FAQ

Agri-business/farm appraisal is an essential process that involves evaluating the value of a farm based on various factors such as size, location, features, and purpose, providing vital insights for farm owners, buyers, and investors. 

The appraisal considers the size and complexity of the farm, its location (rural or urban proximity), the type of appraisal (limited scope or full scope), and the specific purpose for which the appraisal is being conducted (portfolio monitoring, asset benchmarking, loan collateral, estate planning, or an acquisition/sale transaction.). 

Additionally, the presence of additional features like specialized equipment, permanent plantings, orchards, groves, livestock, and buildings further influences the appraisal costs. Understanding these factors is pivotal in estimating the overall cost of appraising a farm. A range from small owner operated farms to large-scale institutional farm operations benchmark the costs beginning at around $2,500. Large scale complex operations can range well into $10,000 – $20,000. 

When evaluating the costs associated with an agri-business/farm appraisal, several factors come into play. These include the size of the farm, the intricacy of its operations, its location, the type of appraisal needed (limited scope or full scope), and the presence of additional elements such as specialized equipment and buildings. Cost variations can be influenced by the purpose of the appraisal, such as portfolio monitoring, asset benchmarking, loan collateral, estate planning, or an acquisition/sale transaction. 

Larger farm operations generally incur higher expenses due to their more complex nature and specialized equipment, while smaller farms tend to have lower appraisal costs as they are more common with more readily available public data required for analytics. Understanding these factors is essential for determining the overall expense incurred in appraising an agri-business farm. 

 Key Takeaways 

– Farm size significantly influences appraisal costs. 

– Complexity of operations impacts appraisal expenses. 

– Location, type of appraisal, and additional features affect costs. 

– Purposes like loan collateral, litigation, or estate planning influence appraisal expenses. 

– Larger more complex farm operations generally incur higher appraisal costs. The more unique or specialized the operation, the higher the cost. 

What drives the necessity for appraising a farm property accurately and comprehensively? The purpose of the appraisal plays a vital role in determining the cost associated with evaluating a farm. Understanding the specific reason for conducting the appraisal can shed light on the depth of analysis required and the complexity of the assessment. 

Here are key purposes that can influence the cost of an agri-business/farm appraisal: 

– Investment Monitoring 

– New Startup Feasibility 

– Loan Collateral 

– Estate Planning 

– Purchase/Sale 

– Litigation 

Size and Type of Farm 

 The size and type of farm property play a significant role in determining the cost of appraisal and the level of complexity involved in the assessment process. Smaller farms, typically those with less than 50 acres, tend to have lower appraisal costs due to their inherent simplicity. On the other hand, larger farms, exceeding 50 acres, entail more intricate operations, often involving diverse crops, livestock, and specialized equipment, resulting in higher appraisal expenses. 

A typical non-complex agri-business/farm appraisal typically takes approximately 30 days to complete. The duration may vary based on the size, complexity, and location of the farm, as well as the scope of the appraisal requested. Larger projects can average 60 – 90 days depending on complexity and scope. 

Factors such as the thoroughness of the assessment, availability of relevant data, and scheduling of on-site visits by the appraiser can impact the overall timeline for completing an agri-business/farm appraisal. 

Additional fees or expenses associated with an agri-business/farm appraisal may include: 

– Travel costs for the appraiser if the farm is located far from their office. 

– Charges for specialized assessments like environmental impact studies or feasibility studies. 

– Fees for any additional research required.   

These extra expenses can vary depending on the specific requirements of the appraisal and may impact on the overall cost estimation. 

Certainly. 

You can request an agri-business/farm appraisal for a property that is not currently operational as a farm. Agri-business/farm appraisals are not limited to active agricultural operations; they can also analyze vacant land or properties with agricultural potential. 

The appraisal will consider factors like land quality, zoning regulations, historical land use, and the property’s suitability for various farming options. This evaluation provides valuable insights for potential land use planning or investment decisions. 

There is a discernible variance in appraisal costs between organic and conventional farms, driven by unique factors like sustainable practices, limited data, certification requirements, and market demand. 

Organic farms often undergo more intricate assessments due to certification standards and specialized practices, leading to potentially higher appraisal expenses. 

Conversely, conventional farms may entail different evaluation criteria, impacting appraisal costs accordingly. 

Understanding these distinctions is crucial for accurate farm valuation and decision-making. 

When seeking a farm appraiser, specific qualifications and certifications are essential. Look for appraisers with credentials such as the Accredited Rural Appraiser (ARA) designation from the American Society of Farm Managers and Rural Appraisers (ASFMRA), or the MAI designation from the appraisal institute, the largest professional appraisal association in the world. 

These certifications indicate expertise in agricultural property valuation, ensuring a thorough and accurate appraisal process. Additionally, experience in agri-business/farm appraisals, knowledge of local market trends, and adherence to professional standards are critical qualities to seek in a qualified farm appraiser. 

MAI stands for Member, Appraisal Institute. The Appraisal Institute is an international membership association of professional real estate appraisers, with more than 18,000 members and 99 chapters throughout the United States, Canada, and abroad. Its mission is to support and advance its members as the choice for real estate solutions and uphold professional credentials, standards of professional practice, and ethics consistent with the public good. The MAI designation, its most prestigious, is held by appraisers who are experienced in the valuation of commercial, industrial, residential, and other types of property and who advise clients on real estate investment decisions. (Source: The Appraisal Institute)

MAI designates must meet the following requirements: Education: Receive a passing grade on 11 examinations that reflect 380 hours of classroom instruction and that test the appraiser’s knowledge of basic and advanced appraisal principles, procedures, and applications; report writing; valuation analysis and standards of professional practice. Receive a passing grade on a four-module, two-day comprehensive examination. Hold an undergraduate degree from a four-year accredited educational institution. Experience: Receive credit for 6,000 hours of experience, including 3,000 hours of specialized appraisal experience, all of which must meet strict criteria. Demonstration Report: Receive credit for a demonstration appraisal report relating to income-producing property that demonstrates the ability to present a properly supported value estimate or opinion evaluating the nature, quality, or utility of a parcel of real estate or any interest in, or aspect of, real property, including handling physical incurable depreciation, or fulfill an approved comparable alternative. Because of its rigorous requirements and commitment to providing valuable information, continuing education and other valuable resources to its members, you can be confident that an appraiser with an MAI designation will provide you with the very highest quality service on virtually any appraisal assignment, even the most complex commercial appraisal