The Pandemic's Impact on Farm and Land Real Estate
We recently interviewed a realtor from southern Pennsylvania, Martin Heaps with Howard Hanna. During the interview, Martin shared his perspectives on the pandemic’s impact on farm and land real estate.
Let’s get started by having you tell us a little about your business. How did you end up in real estate?
Well, it was somewhat by accident. I was in the dairy business. I had a dairy farm. We had cattle and I was into purebreds. I thought it would be a good idea to go to auctioneering school to sell purebred cattle. So I jumped on a plane and I went to Reppert School of Auctioneering in Decatur, Indiana. When I was there in class, they suggested that we go back to our home states and get a real estate license to complement the auctioneering business.
It was sort of coincidence, and after I got home, a broker approached me. I guess he saw something in me. He suggested that I get a real estate license and go to work for his company and specialize in farm and land sales, because a lot of realtors don't specialize in that. They're afraid of it. That was 35 years ago.
I took his advice and I went to class and then went to work with him part-time, because I was still milking a herd of cows. After a brief period of time, I thought, "Well, you know what? This is working out pretty good," so we dispersed the herd and I went full-time real estate with him, specializing in farm sales.
My very first sale, back 35 years ago, was a 104-acre farm with a stone house on it. I got a taste of farm sales quickly. Then I continued on, and I obtained my broker’s license throughout the years. I was doing auctions, too. I've sold real estate at auction, although not so much now.
Then I worked as an appraiser for Absolute Real Estate Appraisers in York, PA for a couple of years. I did farm and land appraisals and residential, of course.
Now I manage the office in Shrewsbury, Pennsylvania for Howard Hanna Real Estate Services. We have 19 full-time agents here. We're going to open an office in Maryland, which will give us state number 13. We have over 400 offices in soon-to-be 13 states.
I sort of got into it by accident, but it's been a 35-year ride so far.
All of us have certainly been through a lot in the last year. During the height of the pandemic, what were the biggest challenges for your team in connecting customers with properties? What technology solutions did your realtor team find that you think will remain past the pandemic?
To say it was awful in the beginning, would be an understatement. Of course, we had representatives, attorneys from Howard Hanna and our York County Board of Realtors attorney providing input.
When we were shut down, we were not allowed to leave our house of shelter, as they called it. So if a sign blew over, we were not allowed to leave our house of shelter and go put the sign up. We certainly weren't allowed to show houses. We could not go into someone's house. We couldn't walk onto the yard. We were absolutely shut down.
So we were introduced to Zoom. I didn't know what Zoom was a year ago. Now we have Zoom calls every week, it seems like.
We had to come up with a way to sell homes. Interest rates were coming down. People were looking to sell. People were looking to buy.
Not everybody, but most people, know how to use their cell phones. So we would get people to show us their home via video. We would do the market analysis from our home offices. We would list the home via electronic signatures. We would get the folks to go and take pictures of the inside of their homes themselves. Most people were more savvy than we thought they would be. It worked out very well.
We sold houses that way. In the month of April last year, we sold 12 homes, sight unseen. People put contracts on them and said, "Well, we'll view it when we can." And, of course, we gave them the right, if they didn't like what they saw inside, to not follow through with it if they didn’t want to. There was only a couple of people who didn't follow through.
We held virtual open houses. We had social media and all the technology tools. I'm one of the older gang here, so this technology was a little bit new to me. The young folks were helping me. We sold a lot of houses through it.
I think we're going to continue to use a lot of the Zoom. You can talk to your children on the other side of the world via Zoom! It’s unbelievable. We all heard things about going paperless 25 years ago too, but I haven't seen that yet.
I think real estate is a lot different than some industries. Real estate is still a people business. They like to have the personality of the realtor help them and coach them and comfort them and give them confidence that their purchase is a good one.
We'll continue use some of the newer tools, but I want to get back to what we think is normal, and we’re almost there. We still have protocols. We wear the masks. We wipe things down. We're very careful with other people's feelings. Some people are still concerned about coronavirus, and they should be. It is something to be concerned about.
At the beginning of the pandemic, we didn’t know what was going to happen and were afraid that we might go bankrupt. We didn't know. We'd never been through this before.
But all in all, we ended December 2020 up 47% in sales over 2019. It's hard to believe. That'll bring the next question up as to why, and we'll get into that later.
We’ve seen a tremendous surge in land and country properties fueled by a pandemic push to leave cities and move to the country along with a low interest rate environment. Do you see this trend continuing in the future?
Absolutely, for a while. There are a lot of reasons.
I had a lady who just came in the office this morning inquiring about a property up the street. Her question to me was, "Why such the surge?" I get that quite a bit, but there are a lot of different things.
Number one is interest rates. Nobody has ever seen interest rates this low. It's just unbelievable.
We're seeing a lot of people want to be out in the country, and they're gardening. If you remember last fall, you couldn't even buy canning jars in the store. There was a shortage of canning jars. I think people are going to want to grow their own food.
We have offices in upstate New York, and there are a ton of people coming out of New York City. They're getting bombarded to move to the suburbs. We've even had people call us from New York City here in my Shrewsbury, Pennsylvania office. They just want to get out of the city.
There's folks that have been boarding their horses, and now, we have people coming in and they want to buy a small horse farm so their daughter or son can ride horses without being around other people.
We're seeing an uptick in folks wanting swimming pools, because they're going to stay home and vacation in the backyard. I've never seen so many people looking for pools.
It's going to take people a while to forget the desire to live city life. I would say, the next five years. Eventually, they'll forget about it. The next generation will come on, but I think it's going to take a while.
We have a lot of folks working from home. We're seeing in the commercial business, there's going to be a lot of office space for rent, because more people are working from home.
And one more sector of it, is we have many people are moving back from Florida to be near their grandchildren.
There’s a pile of reasons for this trend, and I do think it's going to continue for a while.
In your market in southern Pennsylvania, what is the “hottest” property type to sell in 2021?
Well, that's a tough one, because they're all hot. It seems to be that every price range is hot. We've never seen so many houses sell for over $500,000 on a quarter-acre lot.
One that sticks out to me is the big demand is the one-story living. There are lots folks my age, in their 60s, and they want to get out of that two-story and get away from the steps. They want to get a rancher, especially if it's under $300,000 and downsize.
The next hottest would be the 10 to 15-acre farmette. People want to get in and over 10 acres to save on taxes with the Clean and Green.
I deal with a lot of Amish families, also. English folks want to have the small farm, but the Amish as well. I dealt with some of those families 25-30 years ago. They all had 10 children. Now, there are 10 children are looking for farms. I have actually sold the children of previous Amish farm customers.
There seems to be an uptick of police officers wanting to get out into the country. I guess, what they see every day in the city, I'd want to get out of there, too.
I don't think there's anything that's not hot right now. I had a car dealer friend of mine. I sold him a farm years ago. He sold his car dealerships in Baltimore and he had a funny saying. He said, “There's a behind for every seat.” It kind of goes the same way in real estate. There's somebody who will buy the fixer upper. Somebody will buy the $900,000 home. Somebody will buy the 200-acre farm. There's people out there for everything in between.
What tips can you share with our listeners if they are in the market for land and country properties this year?
I think it goes without saying you have to buy it when you can find it. If you find it, buy it. Take advantage of these interest rates. These interest rates can't possibly stay where they are.
The other thing is, there's probably never going to be the perfect house or the perfect property. But you can make an almost perfect property into a perfect home with a little bit of foresight and work. So don't be too picky. Take advantage of the interest rates. If you're young and healthy, go ahead and buy.
We're seeing multiple offers on most all of these properties. Just the other day we had a property with 12 offers, and we had to sit down and go through them. So there were 11 people there that did not get a home bought.
Again, buy it when you find it. Don't be afraid to take the chance and take advantage of these interest rates.
Two years ago it was normal that a home would sell for about 94% of the asking price. Today, it's 99%. And some of them are going above asking. People are agreeing that if they go $10,000 above asking price and it only appraises for asking price, they will come up with the difference in cash. I've never seen that before. But we are seeing it. It's a frenzy right now.
Get with your realtor. Have your realtor put you on a drip campaign, where you can see the properties as soon as they hit the market. Don't wait around, because if you don't buy it, somebody else will.
Is there anything else you would like to share with our listeners today?
Again, I'm going to go back to interest rates. I would say probably a lot of these young listeners today have never seen interest rates in the 8, 10, 15% range for home ownership. When I bought my first herd cows, the interest rate was, believe it or not, 18%. I didn't know any different. I just thought, "Well, that's cost of doing business."
We probably won't see interest rates at 3% or below. In the younger generation of buyers, they often think, "If interest rates went to 5%, I'd be afraid to buy." You know, 5% is still a good interest rate. It's just the times we live in.
I have a funny story for you before we get off the air. There was a guy named Jack. Jack was relatively new to the real estate business, this is back in the '80s. Jack listed a nice brick Cape Cod home outside of Glen Rock, Pennsylvania. I happened to have a buyer who was looking for just that location and that style house, but he couldn't get qualified for a loan because interest rates were at 11% and it came down to 10.5%. Then Jack listed that house.
I went to work one day and, of course, we didn't have computers back then, nor cell phones. We got a call from our lender and the interest rate dropped to 9.75%. I got on the phone, and I said to this guy, "Get up here and bring your checkbook. You've got to get a contract written and you have to get it locked in tonight."
"Tonight?" he asked. "Can't we wait until tomorrow?"
I said, "No, you've got to get up here tonight." We locked him at 9.75%. He was ecstatic.
If you're thinking about buying and interest rates do go back to 4.5% or 5.5%, it's not the end of the world, that's for sure.