Determining Ranch Value
A blog by Jerry Hicks, Fay Ranches Principal Broker
Each ranch is as unique as a fingerprint. Acreage, live waters (rivers, creeks, lakes), Timberland, farm ground, location, efficiency, aesthetics, irrigation, recreational assets, and timing are just a few of the dimensions that come together to determine value! These are just some of the characteristics one must consider when assessing a ranch or farm property. Experience tells me that one must peel away the layers when looking at “similar” ranches. Just like judging livestock or a beauty contestant, we must bracket the differences and similarities in each ranch, placing them in an order that is usually supported by recent sales. Once comparable sales determine the value, we then begin to see where the ranch would be considered a competitive and compelling choice, based on the value within the field of other properties on the market. It’s very easy for a seller to have high expectations and listing prices based on similar overpriced properties currently on the market. The harder but more beneficial conversation we have with our sellers involves what the ranch offers and how that fits in the current market, based on recent sales.
As a buyer, one should spend a great deal of time in the due diligence period to fairly assess value on a ranch, and most importantly, to make sure you are satisfied with your potential investment. Comparable ranches are never a mirror image of each other. To use the most common formula (a per acre value) is like saying all 25-year-old men are in excellent health, which we know is untrue. While using a price per acreage value is a good starting point, one must evaluate production and carrying capacity and have an understanding of secondary value such as hunting and fishing opportunities, location, and climate. Third level benefits to assess and consider would include timber, mineral opportunities, and development credits. Are the improvements helping the value or causing buyers to be reluctant to assume someone else’s dream as possibly their new nightmare? (This phenomenon is called functional obsoleteness.) If we could only see things through the eye of the buyer, rather than the emotional view of a seller, value would be much easier to determine.
At Fay Ranches, we have had the opportunity to list several of the best ranches on the market throughout the United States. This affords us a significant advantage and access to a larger sample of the ranch real estate market. In most cases, we can use the value bracketing method with numerous ranches from a broader region. Likewise, we have invested heavily in an extensive marketing platform that not only has a tremendous regional exposure but also features national and international marketing, unlike any other ranch real estate brokerage. We have been tracking relevant sales and the market direction for decades. We are continually looking to the future, anticipating an ever-changing market and drawing from experience, with a focus on delivering results. Whether it is the sale of the family farm or the acquisition of a legacy ranch for the family, we have the decades of experience to make it the best possible experience. To learn more about our reach, click here!
Co-Authored by Troy Dana, Designated Broker, Fay Ranches and Eco-Asset Solutions & Innovations LLC Why? Because working farms, forests, and ranches often have ecological assets embedded in land-and-water ecosystems. Ecological assets are the monetized, market-based components of a landscape’s ecosystem services. These assets can be revealed by assessing, developing and converting them into either cash, […]
A blog by R.J. Patterson, Ranch Sales A perfect autumn day would be tough for many to define. For me, it was a day I spent on Little Eight Mile Ranch on the Lemhi River in Leadore, Idaho. The day started off just before the sun rose, as I was hoping to get pictures of […]