Looking for advice on a farm purchase

[redpointfarmer]

Hello all, thank you for looking at my post. It might be a bit of a novel so please bare with me

Here's my situation; I have bought an old 56 acre farm, the closing is the end of feb. It is very much a fixer upper, it has not been lived in full time for many years. The farm house is small >1000sqft, bricked,1 3/4 story, but needs a complete gut to the studs and some joist repairs in the kitchen, no basement only crawl space. It has multiple out buildings, 2 pole garages a couple of sheds, and a large 30x70 barn that collapsed a week ago. Dug well, septic tank in unknown condition, old shingle roof, likely leaks. Only decent things about it; new 200amp service, and two newer heat pumps.

Its basically been difficult since the start. I didn't realize how hard it was to get a mortgage on a farm, i thought i had one when the purchase was made only to find out it fell through, it wasn't until about 3 weeks later i finally had a broker get me firm commitments. The thing i kept hearing is that my credit was fine, its the property that was the problem. I purchased it at 350k, the appraisal for house +10acres was 273k.

So thats worked out now, but then the barn fell down after the last big snow storm.....

My initial thought was great, knock a bunch of money of the purchase price, nope 15k off from the seller, was quoted 11k to clean up the mess. Also, you can't get home insurance on a property with a collapsed building, so it has to be cleaned up before the deal is closed. Was also told by the sellers agent that he will not consider any more bargaining.

Did i mention the seller lives in Japan and it takes 4 days for him to respond to anything.......

My basic plan also was to live in a trailer on the property for 6 months while i renovate the little house into something livable. The property is beautiful, not currently farmed, house on a hill overlooking the forest, a stream runs through the property.

There's many possibilities there, but is it worth the trouble? It's been nothing but pain from the start, should i continue with the purchase? Or just walk away from the many disasters that lie in wait.... Thanks for listening, any thoughts or advice would be great.

[nicolthepickle]

I don't know about the land. Does it have trees to harvest, or the potential to make money some other way? Is it good farm land?
But I can say something about the house. RUN! Old houses take so much money to make them wonderful. In the end it will take more than building a new one. They're cold and hard to heat. The electrical is usually not very good in them (fire hazard). And when you start one bit of renovation it always spills over into other parts costing more time and money.
There are a few benefits to buying an old house. You get "character" as many people are very fond of. And you usually can fix it up over time, giving you some time to make more money to fix it.

[blueeyetea]

First, were there any conditions in the offer to purchase that were accepted by the owner, for example, getting financing, or property inspection? If there weren't, and you accepted the property as is, you might not have any choice but to go through with it at the specified price you agreed. Find out what it would cost you if you backed out of the deal.

From what you're telling us, that property doesn't look good, especially if you were having trouble finding a mortgage.

[Frugalbigmama]

But he purchased the property that was to come with a barn and now there isn't a barn so the seller either replaces barn or they come to an agreement on reduction of price that the buyer accepts.

[secheltsaver]

The price is too far above the appraised value(even before the barn was lost).I would use the barn collapse to back out of the sale if it were me.The existing buildings don't sound as if they have much value,the septic is uncertain,and I doubt the well has been tested.56 acres is a nice piece,and may be subdividable or permit a 2nd dwelling,but it should still be priced at nearly land value,due to the liability and expense of rehabilitating everything.If this is listed on the open market,how does it compare to similar properties in the area?What would it cost if the land was bare?Oh,and most importantly-do you have the money,time and skill to cope with doing all this yourself,or will you have the additional hassle and expense of relying on hired help?

[blueeyetea]

But he purchased the property that was to come with a barn and now there isn't a barn so the seller either replaces barn or they come to an agreement on reduction of price that the buyer accepts.

But he's also purchasing a property with a house that needs to be torn down, so, he's aware of the disrepair and neglect of the property. If the barn collapsed during a snow storm, it's not hard to imagine that it was no secret it wasn't in great shape to start with. It could be argued he was taking the risk the barn would collapse after he moved in. So, who would have been responsible then?

It's really a question for lawyers and would hinge on what language was used to describe the state of repair of the buildings in the contract. One one hand, the price negotiated most likely took into account the disrepair of the property. On the other hand, it could be argued the seller is responsible to remove the collapsed building before the closing date. Is it enough to back out of the deal? It's not clear cut that it is.

[Ciel]

If you go ahead with the purchase, see if you can meet other area farmers to get some information on history of farm, what it used to grow (either by past owner or past renter), history of the property over coffee/lunch in town.

Find out what provincial programs exist to help farmers in your province, assuming you intend to farm the land to get some income, and look into what criteria exist for the crop/livestock you intend to raise through the association in charge of the crop or livestock quotas/markets. There are always regulations/paperwork. Chances are if you don't farm the land, your property tax situation will reflect that fact. Have a relative that turned to nuts as a crop in order to get his property tax break as agricultural land rather than non-agricultural land.

In Ontario, OMAFRA is the ministry in charge of agricultural matters. http://www.omafra.gov.on.ca/english/index.html

In regards to living in a trailer onsite-better verify that local/municipal bylaws allow that.

[Frugalbigmama]

But he's also purchasing a property with a house that needs to be torn down, so, he's aware of the disrepair and neglect of the property. If the barn collapsed during a snow storm, it's not hard to imagine that it was no secret it wasn't in great shape to start with. It could be argued he was taking the risk the barn would collapse after he moved in. So, who would have been responsible then?

It's really a question for lawyers and would hinge on what language was used to describe the state of repair of the buildings in the contract. One one hand, the price negotiated most likely took into account the disrepair of the property. On the other hand, it could be argued the seller is responsible to remove the collapsed building before the closing date. Is it enough to back out of the deal? It's not clear cut that it is.

The property is not as it was to be purchased. Doesn't matter that it could collapse after he took possession. The point is he hasn't taken possession and it's not as per the purchase agreement

[blueeyetea]

The point is he hasn't taken possession and it's not as per the purchase agreement

The point is he agreed to buy a poorly maintained property from an absentee owner. If the barn had been in working order when he bought it, the buyer would be in the right, to demand that the barn be replaced. But he's not asking for that, why?

If he's not demanding for a replacement of same value, it leads me to believe he knew what he was buying and he agreed to buy the property as is. In other words, if he agreed to take the risk the barn could collapse, then he has no grounds to go back to the owner and request a reduction in price.

[hirev]

this is simple. I would not buy it unless you really want to. If you accepted the 15K price reduction then you might have to go ahead with the sale but if there were conditions of a home inspection- if it fails then you can get out.

Another thing is you can request another reduction. and keep fighting till he gets tired of it and backs out himself. and if you put in an offer for something and he comes back with a different offer you can refuse and back out of sale with no strings attached. I have done this. I had an offer put in on something was accepted. then something happened to the property. I put in a second offer which he refused and came back with something different and I said no and walked away.

Plus if you cant get insurance you cant get money which is a condition of any sale when a bank is involved. The current owner will have to clean up the property to a state someone will insure it.

[itsmewhoelse]

Let your real estate lawyer deal with it, if you dont have one its worth the price to get one

[tobiwobi]

i would not be paying more than what it was appraised for unless i really really loved the property and saw myself being happy living there. So it's a personal decision OP. are there similar properties around that are less hassle?

[bluerose]

Well good luck ,that barn of yours good thing it fell because now it will not fall on your head. You have a lot of good wood it that barn that can be reused to make another barn,shed or whatever . Your most likely going to have many years of wonderful toil on the farm but if your young and willing well then let the good life begin,have fun and good luck.Attachment 219655