Ultimately, the real value of farm land -- or any land -- is what you as a buyer are willing to pay. Your decision may include emotional components as well as practical ones, but in the case of farm land, practicality should be an overriding factor if your goal for the land is to produce income from it.
Farm Land Purposes
Pinpoint your desired use for the land. People buy farm land for one -- or more -- of three possible reasons: production; investment; and consumption. Production means you intend to produce a farm income sufficient to sustain the farm expenses and a profit. If you're purchasing the land as an investment, you intend to sell it later at a higher price, typically for development. If you merely want a hobby farm or vacation home, your use is in the consumption category.
Visit your county agricultural extension office. This county extension system is a nationwide network function of the United States Department of Agriculture. Each state county has an agent who you should seek advice from before purchasing farm land -- for any use. Your agent can tell you what soil types are necessary for growing specific crops; how to market garden produce if you want a hobby farm; and whether there are federal financial incentives for maintaining farm land for agricultural purposes -- which may prove more lucrative than buying land as an investment to sell later. He will arm you with facts to make the best decision for your family.
Find a certified rural appraiser. According to Roger Johnson, president of the National Farmers Union, the educated opinion of a professional agricultural appraiser is the only good way to determine the value of farm land for any intended use. “The appraisal field has very high standards,” notes Johnson. “They go through a rigorous testing process and have to take continuing education courses throughout their careers.” Appraisers consider soil types; land productivity; water surplus, deficit and quality; rocks, and terrain, as well as other factors. “In the end," says Johnson, "the real value is what someone is willing to pay, and the appraiser attempts to figure out what that number is likely to be.” You can find a qualified appraiser in your area by contacting the American Society of Farm Managers and Rural Appraisers, or your state or county agricultural offices.
- Visit your neighbors. Successful farm living depends on a network of helpful neighbors for security and emergencies.
- Research deed restrictions back to the original deed. If the land has passed through several owners, the most recent deed may not explicitly spell out restrictions to the land's use, but simply refer to the original deed restrictions.
- Roger Johnson, President, National Farmers Union, Washington, D.C.
- American Society of Farm Managers and Rural Appraisers: Find an Agriculture Consultant
- U.S. Department of Agriculture, Natural Resources Conservation Service: Soil Surveys Can Help You … Appraising Farmland
- State of Texas, State Property Tax Board: Agricultural Appraisal Process
- United States Department of Agriculture, National Institute of Food and Agriculture: Cooperative Extension System Offices
- Jupiterimages/Comstock/Getty Images
- What is a Land Perk Test?
- How to Find Out What Your Land Is Worth
- How to Rent Out Farmland
- How to Find the Fair Market Value of Home
- How Do Property Taxes Apply to Vacant Land Investments?
- How to Find Out How Much Rare Coins Are Worth
- How do I Set Up a Stock Portfolio?
- How to Calculate Land Value for Tax Purposes