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September 14, 2020
One of the most important decisions a seller needs to make when putting their land up for sale is setting price expectations. Whether the land is sold via an auction, through a private treaty listing, or some other sale method, having too high an expectation of the value and the property won't sell. Too low and the seller leaves money on the table. Ultimately, there are a number of ways a seller can use to determine the value of their land when selling. Some are better than others.
Today, there are technology services on the web which provide a "value" for tracts of land. A landowner can identify their land on the provider's website and it will show a value. Caution should be used in relying on the number as the estimates are developed using algorithms or other technics and are not accurate when compared to actual sales prices in the local land market. Other web-based services don't generate a "value" but list out "sales" in the area. Again, it would be prudent not to rely on these numbers either as they are not accurate enough for establishing a true value and there has to be quite a bit of analysis to compare different tracts of land to what is being sold before setting a selling price.
In some states, depending on how assessed values are determined, a landowner can look at the assessed valuation of the land. This too is not accurate enough to set the sale price for a tract of land as the market place may generate a different price than the assessor's estimated value. An appraisal is one accepted standard for estimating the value of land at a given point in time. The appraisal looks at past sales in the area of comparable farms and analyzes the differences to come up with an estimated value. But the appraisal may not reflect the current activity in the local land market that can change over time and affect the actual selling price.
Ultimately, the best way to know what the selling price of land should be is to work with a trusted broker who knows both the land and the local land market. The local broker will know how aggressive the buyers are in the area and how much land has been selling, which together tells the broker whether land will sell higher than expected because of demand or lower due to cautious activity. The trusted broker can bring together their experience and knowledge to assist the seller in setting a realistic and attainable sale price. It does no good for the seller if the agent inflates the expected sale price, as it is not a true reflection of market value. It is better to know the market and set realistic price expectations in order to sell land than to think it is worth more and the land not sells.
At Farmers National Company, we strive to be the trusted broker that gives accurate and realistic advice to the land sellers we represent so that they receive the best price possible in a successful sale of their land.
Senior Vice President - Real Estate Operations
|Category: Agricultural Real Estate News|