Why Do Comparable Sales Matter When Buying Farmland?
Comparable sales can be a valuable tool for farmers when deciding whether or not to purchase an appealing farmland parcel.
By analyzing recent comparable property sales, farmers may gain insights into the potential market value of similar land parcels in the local area. While land values are based on many different factors, this information offers farmers one way to help assess whether the asking price for the land they are interested in is reasonable and in alignment with market value.
Keep a few important points in mind when interpreting comparable sale information:
Ensure that the comparable sales are in the same or similar area as the land you’re considering for purchase. Land values can be influenced by multiple location-related factors, including:
Proximity to markets
Size and Features
Look for comparable sales that have similar acreage and features to the land you are considering. This includes factors such as:
Access to water sources
Any improvements or structures on the land
Note the timeframe of the comparable sales. Recent sales within the past year or two are generally more relevant and reflective of current market conditions than older purchases.
Take into account any differences between the comparable sales and the land you are interested in. Adjustments may be necessary to account for variations in size, features, or other factors that could impact the value.
Comparable sales can provide a benchmark for price negotiations. If the asking price is significantly higher than the recent sales of similar properties, farmers may have room to negotiate a more favorable price.
Making a Final Decision
It's important to note that comparable sales should not be the sole determining factor in the decision-making process. Other factors should also be considered, such as your own financial position and the land’s:
Access to water sources
Long-term investment value
Remember to independently verify the information and consult with professionals, such as appraisers or real estate agents, to ensure you make an informed decision regarding the land purchase.
Get Comparable Sale Information with AcreVision℠ from FBN®
If you’re looking for comparable sale information before making a farmland purchase, FBN recently launched a new evaluation tool that includes such insights to help you make an informed buying decision.
AcreVision, which is available for free to FBN members, is an innovative farmland evaluation system designed to assist farmers in making informed decisions about potential land purchases by providing vital insights into specific farmland parcels. This information includes soil types, comparable sales, terrain information and other details.
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