When Do You Need A Farmland Appraisal?

By: Iowa Land Company

 

When Do You Need A Certified Farmland Appraisal?

A farmland appraisal is something that we get asked for often throughout the calendar year here at Iowa Land Company. When an appraisal is needed and why? We can help in getting sellers connected with a certified appraiser. We also provide a free, no obligation market analysis if we feel a certified appraisal is not necessary.

An appraisal is a document that gives an estimate of the fair market value of your agricultural property. The most common reason for ordering an appraisal is to obtain a farm loan on a property. However, there are several other reasons why an appraisal might be needed. Below are just a few:

  • to settle an estate
  • to obtain a farm loan (common)
  • to set a tax basis for capital gains
  • to determine a reasonable price when selling farm real estate (Not Required)
  • to contest high property taxes
  • to settle a divorce

 

 

Dates Are Important When Settling an Estate

 

It can sometimes take one to two years for an estate to settle before ownership is transferred, so the farmland appraisal could be up to two years old before it enters the market. The inheritors of the estate need to keep this in mind when going to sell the land because the original appraisal could be out of date. Meaning the market value may have increased or decreased depending on market analysis. Emotions often play a major part in the selling or purchasing of farmland, which is where a well executed public auction can assist in selling land encompassed in an estate.  

 

  

Obtaining a Farm Loan

 

An appraisal is generally required by all farm lender before a final farm loan approval to ensure that the farm mortgage loan amount is not more than the current value of the property. The appraisals for farm loans are performed by an approved “appraiser” who is typically a state-licensed individual trained to render expert opinions concerning agricultural property values. In an appraisal, consideration is given to the property, its location, farmability, as well as comparable sales. Most lenders will order an appraisal with a certified appraiser of their choice. Consult with your loan officer for further assistance.

 

 

Farmland Appraisal for Capital Gains

 

A farmland appraisal is used to determine the stepped up basis at the time of death of the current landowner/heir. It’s a good idea to have a certified appraiser to appraise the land at the time of death. Having this done will give the new owner an accurate market value of the farmland. The appraised price becomes the basis, if the new owner or beneficiary decides to sell in the future, that price is used when determining capital gains tax. For more information on capital gains tax click here or consult with your CPA.   

 

 

Broker’s Opinion of Value

 

If you’re considering selling your farmland, you should request an opinion of value from a real estate brokerage that is highly educated in farmland sales. The seller does not need to have a certified appraisal to sell their land. Iowa Land Company offers  an extensive, FREE, No Obligation market analysis on your land to help set realistic expectations and let the seller know the value of their farmland. We take into consideration comparable sales, CSR2 average, soil type, location, and farmability when putting together our farmland appraisal. In most cases, a public auction is considered a true appraisal because it determines the worth of what buyers are willing to pay in the current market. We offer a professional farmland auction platform that produces results throughout the state of Iowa. To learn more on this service we provide, watch the video below, visit our website at https://iowalandcompany.com , or email us info@iowalandcompany.com.    

 

 

 

 

 

 

 

 

Iowa Land Company is a full-service farmland auction company that services in all 99 counties of Iowa. We transact all types of land in Iowa. Want to know what your land in Iowa is worth ? Get a | Free Farmland Evaluation (Click) | from one of the trusted agents at Iowa Land Company.

 

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IOWA FARMLAND AUCTION COMPANY

Our company was built to generate Iowa land transactions combining two things, land marketing experience and farmland sales experience. Our marketing company and land salesman are focused on Iowa dirt! Iowa Land runs deep within each person that makes up our company. We have a  passion for land and that’s what we know. Each person has their strengths and we mesh those strengths together forming a land company that is powerful in both land auctions and private treaty land sales.

 

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Farm Location

Location can be the biggest variables when calculating land value so it’s important to not over look this step.
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CSR2 Value

Yes we certainly do consider your Corn Suitability Rating (CSR2) value when giving our traditional farm appraisal because it is very important.
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Improvements

We want to hear your story. How has the farm been taken care of? Who has farmed the farm? Etc…
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Current Market

We look at what is currently on the market, how long similar farms have been on the market, for what price and how that farm compares to yours.
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Recent Sales

We have access to our in farm sales report that we file per county. We keep a close eye on recent farms located near your farm.
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