Should You Split a Parcel When Selling Land?
That includes the method of sale, such as an auction, public listing, sealed bid, or private sale. It also includes how the land itself should be offered.
In some situations, a family may own one parcel that could be split and offered as more than one tract. There could be potential to create more buyer interest if the land were to be offered in separate pieces.
Parcel splitting does not work for every farm. The property, buyer pool, county requirements, and seller’s goals all need to be reviewed before deciding how the land should be presented.
Why Would You Split a Parcel?
The main reason to consider splitting a parcel is to make the offering more attractive to a wider range of buyers. For example, if a landowner has a 160± acre parcel, selling it as one tract may be the right approach. In other situations, splitting it into two 80± acre tracts may create more opportunity.
An 80-acre tract may be more affordable for a neighboring farmer, investor, or buyer who is not in a position to purchase the full 160 acres. By creating more attainable tracts, the property may appeal to a larger group of buyers and increase competition.
Acreage is only one part of the decision. Configuration, drainage, access, soil quality, field layout, and buyer demand in that area all need to be considered before deciding whether a split makes sense.
Different Types of Land Can Appeal to Different Buyers
Another time we may consider splitting a parcel is when the property includes different types of land.
For example, a farm may include 120 acres of tillable cropland and 40 acres of non-tillable ground, such as CRP, woods, pasture, or recreational land.
Some buyers may be focused primarily on the tillable acres. Others may have interest in the recreational land, wildlife habitat, or income from CRP.
By separating those pieces, we may be able to create options for different buyer groups instead of asking one buyer to purchase the entire property as one package.
When a Landowner Wants to Keep Part of the Property
Splitting a parcel can also be used when a landowner wants to keep a portion of the land and sell the rest.
This spring, we worked with a family on a farm that included tillable ground and non-tillable recreational land along a river. The family chose to keep the river ground and sell the tillable acres. In that situation, splitting the parcel allowed them to accomplish both goals.
This can be a good option when a family wants to retain a building site, woods, hunting ground, river frontage, or another part of the property while still selling the farmland.
A Few Things to Know Before Splitting Land
Any time land is split, there may be extra steps involved. A survey may be needed. The local county may also need to review and approve the plan.
There may be zoning, access, drainage, septic, or minimum acreage requirements to consider. These steps can take time and add cost, so they should be weighed against the potential benefit of creating a better sale structure.
Every farm is different. Sometimes selling as one tract is the right approach. Other times, splitting a parcel can create more options.
Before deciding how to sell, it is important to review the land, understand the likely buyer pool, and determine which sale structure gives the property the best opportunity in the market.