CANative
Elite Member
- Joined
- Jun 18, 2003
- Professional Status
- Retired Appraiser
- State
- California
I have to deal with vineyards in my area. Both as subject properties and adjusting comparable sales. There seems to be a discrepancy between adjusting or valuing based on income capitalzation, what Realtors (who sell these frequently) say and what comparative sales analysis indicates.
The discrepancy seems to involve what the Realtors are saying. They keep telling me $40,000 per acre is what they're using. No matter where the property is and no matter what grapes are growing.
But after doing these appraisals for 7 years (even though I'm not a commercial ag appraiser) the sales data clearly shows a contributory value (not counting the underlying land) of anywhere from $10k to $50k per acre, depending on the quality and age of the vineyard and the appelation. Most of the time it's about $15k to a little more than $20k.
Using income on several vineyards (9 acres to 26 acres) I use various formulas depending on the what's there. For example 9 acres of newer zinfandel should produce about 4 tons per acre and can be sold for $1,500 per ton (about $54k gross). Half of that goes to vineyard management, maintenance and good year/bad year averaging. So the NOI is about $27k. I usually use a cap rate of 15. The value indicator is $180,000 or about $20k per acre. These formulas have to be stroked depending on variables such as the location and type and age of the vineyard, the size of the vineyard, organic versus non-organic, dry farmed versus irrigated, head trained versus wire trained, etc.
But the income and sales usually agree or are close enough for government work and I'm pretty comfortable with my final conclusions.
Are Realtors lying? Including the underlying land when they do their CMA? Am I just missing something? Or is $40k per acre just a starting off point?
Any opinions?
The discrepancy seems to involve what the Realtors are saying. They keep telling me $40,000 per acre is what they're using. No matter where the property is and no matter what grapes are growing.
But after doing these appraisals for 7 years (even though I'm not a commercial ag appraiser) the sales data clearly shows a contributory value (not counting the underlying land) of anywhere from $10k to $50k per acre, depending on the quality and age of the vineyard and the appelation. Most of the time it's about $15k to a little more than $20k.
Using income on several vineyards (9 acres to 26 acres) I use various formulas depending on the what's there. For example 9 acres of newer zinfandel should produce about 4 tons per acre and can be sold for $1,500 per ton (about $54k gross). Half of that goes to vineyard management, maintenance and good year/bad year averaging. So the NOI is about $27k. I usually use a cap rate of 15. The value indicator is $180,000 or about $20k per acre. These formulas have to be stroked depending on variables such as the location and type and age of the vineyard, the size of the vineyard, organic versus non-organic, dry farmed versus irrigated, head trained versus wire trained, etc.
But the income and sales usually agree or are close enough for government work and I'm pretty comfortable with my final conclusions.
Are Realtors lying? Including the underlying land when they do their CMA? Am I just missing something? Or is $40k per acre just a starting off point?
Any opinions?
