Welcome to the Close More Deals podcast. I'm your host, Scott Dillingham. Today, I'm gonna be telling you how to close those agriculturally zoned properties or properties with large acreage. Meanwhile, it's a single family home. So what happens is the lenders, they have criteria where they need to follow specific zoning to determine if they're going to lend on a property or not.
Scott Dillingham:So traditionally, if it's a single family home and it's zoned agricultural, they don't like that. And the reason is if you stem back and you go back, let's say, you've lent this money to somebody, they can't pay the loan and you need to repossess the property. A single family home zoned agricultural can be much harder than a property that's zoned residential. So they don't like it, they avoid it. Now I wanna say not all the lenders dislike it.
Scott Dillingham:That's my point here. That's why we're discussing this. So you first need to find out a couple things. Whenever it's zoned agricultural, you wanna look at the property and is it wedged? Is it a home that's wedged between multiple farms everywhere in close proximity?
Scott Dillingham:If they're far away, it's different, but if they're like close proximity, silos, like all this stuff, barns everywhere and then there's just this house that, the farmers couldn't buy the land fifty years ago, so they built their whole farm around you. Like if it's something like that, it's gonna be incredibly hard to finance, not impossible, but those are the hardest, okay? So if that's what it looks like, be careful. Now, if it's just a regular property in the middle of the county, and there's lots of room around and there's not barns and other farm equipment and everything all surrounding your property, then there's multiple lenders that will move forward, even if the zoning's agricultural. Now, the next sort of piece of this, which goes hand in hand is the square footage of the property.
Scott Dillingham:So if it's under five acres, generally that's acceptable to all the lenders, like acreage wise, not the agricultural zoning, I'm just talking about the acreage. We've got multiple lenders that will do 10 acres or below, and then we've got, you know, smaller amount that'll do 15 or below, and then above that, there's only just a couple and they're really farm lenders. So we've got them, but it's not really the residential lender or what happens is, let's pretend the lender will only value and work with 10 acres. If the property is 100 acres, those 90 extra acres that are above the lender's policies, they're going to ask the appraiser to exclude from the valuation when they analyze the appraisal. So if you're buying this place, I don't know, let's just say it's $2,000,000 with a 100 acres in a small house, they're gonna look at what that land costs, right?
Scott Dillingham:So if the house in the first five acres or first 10 acres, depending on the lenders policy is a million, and then the 90 acres of land is also another million, they won't value that. So your client has to come in with those extra down payments. I just want you to kind of be aware of this, this is more of an education, but now we're gonna tie it into how you close more deals. So the thing is, is if you have a lender who's telling you it's agriculturally zoned, you can't do it, that's a commercial mortgage, that's not true, we have lenders that can do it, We can do it on the commercial side too because we have multiple, but you don't need to. So if you're being told that from your lender, give us a call.
Scott Dillingham:We have the options, Canada wide, and we can help you to close more deals. So I hope this helped. I hope it shared some insight into how kind of lenders look at deals. And if it did, please share this with your your coworkers, your fellow realtors, and I look forward to seeing you next week. Take care.