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Deed of agricultural conservation

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Bamba

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Pennsylvania
I am asking the opinion of the more experienced appraisers...I'm doing an appraisal on a 10 acres farm, land is in clean&green and as of last year, they granted an easement to the County agricultural preserve boar... a deed of agricultural conservation easement in the nature of restriction on the use of land for the purpose of preservation productive agricultural land.

What do you guys think? Does it affect the market value? Should all my comps be the same kind of properties?
 

David Wimpelberg

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Does it affect the market value?

Yes.

Should all my comps be the same kind of properties?

Yes.

Utility of the land has a great impact on value. Land that cannot be improved does not have the same value as land that can be improved. To give you an idea of how much it can impact value, in my market one can expect to purchase agricultural reserve parcels at approximately 10% of what one would pay for a similar-sized building parcel. The purchase of development rights usually turns local farmers into instant multimillionaires.

I would also recommend checking into the restrictions on the property. Some parcels may be able to be improved with agricultural buildings, while others may not.
 

Joker

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David is correct.
 

David Wimpelberg

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I should also mention a few other things that pertain to ag res properties, at least in my area.

Often, sales of such properties involve multiple lot transfers. That will affect your price per unit if you only consider one of the lots. Consider the total acreage and total sales price.

Another issue is that sometimes the ag res parcels sell with an abutting building parcel, and other times they don't. Price per unit for the ag res is typically higher when an abutting building parcel is sold with the property.
 

Kevin A. Spellman

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Make sure the entire parcel is restricted. Most restrictions is the vacant land and not for the improvements and the land area beneath. Most deed restriction I have seen here in MA does not include the structures. Here in MA we have programs to protect farmland and the taxes on the land can be reduced by 95% if the owner applies for a Chapter 61 program that also gives the municipality a first right of refusal for the vacant land.

Here in MA the assessors have a list of properties in Chapter 61. I would review a list if does exist in your subject’s municipality. If the deed restriction can be remove, the value findings could be different.
 

CANative

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California
Is 10 acres really "farm land?" Or is it more like a large residential lot? The Williamson Act in CA (California Conservation Act) will almost always allow residential improvements along with some farm type buildings. What it doesn't allow is subdividing into smaller lots for development. Out here, value is either not affected and it is usually a favorable marketing feature because of the low property taxes. These contracts roll for 10 years and automatically renew each year. There are severe tax consequences for early termination from the contract. Some areas require minimum lot size requirements but multiple parcels can be included in one contract to meet the size requirements.

You need to do some detailed research on the issue.
 

Terrel L. Shields

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Arkansas
Unless it restricts the 10 acres from any and all buildings (most simply limit the number of SFRs and out buildings on a tract) then it is a 10 acre tract that can be used for residential or agri...I'd try to see how common that was and compare it to similar tracts or at least tracts of similar size which are not likely to be divided in the near future.
 

stefan olafson

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North Dakota
It seems like we are trying to answer a question without benefit of all the information?

What type of conversation easement is on the property? Is the property farmland, only being 10 acres in size? What is the neighborhood like? Is this typical of the area, having an easement on the land? Is the easement permanent? In MN you can protect your timberlands and receive a small tax break, but it's a type of easement that is revokable by the owner at any time.

More information is what you need and if you want a good honest answer it's what we need.
 

Vermonter

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Vermont
It seems like we are trying to answer a question without benefit of all the information?

More information is what you need and if you want a good honest answer it's what we need.

Agreed.
Here, you get a minor tax break on the portion of 10 ac with no dwelling, but have to be over 25 to get the greatest tax breaks.
Easements can allow a certain number of dwellings/buildings/uses as well.
Sometimes bigger conserved parcels are split and this also complicates uses or restrictions.

It all effects market value.
 

Bamba

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Pennsylvania
I would also recommend checking into the restrictions on the property. Some parcels may be able to be improved with agricultural buildings, while others may not.

This is one of them...it allows them to build agricultural buildings but not residential...they are not using it as a farm anymore, that's why they agreed to this easement in favor of the county.
 
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