Farmland valuation is an important step in financial planning for many operations. Whether you’re preparing to sell or purchase a parcel of land, evaluating your borrowing potential or making improvements to your property, understanding its worth gives you a strong foundation for informed decision-making.
Factors like road access, market conditions and comparable sales of similar properties in the area all play a role in the land valuation process. This guide explores tools and resources to help you estimate the value of your land with confidence.
How to Determine Land Value
When it comes to answering, "How much is my land worth?" the process requires a mix of professional input and independent research. Here are some practical ways to get started.
Enlist a Certified Appraiser
One of the most reliable ways to determine your land’s value is to work with a certified appraiser who can provide a detailed evaluation based on market conditions, comparable sales and the specific attributes of your property.
Farmland appraisals are different from residential appraisals, so it’s important to find a professional who is familiar with the nuances of agricultural land, such as soil quality, stocking rates, or tile and field drainage. Our certified general appraisers have extensive experience in evaluating diverse agricultural operations, ensuring accurate and unbiased valuations.
Research Comparable Land Sales
Another useful method for estimating land value is researching similar properties that have recently sold in your area. Realtor websites and other online resources can provide valuable insights into land sale prices and current listings.
Look for properties with similar acreage, soil quality and location to ensure meaningful comparisons. The U.S. Department of Agriculture (USDA) also tracks farmland values, including average prices per acre for cropland and pastureland, which can be accessed through the USDA NASS website.
Consult Local Experts
Talk to local real estate agents, investors or auctioneers who specialize in your area. These professionals often have valuable insights into land valuation trends, current market conditions and what buyers are willing to pay.
For example, they may have firsthand knowledge of recent land sales as well as access to proprietary tools, market data and property history that provide a more accurate estimate of land values.
Talk to your local FCSAmerica financial officer. They have access to our extensive database of land sales activity and can provide insights on land values and transactions.
Factors that Impact Farmland Value
Understanding the factors that influence farmland value is essential to accurately assessing its worth. Here are ten key factors that impact the value of agricultural land.
- Location: In addition to being influenced by the market conditions of the state or region where it is located, farmland near processing facilities, grain elevators or other end users often commands a higher price.
- Road Access: Convenient access to well-maintained roads can enhance land value. Poor road access may limit usability and market appeal.
- Soil Quality: Fertile, productive soils with good drainage and high organic matter are typically more desirable.
- Topography: Flat or gently rolling land is often more valuable than sloped terrain or flood-prone areas.
- Natural Features: Unique natural features, like streams, forests or ponds can add or detract from land value depending on their utility. For example, a reliable water source may enhance agricultural potential, while wetlands might restrict development.
- Zoning: Land designated for agricultural use is generally valued differently than land zoned for residential or commercial purposes. Zoning regulations can affect what activities are permissible on the property.
- Easements: Rights of way, conservation easements or utility easements can restrict how the land is used, potentially decreasing its value depending on the limitations they impose.
- Utilities: Access to water, electricity and natural gas can increase land value, especially if they are essential for operating irrigation systems or other agricultural infrastructure.
- Infrastructure: Existing features like fencing, irrigation systems, drainage or storage facilities add value by improving the land’s functionality.
- Market Conditions: Economic factors like local and regional demand for farmland, commodity prices and interest rates all play a role in determining land values. Favorable market conditions typically lead to higher valuations.
By enlisting appraisers, exploring comparable sales and understanding key value drivers, you can arrive at a more accurate understanding of a property's worth. This knowledge not only helps you plan for the future but also positions you to make strategic decisions about selling, purchasing, improving or leveraging farmland.
