tax deferral strategy, it’s crucial to note that taxes on capital gains still need to be paid. While federal codes are generally followed by most states, it’s essential to be aware of any state taxes applicable to the exchange property. For instance, Texas might be an income tax-free state, but it compensates with a higher property tax rate of 1.8 percent.

Taxed on the Boot

If the identified replacement property is valued lower than the property being sold (after deducting ordinary transaction expenses), capital gains taxes must be paid. Additionally, accumulated depreciation is recaptured through the difference in the prices of the properties, commonly referred to as the “boot.”

Difficulty Identifying Like-Kind Properties

Finding a property that aligns with an investor’s goals can be challenging, especially within the limited timeframe of 45 days. Failing to identify a replacement property forces the investor to pay taxes on the full gain from the initial sale. To avoid this situation, it is imperative to work with a qualified broker from a reputable firm.

Qualified Intermediary

Whether you are a seasoned or first-time investor, professional advisors are crucial to navigate the intricacies of fees and regulations. Investors are required to hire a Qualified Intermediary (QI) who will facilitate the 1031 Exchange process.

Professional Guidance

Executing a 1031 exchange involves a complex set of rules and timelines that must be strictly adhered to. Restrictions are imposed on exchanging into properties with the intention of selling them for quick profits. No limit is set on the number of 1031 Exchanges one can execute however, from the date of sale of the original property, the seller has 45 days to identify potential replacement properties and 180 days to close on the purchase of the new property.

Rules can be murky. For example the IRS does not specify a minimum holding period but, holding onto the property for less than two years may trigger a “dealer status” designation and invite closer scrutiny from the IRS.

Given these complexities, it’s crucial that cattle ranchers work with a professional experienced in 1031 exchanges. Such professionals can provide invaluable guidance and help ranchers navigate the process successfully and legally.

Conclusion

A 1031 exchange can be a strategic tool for ranchers, allowing them to boost their profits and reduce tax liability. By reinvesting the gains from sales into “like-kind” properties or assets, ranchers can defer capital gains taxes and reinvest more of their money back into operations. While there are several advantages, it’s essential to remember that 1031 Exchanges only defer capital gains taxes, and they will still need to be paid. Help yourself thoroughly understand potential liabilities by always seeking guidance from qualified tax and financial advisors able to provide professional guidance through the full process.

Habits of Successful Rural Land Investors

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Rural land investing can be lucrative and risky. Going it alone can be challenging and highly risky. Successful investors know that it takes a little savvy to be successful in this highly competitive sector.

Land investment offers a myriad of opportunities for investors who are seeking long-term, low maintenance investments with the potential for solid returns.

KEY TAKEAWAYS

  • Land investing requires knowledge, talent, organization, networking, and perseverance.
  • Fully educating yourself is crucial and requires significant research and learning.
  • Understanding the risks and building a professional advisor network are vital.

Key to this success are certain habits and practices shared by successful rural land investors. Let’s delve deeper into these habits and how they contribute to success in this unique sector. Learn more is this 4-minute read.

They Always Consider Risk

We all see the warnings about the risks and potential losses when reviewing stock opportunities. But real estate investors often encounter a narrative of easy money. Smart investors recognize the risks and legal implications involved in real estate deals. They actively adapt their strategies to mitigate these risks and protect their businesses.

“Profit is made when you buy, not when you sell,” advised Eric Johnson becaue he feels that smart investing is all about “de-risking the investment up-front”.

Minimizing potential risks and uncertainties is crucial before committing substantial resources to a real estate project or investment. This strategy involves a comprehensive assessment and effective risk mitigation right from the early stages of the investment process. By adopting such an approach, you can ensure a more secure and successful investment journey.

They Do Their Homework

Effective real estate investors invest in themselves by learning all they can about area, people, market and potential outside risks. Staying informed about the latest trends,like local developments, new or expanding employers, potentail unemployment swings, and the like prepare you to adapt to evolving conditions. By doing so, you gain the ability to anticipate when trends might shift, thus creating potential opportunities for yourself. It all begins with diving into your local real estate market and learning everything you can about it. Real estate investor and rancher Max Franklin agrees: “If you don’t know the people and the area like the back of your hand, you don’t know it well enough to invest in.”

They Rely on a Network

Building a professional network is crucial for real estate investors, whether they are just starting out or experienced. This network can provide valuable support, create opportunities, and help investors grow. It typically consists of a mentor, business partners, clients, or members of a nonprofit organization. Being part of such a network allows investors to challenge and support each other, which is essential in the experiential learning nature of real estate investing. Savvy investors understand the significance of establishing a strong network to thrive in this field.

They Develop Trust

Real estate investors generally have no binding ethical obligations, but it’s worth noting that most successful investors hold themselves to high ethical standards. As real estate involves dealing with people and earning their trust, your reputation plays a vital role in negotiations and sales opportunities. Effective investors understand that fairness prevails over opportunism.

They Specialize

Successful investors frequently focus on a particular part of the real estate market where depth of knowledge is essential. This can take time, but once you master a particular market, you can move on to other areas using the same in-depth approach. Niches might include development land, farm or ranch land leasing opportunities, subdividing for home-building residential parcels, or farm & ranch rehabilitation.

They Plan and Verify

To establish and achieve short- and long-term goals in real estate investing, it is crucial for investors to approach it as business professionals. A solid starting point is developing a well-structured business plan that allows you to visualize the big picture and prioritize important aspects over minor setbacks. This plan not only keeps you organized and on track but also factors in estimated cash flows from rentals, the number of units to own, timing for refurbishment or upgrades, demographic changes, and other variables that could impact your investment over time. By incorporating these elements into your plan, you will navigate the complexities of real estate investing with confidence and efficiency.

They Build Relationships

Trust and the referrals that trust fuels are vital to investors success. People want ot do business with those they, or their friends, trust. Therefore, it is crucial to earn the respect of business partners, associates, clients, renters, and any other individuals with whom you have a business relationship. Effective real estate investors exhibit attention to detail, attentiveness to complaints and concerns, and maintain a positive and professional representation of their business. By doing so, they build a reputable image that attracts potential collaborators.

They Know What’s What

To thrive in land, or any type of real estate investing, you must stay informed about the ever-evolving laws, regulations, terminology, and trends. Falling behind not only hampers business progress but also exposes investors to potential legal consequences. Successful real estate investors understand the significance of keeping up with real estate, tax, and lending laws that directly or indirectly affect their operations. Stay ahead of the game by staying updated on these important aspects!

They Listen to Tax Advice

Taxes represent a substantial portion of a real estate investor’s annual expenses. However, navigating the complex world of tax laws can be time-consuming and divert attention from core business operations. That’s why savvy real estate investors opt to enlist the expertise of a qualified and reputable accountant to handle their financial books. While there may be costs associated with hiring an accountant, the potential savings and benefits they bring to the business far outweigh the expenses. Effective tax planning can make or break an investment. You must prioritize sound tax strategies alongside asset acquisition plans.

They Don’t Go It Alone

In leand investing, going solo can be a tough journey. Successful real estate investors understand the value of seeking guidance from others – be it a mentor, lawyer, or a supportive friend – and attribute part of their success to this collaborative approach. Rather than risking valuable time and money on tackling difficult problems alone, they recognize the benefits of embracing and learning from the expertise of others. Investing wisely in these additional costs becomes a worthwhile investment in one’s own knowledge and growth.

The Bottom Line

Land investing is fun, engaging and challenging endeavor requiring expertise, planning, and focus. And, because the business requires strong relationships with people, investors benefit in the long run by operating with integrity and showing respect to associates and clients. Though you may hear about quick and big profits, the truth is that profitable success long-term requires skill, effort, and strong habits that  encompass research, risk-taking, financial acumen, networking, visionary thinking, environmental consciousness, negotiation skills, and patience. By cultivating these habits, prospective investors can significantly increase their chances of profitable success in rural land investing.

Fall Real Estate Auctions

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530 total acres and three homes will be sold to the highest bidder as CJ Real Estate offers two cattle ranches for sale this fall.

430 Acre Ranch and Equipment Sells Dec 7th

Beautiful 430 acres prime development land offered for sale in 11 parcels of 10 to 58+/- acres that include land and 2 homes. The ranch offers prime Mount Pleasant development land located adjacent to the Harts Bluff Pre K-12 school complex along FM 1402. 75+ equipment lots will sell at auction immediately following the real estate auction includes a wide variety tractors, vehicles, trailers as well as farm & ranch equipment.

100 Acre Working Cattle Ranch Sells Nov 15th

100 acre ranch for sale offered in 4 parcels of of 3/4 to 50 acres each. Beautifully updated home and scenic land ideal for cozy home sites or continued livestock operation. Ranch features two ponds, fencing and cross-fencing, multiple barns and outbuildings, 4-bedroom home and scenic views. Conveniently located 3-miles east of Wayne, OK.

Image: Eaton Ranch

6 Tips Before Selling Your Farm or Ranch

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6 Tips Before Selling Your Farm or Ranch

 

For most producers, their farm or ranch is the largest asset they own.  So, when it comes time to sell, you want to make sure it is done right to achieve maximum return on your investment.

Selling land is often an overwhelming task for many landowners, especially if the property was inherited.  We asked experts to give us tips on what you should do before selling. Here’s what they said.

 

Know Exactly What You are Selling

You might be surprised to learn that most landowners really don’t know what they own. Sure they have a general idea but, when it comes to selling that land it’s vital to be certain of all the details – how many acres, where the property boundary lines lie and what easements apply. Having your property surveyed ensures that you’ll know what you are selling, is essential for accurate property valuations and prevents closing surprises that may delay the sale or scare away your buyer.

“In my experience pre-sale surveys are essential for successful sales. Often actual property lines get muddled as ownership transfers over the years.” says Eric Johnson of CJ Real Estate.

This is particularly true for property passed down over generations and in complex land transactions. Pre-sale surveys boost buyer confidence and virtually eliminate problems at closing resulting in higher sale prices.

 

Make a Great First Impression

The second biggest tip for landowners is to prepare your land to attract buyers for the best price. Curb appeal attracts more buyers and drives higher offers because buyers have confidence – they aren’t thinking about ‘what else’ might be wrong with the property.

You never have a second chance to make a first impression. Shelby Enyart of CJ Real Estate relayed that, “it seems obvious, but many sellers struggle to realize that small changes will build buyer confidence so that their property sells faster and for more.”

Get your land ‘market ready’ by clearing away unwanted or unattractive features. Sell faster and at a higher price by:

  • Clearing debris and broken equipment
  • Improving trails, roads, and repairing any broken gates
  • Mow pastures or fields that aren’t in production
  • Trim around all building and clear underbrush

 

Think About Your Lands Highest and Best Use

Maximize your profit potential by thinking of the highest and best use of the land you’re selling. Think about how prospective buyers most likely use the land? What will attract that largest pool of potential buyers? What types of buyers are likely to place the highest value your land? Common uses include:

  • Residential development
  • Commercial development
  • Ag production
  • Recreation
  • Hunting

Understanding what potential your land offers, what investors are most interested in your area and, which buyer pools will offer the most per acre will help you to position your land for faster sale at a higher closing price. It will also help you know what’s most important to clear away, update, or add to your land before the sale.

Consider selling multiple tracts to drive a higher total price. You’ll appeal to more buyers, boosting demand. – Gloria Gilliland, CJ Auctions.

Subdividing your land into smaller parcels that appeal to potential buyers with different end uses can significantly increase your total sales price.  There are several steps you’ll need to consider before moving forward. First, find out if subdivision is possible. Next, determine what work would be required and what costs are involved. You’ll need to engage a surveyor, who will review your proposed subdivision and coordinate with your attorney.

 

Understand Which Sales Method is Best for You

There are a host of factors to consider when determining whether you should sell via auction or traditional listing. Your land is unique and seasoned real estate professionals understand that every sale benefits from a custom marketing approach.

Eric Johnson described it best when he said, “every property is unique. We sit with the client and learn everything there is to know about their property…then help them determine the best sale method for their situation.”

Real estate auctioneers and real estate agents possess specific areas of expertise that distinguish their services and benefit clients differently. Auction gives real estate sellers the benefit of a faster sale, competitive bidding, true market value and more control of the sale – you’ll set the date of your sale and create urgent need for your property. Auctioneers are sales specialists and typically only represent sellers. The traditional listing method turns the process over to a real estate agent that sets your asking price, then waits for buyers to come to them and make an offer.

Real estate auctioneers and real estate agents possess specific areas of expertise that distinguish their services and benefit clients differently.

Real Estate Auctioneers:

  • Are real estate marketing specialists
  • Represent only the seller in a transaction
  • Evaluate and establish property value
  • Manage complex legal structures
  • Give property owners more control of their sale.
  • Provide guidance and facilitate legal compliance

Real Estate Agent:

  • Are marketing generalists
  • May represent both the buyer and seller
  • Focus on localized services
  • Rely on third-party evaluations
  • Estimate asking price then list-and-wait
  • Assist with paperwork

 

Work Smarter, Not Harder

Call a real estate professional.  If you are considering selling land – do your homework and interview seasoned professionals with a proven track-record of selling properties just like yours, who knows the industry and the area.  Selling land is an in-depth process: you need to be able to price it with the market, provide aerial maps, soil maps, FSA information, crop history, cash rent agreements, boundary lines, etc. Having an experienced pro who knows the area, the market, and where to find this information and make it available to potential buyers, will result in much more successful sales.

“I believe that the most important thing for a seller to do when selling their property is use a land broker who is familiar with the general region and current market conditions of the specific property”. Said Chris Lowers of Grey Partners. “The guidance that a knowledgeable land broker can give to a seller is invaluable to making sure the seller maximizes sale price. This is done through the expertise and market insight of the broker when it comes to the marketing of any individual property.

 

Conclusion

Invest in the real estate process. Understand all of your options so that you can make an informed decision.  Gather all the information you have about your property and have it ready for the real estate broker, auction company, surveyor and appraisers. This makes the process much easier on you and all the parties involved. And, you’ll have less stress and more confidence in your decisions.

Maximize Your Lands Value

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Managing your ranch land well now will pay big dividends when the time comes to sell. Well managed ranch land attracts a larger pool of buyers, increasing competition for your land which leads to higher sale prices.

Auctioneer Sonny Booth advised, “High sales prices don’t happen by accident. I’d like to take all the credit for high sale prices but the truth is that ranchers with a reputation for quality land management are an auctioneers best friend when it comes to getting top-dollar on sale day.”

As a rancher, you already know the importance of proper land management in ensuring the well-being of your livestock. Have you truly considered how good ranch land management can also impact the bottom line when it comes time to sell your property? Check out these tips for maximizing your re-sale value through effective ranch land management.

Regularly Check and Maintain Fences

One of the most important aspects of ranch land management is keeping your fences in good condition. This not only keeps your livestock safe but also prevents them from wandering off into neighboring properties. Regularly check your fences and make any necessary repairs. A well-maintained fence can also make your property look more visually appealing to potential buyers.

Implement Sustainable Grazing Management Practices

Many ranchers are shocked to learn that nearly 70% of available grazing land in the United States is degraded in some form as discussed in this recent article published in the Angus Journal.   Overgrazing can have a negative impact on your pasture’s health and, in turn, decrease your property’s sales value. Consider implementing sustainable grazing management practices that allow for adequate rest periods between grazing cycles. This will help maintain the health and productivity of your pasture while also ensuring the long-term profitability of your ranch.

Properly Manage Water Resources

Water is a fundamental resource for both your livestock and your land. Properly managing water resources can prevent soil erosion and maintain pasture productivity. Regularly cleaning out and maintaining ponds and waterways can not only make your property look better but also make it more appealing to potential buyers.

Remove Unwanted Vegetation

Weeds and invasive plant species can significantly reduce the productivity of your pastureland. Consider implementing a regular weed control program to keep unwanted vegetation under control. Not only will this help maintain the productivity of your land, but it will also make your property look more visually appealing.

Maintain Buildings and Infrastructure

Maintaining your ranch’s buildings and infrastructure doesn’t just make your property look better, it also increases resale value. Regularly inspect and maintain your ranch’s buildings, corrals, and other infrastructure to ensure they’re up to code, fully functioning and eye-appealing. This makes your property more attractive to prospective buyers and increases the sale price.

Conclusion:

Proper ranch land management is critical to maintaining both the short-term productivity and long-term profitability of your ranch. Investing in regular maintenance and improvements to your property can make it more visually appealing to potential buyers, increase its sales value, and ensure the continued success of your operation. By implementing the above tips for effective ranch land management, you can maximize your sale profitability and set your ranch up for long-term success.

 

ABOUT CJ REAL ESTATE:  CJ Real Estate sells ranch and residential real estate across Oklahoma, Texas, Arkansas, Missouri, Kansas and Colorado. Led by Eric Johnson and Ronn Cunningham, the CJ Real Estate team specializes in complex acreage sales typically dispersing assets in 45 days while outperforming market conditions. What makes CJ Real Estate different is that they give sellers more control through unbiased advice and the opportunity to choose the real estate sale method that’s best for them: auction or listing.

 

MEDIA CONTACT:

Eric Johnson

1.918.550.8118

Info@CJ-RE.com

 

SOURCE: Cunningham-Johnson Real Estate

Sept Real Estate Auctions

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Ranch and Timberland for sale via Real Estate Auction

Nearly 1,200 acres and two homes are on the auction block as CJ Real Estate offers a Red River cattle ranch and East Texas timber land for sale on September 6th & 7th.

Bryan County Oklahoma Ranch for sale September 6th, 2023

This amazing 1,100 acre cattle and hunting ranch features two homes, barns, shops and outbuildings offered in 8 parcel of 40 to 364 acres each. Located 15-minutes southeast of Durant, OK and 3-miles north of the Red River.

Bonham Texas residential lot for sale September 6th, 2023

0.1-acre residential lot ready for new home construction located 2-blocks from Powder Creek Park, 1-mile south of Bonham Elementary, Junior and Senior High Schools.

Polk County Texas Timberland for sale September 7th, 2023

No reserve auction of 84-acres ideal for continued timber production, quiet country living or a hunting retreat.

CJ Real Estate is proud to bring these properties to auction. Whether you’re an experienced rancher, land investor, or individual seeking land, our upcoming auctions offer real property sure to meet your needs. Visit www.CJ-RE.com for auction details of these and other ranch, residential and commercial real estate assets.

Image: Real Estate Auction

What is a Real Estate Auction?

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What is a Real Estate Auction?

A real estate auction is an intense, accelerated real estate marketing process that involves the public sale of any real property via open competitive bidding with the highest bidder taking ownership. A professional auctioneer moderates bidding to ensure a fair and legal process.

Real estate auctions are an effective and efficient way to buy or sell real property such as homes, land, commercial buildings, farms and ranches. The advantage of auction is that sellers know when their property will sell and that they will get true market value for their property.

Real estate auction companies are real estate brokers that utilize auction as a method of sale. They may sell property via the traditional ‘list-and-wait’ method too. In most states, real estate auctioneers are required to be licensed to sell real estate or work on behalf of a licensed real estate broker.

The auction method offers a property for sale in an open bidding process with the highest bidder taking ownership. Auctions are typically used when time is of the essence, giving sellers a proven tool to quickly sell assets without discounting. It is a unique platform that brings together motivated buyers and sellers to determine a property’s true market value through competitive bidding. In this article, we will delve into what a real estate auction entails, how it works, and discuss the pros and cons for both sellers and buyers.

What Types of Real Estate are Best Sold at Auction?

All types of real estate can be sold at auction. Auction is the primary method of sale for farms, ranches, luxury homes, commercial and investment grade real estate. Which sales method is best depends upon the specific characteristics of each property and market conditions.

Eric Johnson described it best when he said, “every property is unique. We sit with the client and learn everything there is to know about the property…then help them determine the best sale method for their situation”

The advantage of real estate auction is that it creates the market and establishes a sense of urgency among potential buyers.

That’s why farm, ranch, luxury and other high-value properties are commonly sold via auction. While these types of properties are often sought after, the pool of qualified buyers may be small and geographically diverse. Aggressively marketing these types of high-value properties attracts buyers, generates demand and facilitates a quick sale at true market value.

Distressed properties such as foreclosed homes and bank-owned properties are also excellent candidates for auction.

Unique or historic properties can benefit from auction too. Properties with historical significance, architectural uniqueness, or located in sought-after locations can capture the attention of buyers who appreciate their distinctive characteristics.

What’s the Difference Between a Real Estate Agent and a Real Estate Auctioneer?

Most people are surprised to learn that real estate auction companies and agencies perform many of same functions. Both are licensed professional businesses that must abide by the same laws and code of ethics. While their primary goal is to facilitate real estate transactions, there are fundamental differences in their approach and focus.

Real estate auction companies specialize in selling real estate and focus on delivering the highest sales price to property owners through competitive bidding. Real estate agents are generalists that help people find property through a local MLS and then facilitate a mutually beneficial transaction.

Real estate auctioneers and real estate agents possess specific areas of expertise that distinguish their services and benefit clients differently.

Real Estate Auctioneers:

  • Are real estate marketing specialists
  • Represent only the seller in a transaction
  • Evaluate and establish property value
  • Manage complex legal structures
  • Give property owners more control of their sale.
  • Provide guidance and facilitate legal compliance

Real Estate Agent:

  • Are marketing generalists
  • May represent both the buyer and seller
  • Focus on localized services
  • Rely on third-party evaluations
  • Estimate asking price then list-and-wait
  • Assist with paperwork

What Are the Different Types of Real Estate Auctions?

There are common types of real estate auctions that bidders may encounter.

  1. ABSOLUTE AUCTION: In an absolute auction, also known as a ‘No Reserve’ auction, the highest bidder wins regardless of the amount of the bid. These are exciting events where you could bid $1 and win the auction. Absolute auctions attract the largest pool of bidders because all sales are final – the property will ‘absolutely’ sell.
  2. RESERVE AUCTION: This is the most common type of auction. The seller reserves the right to review the bids and accept or reject the highest offer. Typically, the reserve price is not published and has been set in advance by an agreement between the auction company and the owner.
  3. MINIMUM BID: In this type of auction, there is a minimum accepted bid amount. This is different than a ‘reserve’ because the minimum bid is generally the balance owed to a third-party such as a mortgage balance, taxes, or a lien. All sales at the minimum bid or higher are final.

Why is Real Estate offered As-Is at Auction?

Real Estate is offered ‘as-is’ at auction because the high-bidder is bidding on real property in ‘as-is’ condition without contingencies. This means that the seller will not repair or improve the property in any way prior to closing. Properties are sold in ‘as-is’ condition at auction because the high-bidder is legally obliged to purchase the property at the bid price offered.

Bidders should conduct their own due diligence prior to bidding. The real estate auction company will disclose things such as lead paint, inclusion in a flood plain, easements or other known potential issues in the printed auction materials and the auctioneer will verbally communicate any such disclosures in advance of the auction.

Can Buyers Back Out of a Real Estate Auction Bid?

At a live auction, a bid represents a legal obligation. If you make a bid, you are committed to purchasing the property at the bid price you offered. Always perform due diligence prior to attending an auction. Ask questions prior to the auction. Read and understand the auction terms and conditions. Then, establish your bidding strategy and pricing parameters prior to auction and stick to it.

How Do Real Estate Auctions Work?

  1. Preparation:

The auction process begins with the seller or their representative meeting with a licensed real estate auction company to help evaluate the best method of sale for their needs.  The property is evaluated, appraised, and the marketability is assessed. The auction company will review these findings with the seller, discuss the pros and cons, then determine if auction or listing is the best method of sale for that property.

  1. Planning:

Once the seller decides to utilize the auction method, the real estate auction company will:

  • Set the auction date, time and location.
  • Package the property for maximum pricing potential through parceling.
  • Organize all relevant documentation, disclosures and other legal paperwork.
  • Prepare a marketing recommendation.
  • Prepare marketing materials.

 

  1. Marketing:

Real estate auction companies are expert marketers. They will tailor the marketing to attract a pool of the most qualified buyers through a comprehensive marketing campaign. Marketing typically involves broad reaching and highly-targeted online marketing reinforced with eye-catching signage and intense local advertising as well as personal outreach to insiders and investors. The goal is to create interest, build competitive excitement to attract a pool of qualified bidders.

 

  1. Inspection:

Interested buyers are typically provided with the opportunity to inspect the property before the auction. This allows them to assess the property’s condition and evaluate its suitability to meet their needs. Buyers are encouraged to conduct thorough due diligence to minimize risks.

 

  1. Auction Day:

On the auction day, interested buyers will have one last opportunity to inspect the property in-person for an hour or two prior to auction. At auction time, the auctioneer will make pre-auction announcements that include disclosures and then ask the audience if there are any questions for the record. Once all questions have been answered, the auctioneer opens the bidding with an initial starting bid. Potential buyers make successive bids, each higher than the previous one. Those new to the process may have trouble keeping up with the fast and exciting pace. The auctioneer is responsible for moderating the process and ensuring fairness and transparency. Auctioneers often work with a team consisting of the auctioneer, ringmen and an auction manager.

The auctioneer is the public face of the auction. The top role of the auctioneer is to expedite the sale and keep track of the bids ensuring a transparent process in a fast, exciting and hectic setting. Auctioneer Ronn Cunningham put it best, “people are amazed… in 20-30 minutes we’re selling a ranch that they’ve called home for many, many years.”

Ringmen assist the auctioneer. During the auction, ringmen monitor the bidder activity. Also known as bid spotters or bid catchers, Sam Grasso says that, ‘the correct title is ringman’. They use their bodies and voices to create energy, encourage sales and ensure that the auctioneer recognizes every bid through voice and hand signals.

The auction manager is responsible for setting up the sale day operation including the stage, seating, lighting, public address system and more. They help ensure that all bidders have access to property information and answer prospective bidder questions about the property or auction process. After the auction, auction managers help process paperwork and inform winning bidders of the next steps to closing the sale.

  1. Closing:

Once the auction concludes, the winning bidder is legally obligated to complete the purchase. Typically, a deposit is required, and the remaining balance is settled at closing within a specified timeframe, usually 30-45 days upon the completion of the auction. If the winning bidder fails to fulfill their obligations, the property may be offered to the next highest bidder.

What Are the Pro’s and Con’s of Real Estate Auction for Sellers?

Pros:

  1. Speedy Sale: Real estate auctions can expedite the selling process, as properties are typically sold within a specific timeframe, avoiding prolonged negotiations and reducing carrying costs.

 

  1. Competitive Bidding: Auctions foster a competitive environment, which can result in higher sale prices. The public nature of the event and the urgency it creates among buyers can generate enthusiasm and increased interest.

 

  1. Market Value Determination: Auctions help determine the true market value of a property, as the price is determined by the bidding process. This transparency provides sellers with assurance that their property is sold at its highest possible value.

 

  1. Control: Sellers have control over the terms and conditions of the sale, including setting a reserve price and a specific auction date. This control allows them to streamline the selling process and align it with their specific needs.

 

Cons:

  1. Uncertain Outcome: The final selling price of a property at auction is uncertain, as it is entirely dependent on bidding. There is a possibility that the property may not sell if the reserve price is not met.

 

  1. Limited Exposure: Auctions may limit the exposure of a property to a specific pool of buyers who are interested in auctions. This could potentially exclude a broader range of potential buyers who may be interested in a traditional sale process.

 

  1. Costs: Auctions involve various costs, including auctioneer fees, marketing expenses, and potentially commissions. Sellers should carefully consider these costs to ensure they align with their budget and overall financial objectives.

Final Thoughts About Real Estate Auction

What Are the Pro’s and Con’s of Real Estate Auction for Buyers?

Real estate auctions provide a proven platform for buying and selling properties. Real estate brokers like CJ Real Estate offer sellers a quick and efficient way to sell their properties at potentially higher prices, while buyers can benefit from competitive bidding and access to unique opportunities. Understanding the auction process and weighing the pros and cons can help both sellers and buyers make informed decisions regarding their real estate transactions.

Pros:

  1. Competitive Environment: Buyers have the opportunity to compete against other bidders, which can result in purchasing a property at a potentially lower price than in a traditional sale.

 

  1. Efficiency: Real estate auctions provide a streamlined and transparent buying process. The competitive nature of auctions encourages buyers to make swift decisions and complete the purchase within a specified timeframe.

 

  1. Access to Exclusive Properties: Auctions can offer access to unique properties that may not be available through conventional channels. Buyers can discover rare investment opportunities and properties with potential value.

 

Cons:

  1. Limited Time for Due Diligence: Buyers must conduct thorough due diligence within a limited timeframe before the auction. The inspection period is typically shorter than in traditional sales, which can increase the risk of unforeseen issues.

 

  1. Competitive Pressure: The competitive nature of auctions may result in buyers feeling pressured to bid higher than their initial budget. It is essential for buyers to establish a clear budget and stick to it to avoid overpaying.

 

  1. Non-Refundable Deposit: Winning bidders are typically required to provide a non-refundable deposit. This may pose a financial risk if the buyer encounters difficulties in securing financing or backing out of the deal.
Image: 80 Acres farmland Alfalfa county, OK

CJ Real Estate Streamlines Land Sales

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TULSA, OK, July 20, 2023 /Newswire/ —

CJ Real Estate helps land buyers find ranch and rural real estate while improving average price-per-acre for land sellers with the launch of their streamlined website.

Real Estate buyers often struggle to find rural land parcels.

“Helping connect rural land sellers and buyers is what we do,” said Eric Johnson, co-founder of CJ Real Estate. Eric further clarified, “Constantly improving our process helps us maintain our edge as the industry leader. That’s why we continually invest in world-class technology that makes it easier for buyers to find what they want so that sellers can realize maximum sales price.”

The CJ Real estate team has a long history of delivering maximum value for property owners and trustees across the south-central plains. “We are absolutely impressed, and our clients are thrilled, “said John O’Brien of Northern Trust Company when CJ Real Estate sold 280 acres for 131% above the pre-sale estimate. Yesterday’s sale proved the power of auction again when the CJ Real Estate team sold 80-acres of Enid, Oklahoma farmland. Marty Powers, owner of the 80-acres remarked, “Results – that’s why I trust CJ Auctions to sell my land. They’ve exceeded my expectations in past sales. Now they’ve brought the highest price-per-acre that anyone can remember for my farmland.”

Chris Lowers, President of Grey Partners reported that, “Over the first 90-days, our core website update for CJ Real Estate increased average daily traffic by 852%, reduced the average bounce rate by 59% and, quarterly conversions tripled.”

ABOUT CJ REAL ESTATE:

CJ Real Estate sells ranch and residential real estate across Oklahoma, Texas, Arkansas, Missouri, Kansas and Colorado. Led by Eric Johnson and Ronn Cunningham, the CJ Real Estate team specializes in complex acreage sales typically dispersing assets in 45 days while outperforming market conditions. What makes CJ Real Estate different is that they give sellers more control through unbiased advice and the opportunity to choose the real estate sale method that’s best for them: auction or listing.

MEDIA CONTACT:
Eric Johnson
1.918.550.8118
Info@CJ-RE.com

SOURCE: Cunningham-Johnson Real Estate

Image: 16108 E 89th

July Real Estate Auctions

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Oklahoma Land and Home Real Estate Auctions July 2023

Are you looking for ranch land, productive farm land or a country home in Oklahoma? CJ Real Estate, the real estate auction industry leader, brings 3 incredible properties to market this Summer.

Alfalfa county Oklahoma farmland for sale July 19th, 2023

For those seeking farmland, we offer an 80 acre parcel that’s been in the same families hands since the land run. This Alfalfa county farmland will sell on July 19th in a no-reserve real estate auction. This property boast rich soils comprised of 87% Grant silt loam with moderate to intense farming capability. And, it’s located 7-miles north of Ringwood, Oklahoma along Hwy 58.

Owasso, Oklahoma 3 Bedroom Home for sale July 19th, 2023

If you’ve been dreaming of waking up to beautiful sunrises and winding down to stunning sunsets, we have an Owasso single-family home ideal for homeowners or real estate investors. Offered via Trustee Auction, this 3 bedroom, 2.5 bath home on 1+ acre lot features a 3-car garage and 25’x50′ heated shop with half-bathroom. It’s located in the heart of Owasso, Oklahoma approximately one-half mile from Centennial Park along 161st E Ave at 89th St North in quiet Hunters Glen Estates.

1,100 acre Bryan county, Oklahoma ranch for sale early September 2023

Late summer brings the auction of a 1,100 acre cattle ranch near Durant, Oklahoma and 84 acres of timber and open land nestled among the whispering pines northeast of Houston, Texas. Both ranches offer a variety of rolling terrain with timber, creeks and ponds.

CJ Real Estate is proud to bring these properties to auction. Whether you’re an experienced rancher, farmer, or investor, our upcoming auctions offer land to meet your needs. Don’t miss out on this opportunity to own the property of your dreams. Visit www.CJ-RE.com for auction details of these and other ranch, residential and commercial real estate assets.

Subdividing Land Pro’s & Con’s

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Should You Consider Subdividing Your Land Before Selling?

What are the pros and cons of subdividing land?  When thinking about selling your rural, ranch, or farm land, owners may increase the total sales price but how does that work? What are the advantages and disadvantages of subdividing the property into smaller parcels? And what should landowners understand before parceling land for sale? In this article, we will delve into the details of land subdivision, equipping you with the knowledge needed to make an informed choice and highlighting key factors to consider.

Know The Purpose:

Before you proceed with subdividing your land, you need to know the purpose behind doing so. Subdividing creates smaller parcels of land for the sale, ensuring that you’re selling all the land or some of the land but in more significant portions, which can often lead to higher profits. Subdividing can also make your land more attainable to prospective buyers by breaking it into smaller, more affordable pieces. The question is, do those benefits align with your goals as a landowner? When properly parceled, land subdivision can increase your total property value and increase how quickly you’re able to sell because your property will now appeal to a larger buyer pool.

Legality:

Before you proceed with the subdivision, you need to ensure it is legally allowable. Even in rural areas many sellers are shocked that land use regulations and zoning requirements can be so complicated. Professional real estate brokers like Ronn Cunningham of CJ Real Estate, research the zoning laws and regulations within your area, your property’s area, and the jurisdiction in which it’s located to determine if subdividing is permitted and then pursue the parceling process. Ronn Cunningham remarked, “It is essential for landowners to consult with a professional to avoid legal issues resulting from improper land parceling”.

Determine Land Subdivision Cost:

Subdividing comes with different costs that may include legal fees, surveying, filing fees and more. Eric Johnson of CJ Real Estate effectively summarized the cost-benefit of parceling land for real estate auction when he said, “Parceling is a very effective method of increasing the average selling price per acre. And, it’s common in real estate auctions that the research, surveying and filing costs are passed-along to the buyer at closing rather than being carried by the seller”.

Environmental Issues:

Before subdividing your land, be aware of how parceling may alter land access, the beauty of the land for future users, soil erosion, watersheds, and wildlife habitat. Identify potential environmental issues ahead of time and work with experts like CJ Real Estate to ensure that any parceling makes a positive impact that improves the value of the land.

Marketing Your Subdivided Land:

After the subdivision process, your land’s market value will most likely increase, but it’s important to create a comprehensive marketing plan to attract potential buyers. That’s where it’s vital that sellers employ experienced marketing experts like CJ Real Estate that focus on strategic selling. They’ll identify the characteristics and features that each parcel of land has and what potential buyers would be most interested in. Then tailor a marketing plan that attracts, engages and compels qualified buyers to your sale.

Conclusion:

Subdividing land is a complex process that requires careful planning, legal consultation, and thorough research to maximize its potential benefits. Before making a final decision, consider your goals, legality, cost, environmental impact, and marketing strategies. Successful land investment requires significant attention to detail, working with the right team of professionals, and making informed decisions. By keeping all these in mind, subdividing your land could ultimately lead you to maximize your profits and find a more substantial market for your property.

When you’re thinking about selling, choose the Real Estate auction industry leader. Visit CJ-RE.com to learn how CJ Real Estate will help you achieve top-dollar for your ranch, rural or farm land. Then call CJ Real Estate at (918) 550-8118 to get started.