False rumors and misinformation can circle the earth 10 times before the facts can travel to the end of the road. This is especially true in the rural land market. Here’s why.
Accurate real estate sales information is not available in most Missouri county public records. So the only reliable sources for a sale price is from the buyer, the seller, or the real estate agent. And if these people are not available or are not talking, then the rumors and half truths start mounting. Here’s a few recent examples:
Example #1: Last week I saw an acquaintance who had “information” on a farm sale that he couldn’t wait to tell: “Have you heard about the 120 acres that sold for $5,000 per acre? Yep, All farm land in this area is going to be selling for $5,000 per acre from now on.”
If his information was correct, then this could indicate that land prices in this area had gone up $1,000 per acre in less than a year. I called a reliable source and found out his information was only half correct. The 120 acres had sold but the price was $3,800 per acre and not $5,000 per acre. So how did this misinformation get started?
I asked my acquaintance where he got his information. With reassurance he told me that when he said to the buyer that he bet he had to pay $5,000 per acre, he didn’t say a word, so he assumed the price was $5,000 per acre.
Example #2: Last week a seller told me he wanted $3,500 per acre for his land. He was basing the price upon a neighboring property that had sold for $3,500 per acre. His information was only partially correct. True, the property had sold and yes, the total price was accurate; however, the land had several buildings. When the price adjusted was made for these improvements, the value of his vacant land was far less than his expectation.
Example #3: Last spring a gentleman called about selling his Warren County property. His St. Louis business had become a victim of the down turn in the residential market. The bank was forcing him to sell his rural property to pay his sbusiness loan. His previous listing agent, a residential salesman had listed the property at $6,000 per acre. The agent had arrived at the price by relying on unconfirmed sale information of a nearby property. His information was incorrect. The neighboring property had not sold! Furthermore, he ignored two comparable properties in the $4,000 per acre range. With this information the seller’s property was re-evaluated. We listed and sold the property within a few weeks. The seller paid off the bank loan a month before foreclosure was to begin, put cash in his pocket, and restored his peace of mind.
Example #4: In July, a landowner from California called about his family’s 293 acres Missouri farm they needed to sell. He had spoken to a friend of the family who lived in the area. The friend had told him that no one was buying land and that their farm would only sell at a “give away price.” I explained to the landowner that to say “no one” is buying land was not true. I had information of area sales and none of these sales indicated a “give away” price. He listed the property and by the end of the year, the farm sold. The price was higher than he expected and much higher than the family friend had told him he could expect.
Example #5: This fall a landowner called, desperately needing to sell her land because of family illness. The sale had to be made quickly. It sold in less than 6 weeks for $2,350 per acre. Two years earlier, a buyer offered $3,500 per acre, which the owner refused to accept.. She heard rumors that land in her area was selling for $4,500 per acre. Sadly for her, she chose to believe the misinformation rather that seek the facts. This decision cost her over $130,000.
Here’s what George Washington had to say about the consequences of using misinformation in a letter to John Jay on May 8, 1796:
“Serious misfortunes originating in misrepresentation, frequently flow and spread before they can be dissipated by truth.”