How Much Is My Land Worth? How to Value Your Farm and Prep for Sale

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How Much Is My Land Worth? How to Value Your Farm and Prep for Sale

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This is likely the first question that comes to mind when you consider selling your farm. After all, you have to know what the land is worth to decide on a sale price. But figuring out that number can be tough, especially if you have other assets such as personal property or an income stream tied to your land. 

There are a few different ways you can establish land value for a farm and some basic things to do to prepare your property for sale. To help streamline the process, we’ve put together this guide that walks you through the steps from finding out your land’s worth to putting it on the market.

 

How to Value Your Farm

You don’t want to hand over your farm to the first person who offers to buy. Take the time to figure out how much your piece of land is truly worth so you can make sure you get a fair price in the sale. Professional appraisers will typically approach valuing your farm using the Market Value Approach, the Asset Approach, or the Income Approach or a combination of these approaches.

 

Market Value

Finding your farm’s current market value means looking at the sales price of similar parcels of land that have sold and using those numbers as a benchmark. To ensure this type of land valuation is accurate, make sure you’re looking at comparable properties—farms of the same size, with similar assets and income. Keep in mind that the value of your land is based on current market conditions in this type of valuation and that market conditions may be different today. So if you aren’t seeing what you feel is a fair market price, then you might opt to wait it out and list when the real estate market swings back in your favor.

 

Asset Approach

This approach determines the value of the entire property by combining the value of the land with the value of all the assets being sold with it. An asset approach is often a wise move for people who want to make sure the value of all improvements such as barns, fencing, irrigation equipment, timber, etc is reflected in the sales price, not just the land. The asset approach ensures your final sales price reflects the full worth of your farm.

 

Income Approach

This system of land appraisal is based on the value of past and future cash flow. So instead of looking at similar properties and nearby land prices, the assessed value of your farm is solely based on its financial success. This option is good for people who have a healthy farm that consistently produces profitable yields through annual crops, rotational timber harvest or an annual cash rental income . It helps to cover not only the cost of your land but also the income you generated from it.

 

Prepping for Sale

Typically a lot of work has gone into your farm, so you don’t want to just hand it over for the first offer you get. If you assess your property value and properly prepare for sale, then you’ll increase your chances of getting the best price from a qualified buyer. 

 

Gather Documentation

The first step is to gather all of the legal documents pertaining to your farm—the legal description and plat, tax maps, copies of any easements or restrictive covenants, property tax receipts, any data available from the Farm Service Agency, and any other documentation that a buyer may find helpful. Having all of these in hand makes the transfer of ownership much easier when it comes time. Next, you want to find a real estate agent who has experience selling land. They’ll guide you through the rest of the process and make professional recommendations as you go to make sure you get the best price and sell quickly.

 

Create an Information Packet

Your real estate agent will also help you organize all the records and information about your property so that it’s a single information packet for potential buyers. This is an important element of preparation whether you sell at auction or traditionally. Buyers want to know as much information about the property as possible and the information packet keeps you from having to explain things to every interested person.

 

List All Items For Sale

Next, your real estate agent will make a list of everything you’re selling. If you live on the property and are selling your house, you’ll also need to list things like square footage and special features. Some sellers will opt for a separate real estate appraisal of the house so they know their home’s value aside from the farm. For the rest of the property, it’s important to list how many acres of land are for sale and clearly note property lines if you’re dividing into parcels.  The improvements should also be noted indicating their location on the property. Working with an agent experienced in selling land, you will be able to determine the best configuration to get you top dollar while abiding by any guidelines set forth by the county.

 

Complete Needed Maintenance

The last thing you need to do before you offer your property for sale is take stock of your property’s condition. If you’ve been living and working there for a long time, odds are there will be some depreciation, but you’re looking more for major issues. Things like roof leaks, broken fences, or equipment that doesn’t work might require fixing before you can sell. Your land doesn’t have to be in perfect condition but there shouldn’t be signs of deferred maintenance either.

 

The Auction Process

All this prep work takes time, and if you sell your farm as if it’s traditional real estate, then finding a buyer will take even longer. Auctions help you sell your farm faster and often for a better price.

Auctions are the best way to get the fair market value for your farm. They ensure you’re exposing your property to the highest number of committed buyers who won’t back out of a sale and are ready to close quickly. Plus, when you work with an auction group, you have a real estate agent who’s dedicated to helping you get the best possible price while making the auction a smooth process. 

To achieve this, your agent is involved in every step of the assessment, preparation, and sale process.

  • Before the auction, they’ll come to assess your property and help you determine a range for the real estate value. They’ll use this number and data from recent sales to recommend a starting bid for the auction.
  • They’ll take pictures and get property information from you for the listing.
  • Once you’ve decided to move forward with an auction firm, your real estate agent will list your property complete with photos, an information packet, and an auction date.
  • Buyers will bid online until the established deadline. By the end of that day, the highest bid you accept will be your buyer. Your agent will help you finalize the sale and navigate the closing process.

Auctions make farm and land sales a whole lot easier by connecting sellers with people ready to buy land for a fair price.

 

Our Real Estate Agents Can Help

From valuing your land and making suggestions for properly preparing it for sale to navigating the auction process, selling your farm is a detailed process that requires a lot of leg work. Don’t take on that burden alone. Make sure you’re getting the best price for your farm by partnering with us.

At Weeks Auction Group, we have a team of experienced real estate agents who can help you sell your farm.  Many of our agents have years of experience selling agricultural assets.  We manage the entire process from start to finish so all you have to do is wait for the winning bid to come in. 

Whether you want to know how much your land is worth or how to sell it at auction, Weeks Auction Group can help. Give us a call today to speak with one of our experienced real estate agents.