How to Buy a Fly Fishing Ranch, pt. 3: Closing the Deal

This is the third of a 3-part series on how to buy a fly fishing ranch. In this article, Greg covers important steps to take toward the end of your journey and how to make sure a property is right for you. We hope you have enjoyed this series and that it helps in making one of the best decisions of your life: purchasing a fly fishing ranch. If you didn't catch the previous two articles, you can read them here:

How to Buy a Fly Fishing Ranch, Part 1: Do Your Research

How to Buy a Fly Fishing Ranch Part 2: Find a Broker

Pictured are some of our Fay Ranches brokers who will help you find the right private stretch of water for your floating line: Jim Toth, Chuck Davison, James Esperti, Greg Fay and B. Elfland.

Part 3: Closing the Deal

The second phase of finding your ranch now begins. Your journey becomes real when your boots hit the dirt. You start confirming what your priorities are and what appeals to you and your family. You will learn more in one day of looking at ranches with a good broker than you learned in the weeks or months you spent obsessing over websites.

However, you won’t get much accomplished if you take a couple days out from a family vacation to look at ranches with your young children. You will need to be focused on the task at hand when you are looking at ranches to make the most of your time. Only the decision makers should be in attendance until you are making the final decision or have made an offer. If you have a family vacation scheduled for July, come on out in April, May or June to look at ranches. You may be in the midst of due diligence or ready to sign closing documents when you come back out with the family.

Know who the broker is representing. If the broker you’ve decided to work with is showing you one of his/her listings, they will be representing the seller. If it is not one of their listings, they will be representing you. The other broker in attendance will be representing the seller.

Manage your expectations. As I mentioned before, there is no perfect ranch. You can spend a lifetime looking at ranches if you don’t understand this point up front. Some problems can be solved; some cannot. You will just need to decide what matters most.

After you’ve looked at some ranches, maybe you just can’t stop thinking about one of them. You find yourself daydreaming about being there. It’s time to make an offer. Be prepared for what’s ahead. The pace of this process may be frustrating.

It is customary to give a seller at least three days to respond to an offer but more often a week is given. In many circumstances there are family discussions that need to take place, an attorney needs to review the document and a decision to accept or counter needs to be made. Often a counter offer is drafted and delivered to the buyer’s agent. The key deal points are obviously the price and terms. Earnest money is often approximately 3% of the offered amount.

There is customarily a due diligence period which is generally from 30 to 60 days with 45 being an average. The due diligence period is an inspection period in which the buyer is given the opportunity to research what they have agreed to purchase. If everything checks out, the deal moves ahead.

Most of the issues discovered during due diligence arise in the Title Report, which for a 100-year-old ranch can be an interesting process of discovery. I’ve represented clients on ranches that did not have insurable access and never have, but for several decades no one cared or bothered to check and no one knew until we discovered it while researching the title.

Hopefully, you won’t run into anything quite this egregious, but it seems there is almost always something to clean up on the Title Report. This is where a good transaction attorney comes in handy. More about that later.

Another important aspect of the ranch to delve into is the physical inspection of the ranch that often involves a Phase 1 Environmental Survey. Any number of things can surface during the Phase 1 inspection, but the most common items are underground gas tanks that have never been removed or were removed improperly. A host of other issues can arise, most of which can be solved. The water rights need to be researched as well as making sure the irrigation water that is represented truly does exist, is sufficient for the acres being irrigated, and is being applied in the place and manner in which it is supposed to be. In some areas a mineral search and remoteness test may be needed, depending on the likelihood of the presence of extractable minerals in that area.

Almost every due diligence period discovers some issue with the ranch. A good ranch broker has a skill for solving problems and a team to help him or her. The majority of issues can be solved, but it may take some patience, understanding and cooperation between all the parties to get through the process. Some deals extend beyond 60 days if there are due diligence items that have not been satisfied and the parties have agreed to extend the due diligence because of an expectation that the issue will be resolved given the additional time.

One of the most important qualities a broker must bring to the equation is an ability to bridge the gap between buyer and seller and to keep the deal running as smoothly as possible. Things can get a bit emotional during difficult transactions, so your ranch broker needs to keep a level, unemotional, solution-oriented head on throughout the process.

At Fay Ranches, we have an unwritten rule that we try our best to only work with reasonable people. We feel this is in the best interest of our clients since we don’t want to be the ones who bring someone into the area that is not going to be a nice neighbor. Then he or she becomes a problem for all the surrounding ranch owners. This also makes for smoother deals. This rule also accounts, in part, for the reason we have never been on either side of a lawsuit in the history of the company.

If your goal is closing the smoothest deal possible, this is my next bit of advice: make sure you have a good ranch transaction attorney representing you during the purchase process. In my opinion there are two types of attorneys, problem solvers and problem creators. Your broker will have developed relationships with two or three of the best ranch transaction attorneys in the area. Take his or her advice and hire one of those attorneys. If you take a chance and hire an attorney your broker has not recommended and they turn out to be a problem creator, it will make it much more difficult to get anything purchased.

A good ranch transaction attorney is extremely valuable to the process and adds another set of skilled eyes to make sure you fully understand what you are buying and any issues discovered during due diligence are solved in a manner that is in your best interest. Ranches are complex animals and need to be fully researched before purchase to avoid future surprises.

Deciding to purchase a ranch is the start of a great adventure. You will see some beautiful country during the process and hopefully meet some great people. Additionally, it’s an opportunity to learn and experience new things and fulfill your expectation of finding a wonderful place for you and your family and friends to gather and create memories.

Have fun, good luck, and congratulations on your decision.

Greg Fay

Greg Fay is an avid outdoorsman and ranch broker and resides with his family in Bozeman, MT. Greg and the 17 other brokers at Fay Ranches represent the finest hunting, fly fishing and working ranches in Montana, Wyoming, Colorado, Idaho and Oregon. Contact Us today to learn how you can start living the life you have imagined.