What constitutes a Farm/Ranch Appraisal?

[Donny Lindner]

What is actually a farm/ranch appraisal? If a sales contract is on a farm/ranch contract form, does it have to be a farm/ranch appraisal? What qualification are needed to appraise farms/ranches?

Anyone have some information or good reading on this topic?

 

[Joker]

I see this as a common sense issue but since no one has responded to your question, I'll take a stab at it.

A farm/ranch appraisal is just that. An appraisal of a farm/ranch. If you have to ask what a farm/ranch is, you probably shouldn't be appraising one but for purposes of discussion, I believe that a property that derives reasonable income from agricultural endeavors would qualify as a farm/ranch.

Furthermore, the definition of farm/ranch varies from person to person and from location to location. I know several city folks that consider themselves proud owners of 5 acre farms or 10 acre ranches. Although it is possible to generate substantial agricultural related income from 10 acres or less, it is not the norm in my market area. Ten acres is often not enough to even be a hobby or "gentleman" farmer.

To answer your question as to the qualifications to appraise a farm/ranch, check with USPAP. To obtain competency, I belive you must have proper education/training and experience working with a seasoned veteran. I often see reports of farm appraisals where residential appraisers list a house and 5 acres on a URAR and on the "other" comment line, list 100+ acres and adjust for it. They don't realize that the 100+ acres is worth substantially more than the house and 5 acres. They don't know the soil type, productivity, condition, or utility of those acres. They don't comment on noxious weeds (or know what they are), they don't mention water sources for pasture or cropland, they don't mention the ag related buildings and if they are functional or not. They don't understand the use or capacity of grain storage facilities.

In short, I have seen many farm appraisal reports performed by residential (and commercial) appraisers who don't know what they don't know. If you're interested, check with ASFMRA or contact a local ag appraiser.

 

[JTip]

Fresh from 4 days of class which included the farm/land class.....those finished up my 120 hours of cert. requirements

Definition of a farm: Any place of 10 or more acres from which $50 or more of agricultrue products were sold during a census year or sales of $250 of product sold in a year (less than 10 acres).

Our instructor said one of the key points to a farm apprasal is seperating the tillable/junk/home land and extracting prices from that. I could go on and on.....but I won't because my head hurts with too much info.

I agree with Doug, you need someone who has been there and done that. After the class, I believe a farm could be a very demanding assignment.

I would suggest taking the class. Very informative. Check with Lincoln for classes in your area. Mr. "Ted" Fisher MAI SRA is one smart cookie and you will leave there feeling like a champ.

 

[Stone]

Definition of a farm: Any place of 10 or more acres from which $50 or more of agricultrue products were sold during a census year or sales of $250 of product sold in a year (less than 10 acres).

Definition from where? How did he come up with that and how does that definition really relate to appraisal?

Almost all our work is rural lands (that includes farm lands) and I have a hard time with that definition.

Doug's post is to the point. Different types of properties can be considered farms at different sizes and income levels. To me, there is no single definition of a farm that can be considered legitimate for appraisal purposes.

 

[Bobby Bucks]

Although it is possible to generate substantial agricultural related income from 10 acres or less, it is not the norm in my market area.

Are you talking about those west coast farms around Hopland with the funny looking plants that grow 10' or higher?


.

 

[Joker]

Mr Bucks,
That plus selling high quality livestock, a feeder facility, poultry, tobacco, etc.

 

[Robert Dunkle]

What is actually a farm/ranch appraisal? If a sales contract is on a farm/ranch contract form, does it have to be a farm/ranch appraisal? What qualification are needed to appraise farms/ranches?

Anyone have some information or good reading on this topic?

You don't mention the size or current usage of the property! Just because somebody may have borrowed a standard contract from a friend/relative or bought something boilerplate at the office supply store, shouldn't impact how you appraise the subject property! The contract doesn't dictate the "form", the appraiser has to determine what "form" will most adequately yield a credible report and add to the form if necessary. I haven't seen a "form" that yielded a reasonable report and I would rather start out with my narrative, than add 20 addendums to some form that I may need to leave half of it blank.

Around here, a farm/ranch is typically considered to be 40 acres or more from which at least $1,000 of agricultural products (Schedule F income, not pot, etc) were sold in the previous year.

Appraising a farm/ranch is complex enough that you must be a CGA, or work with a CGA, on the report. I am only CRA, right now, but have been appraising farms and ranches as a niche market for years. It is not a simple appraisal to perform......correctly!!!! You must know how to use soil maps, crop and livestock market reports, crop yield information..to give you the tip of the problem.

Tell us the size and current usage and we'll give you a more informed opinion!

 

[JTip]

Definition from where? How did he come up with that and how does that definition really relate to appraisal?

US Rural Agency formerly US Dept of Agriculture.

I live on an old chicken farm, complete with a coop, on 80 acres. The coop is used for family storage, tractors and mowers. 5ish acres are planted with feed corn. If I sold $50 worth of this corn, could I get some sort of tax break? Is this considered a farm? If I figure out the right person from the state to talk to and find out, I will post the results.

Around here, a farm/ranch is typically considered to be 40 acres or more from which at least $1,000 of agricultural products (Schedule F income, not pot, etc) were sold in the previous year.

LOL! Whats wrong with that cash crop! Your definition seems more current than the one offered in class.

 

[spittman]

Is it a "working" farm (income-producing) or just a rural property. Did they specifically ask for a farm appraisal. There is a special form for appraising agricultural real estate if that's what your client requests and you should have had some kind training in order to complete it. It'll involve ALOT more than a measuring tape and a few notes to complete. I've appraised lots of rural property on a 1004, but after having taken an intimidating Farm & Land Appraisal Course, I decided I'd rather not do farm or ranch appraisals or even appraise anything over 10 acres, preferably under 5 for that matter.

 

[Stone]

US Rural Agency formerly US Dept of Agriculture.

Just because the USDA calls something a farm doesn't mean that is the definition I would use in an appraisal.