There are around 11,000 dairy farms in New Zealand in the same number of sheep farms, and probably a similar number of horticultural operations. Wild farms do not change owners nearly so much as residential property, when they do change owners it is almost always a highly complex and difficult challenge to finance. It is important to understand the dictionary definition of a mortgage broker for this article.
Dairy farms in particular are extremely expensive to purchase because of the land prices, and nowadays it is nearly impossible for individuals to work their way up through contract milking and share milking to the point where they can purchase a farm. Most dairy farm purchases are achieved by groups of farmers or companies, and indeed dairy farming is steadily turning into a corporate commercial operation.
The complexities for the financing of the farm mean that only specialist farm sales managers and financiers can really be involved. It takes a very skilled and qualified financial advisor to fully understand the financial books for our farm, and to be able to advise potential lenders of the likely profitability in the short and long term of a farm. The financing will also be complex and that there could possibly be multiple sources of cash for a deposit including family money and other partners, and there may need to be more than one Bank involved and supplying the finance simply for risk management reasons.
The banks that lead to farms will always have specialist staff involved throughout the whole process, and in some cases this means that a mortgage broker is not required, but in the majority of cases a mortgage broker is a very valuable addition to the team. The farm buyer is going to want to know that they are getting the best deal, and any bank is not going to be screwing them down in a way that is to their disadvantage. Mortgage brokers in Gisborne really need to be able to compare the deals across a number of banks, and to take into account all the other sources of Finance including the family and business partners, plus they need to take into account the financial needs of the business in the short term and during periods where production maybe load for example winter or during droughts. This means that the mortgage broker really does need an intimate understanding of farming practices and farming financing needs.
However for mortgage brokers in Nelson that can service this market, the rewards are significant as it is very common for farms to sell for many millions of dollars, and in 2017 a typical sale maybe around $10,000,000. One such sale alone will generate around $65,000 for the mortgage broker, and if they are good then they should see probably half a dozen of these types of sales every year. It can be a very very lucrative business.