Determining the Value of Farmland

 


Determining the Value of Farmland

This is kind of an abstract question to which there seems to be no solid answer. More often than not farmland is bought and sold with no rhyme or reason behind the final sales price. One farm might sell for much too high while another might seem far underpriced. However, in my experience, if you take the time to dig a little deeper into the land quality, location, and neighboring properties, the answer will present itself.

First and foremost is quality. What is the soil like? Does the land drain well? These are probably the two biggest factors in value for a buyer in regards to the land itself. If a agricultural property contains poor soil and holds water, a buyer would likely step away.

The other variable is location. Now, for farmland, a property doesn’t have to be conveniently located or be highly visible to passersby. In this case, we’re talking about neighboring owners. This kind of property usually changes hands once in a lifetime and more often than not there are adjacent or nearby owners who have had their sights set on a particular tract for years. This kind of buyer is poised and ready when farmland property comes available and they are likely not alone. In this kind of scenario, market value of the property is given little attention and pure motivation for ownership is the only driver of price.

It is this exact situation which prompts me as a broker to encourage my farmland clients to consider auctioning their property. This kind of selling environment emboldens buyers to bid higher, likely settling at a higher price for owners than through a traditional listing process.

If you’re interested in this method of sale or curious to learn your farmland’s value, let’s connect! Give me a call at 765-427-5052, I’m happy to help.  

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