Companies that buy land often operate as middlemen, leveraging the relationships of real estate agents to close deals. But they also face a different set of challenges that can delay the process, including issues with title insurance and real estate sales taxes. It’s important to research buyers thoroughly to make sure they’re reputable. A few red flags to look out for include refusal to provide a real estate license number and memberships, a lack of client references, high-pressure tactics urging you to accept offers immediately or risk rescindment, and a willingness to sell at a price significantly below your property’s value.
In recent years, investors with ties to China have been buying American farmland at a record pace. Data from the USDA shows that over a third of Companies that buy land in U.S. belongs to corporations like Smithfield Foods and a billionaire named Sun Guangxin. The latter used the names Brazos Highland Properties LP and Harvest Texas LLC to purchase 100,000 acres in Texas for a planned wind farm, which was ultimately halted by state law limiting foreign ownership of land.
Congressional leaders and farmers have raised alarms over these purchases. They fear that the influx of Chinese money could lead to national security concerns, and control of the nation’s agriculture sector. Those fears grew in 2021, when a Delaware company called Flannery Associates bought 52,000 acres near a military base in Solano County, California. The company denied any ties to the Chinese government, but Congressman John Garamendi accused the company of being an agent of the Communist Party and demanded answers about the deal from the firm’s owners.
The mystery surrounding the Flannery Associates purchase has been fueled by concerns about Chinese espionage and economic influence. But it’s unclear why the company purchased the property, which abuts the Travis Air Force Base. The company didn’t respond to a request for information. Garamendi’s office says it has spoken to family members of the farmers who sold their land, and that they were unaware the company was connected to a communist organization or that they’d receive several times more than the actual market value of their property.
While many domestic institutional investors have jumped into the farmland investment game, their holdings are dwarfed by the amount owned by foreign entities. These investments are often backed by banks, hedge funds, university endowments and pension funds. Over the past two decades, these financial giants have increased their farmland investments by a factor of almost five.
It’s not uncommon for these firms to buy land at prices well below market value, assuming the seller is willing to take a loss on the sale and cover closing costs and other expenses. This approach can reduce the time it takes to complete a sale, but it’s important to get all offer terms and promises in writing. Verbal assurances are usually meaningless. A trusted real estate attorney or a sage friend can help review a contract for clarity.