A potential land assessment tool
How is farm real estate value affected by environmental issues and related management? It's a question landowners and realtors want answers to and one where environmental farms plans (EFPs) may play a role say some Alberta realtors.
There is growing awareness and more questions about the environmental status of agricultural holdings all the time in the rural real estate industry, says Gemma Beierback, Town and Country Manager for the Calgary Real Estate Board (CREB). Realtors becoming aware of EFPs are considering their value in the course of listing and selling rural real estate.
"Environmental factors are not only an important part of the value of an agricultural holding, they are a potential liability issue," says Beierback. "There's no question today there is a rising focus on these factors.
"A tool such as EFP that can help document and assess the environmental soundness of a holding can offer a lot of value. It's something that warrants a closer look at. It's something our organization is taking a closer look at. It would appear to have value for both sellers and buyers, by providing clarity that may mitigate risk and make a holding more attractive for potential sale."
The EFP tool and process has more than decade-long history in Alberta. It is used by farmers and ranchers to support awareness, assessment and planning for environmental stewardship on their operations. EFP is based on a process that assesses every aspect of the operation from an environmental stewardship perspective and guides the user toward a plan for implementing 'beneficial management practices. Producers do this on their own with support resources available to them.
Perry Phillips knows this topic from several perspectives. He's worked with the EFP initiative for several years and today, through Alberta Agriculture and Rural Development, is the program coordinator for EFP in the province. He is also a farmer himself and has real estate experience as an agent and trainer.
Olds College has been involved in real estate training for many years and, Phillips has helped to design their 'Program for Excellence in Rural Real Estate.' Through that effort he is working with Beierback and others to increase awareness of EFP in the real estate industry. Interest is increasing with a request for training on EFP coming from the industry recently.
"EFP has become a topic of interest in real estate for several years now," says Phillips. "Efforts by a number of realtors, organizations such as CREB and the training programs are now taking that to another level, driven by the growing focus on environmental stewardship the real estate industry is experiencing."
From his perspective, Phillips says this is welcomed. "The role of EFP has always been to provide farmers and ranchers with a tool that supports their stewardship efforts. One of the benefits of that is enhancing their operation from a property value angle. We see the opportunity here as a natural fit.
"Ideally, we would like to see realtors understanding the purpose of an EFP and considering good environmental stewardship practices when evaluating and marketing rural properties. Landowners who are good stewards deserve to benefit from their efforts at this stage."
Beierback sees having an EFP in place as potentially having value. "There's good potential that will get more and more recognized by the marketplace, particularly as more realtors become familiar with EFP."
Landowners with an EFP may find their property is potentially more attractive to a buyer, says Beierback. Environmental considerations and a commitment to environmental stewardship are gaining focus and value in the marketplace. Even if they don't plan to sell they have the opportunity to enhance their property and its value through the EFP process.
An EFP from a real estate perspective can be an important part of the due diligence process, she says. "I've always encouraged both realtors that I'm instructing and clients when I was practicing real estate to provide as much information as you can up front, because it facilitates the process. If you answer more questions before a buyer asks, then you can get further down that interest road and potentially override some roadblocks."
Beierback remembers the first time she heard about EFP when dealing with a client. "I remember being really impressed with the depth and breadth of the workbook document. It said to me, 'okay these people have really thought through and put on paper where they are at with environmental stewardship.'
"The document gives the buyer a lot of knowledge and confidence."
More information on EFPs in Alberta is available at www.albertaefp.com.