Selling a family farm is a major decision. One of the biggest questions is simple: How do we know we are getting a fair price?
Start by understanding your family farm value. Look at recent comparable sales, the quality of your land, local buyer demand, and current market conditions. Then, make sure qualified buyers know the farm is available.
The goal is to give the market a chance to determine what your farm is worth.
How Is Family Farm Value Determined?
Every farm is different. Two farms in the same county can sell for very different prices.
Several factors can affect family farm value, including:
- Location
- Total acres
- Tillable acres
- CSR2
- Soil quality
- Drainage and tile
- Access
- Farm shape
- Buildings
- Farm leases
- Recreational value
- Development potential
Current buyer demand also matters.
A neighboring farmer may place more value on your farm because it fits their operation. An investor may look at rental income and long-term value.
That is why it is important to look at the individual farm instead of relying only on county averages.
Look at Recent Farmland Sales
Comparable sales are a good place to start.
However, not every nearby sale is a good comparison.
Look for farms that are similar in size, location, soil quality, CSR2, tillable acres, and other important features.
You should also consider when the property sold. A sale from several years ago may not represent today’s market.
Recent comparable sales can help establish a reasonable price range for your farm.
Is an Offer on My Farm Fair?
A fair offer should be compared with the current market.
For example, a neighbor may offer to buy your farm before it is ever listed for sale. The offer may sound good.
But how do you know another buyer would not pay more?
Before accepting an offer, ask:
- What have similar farms sold for?
- What is my farm worth today?
- Are there other likely buyers?
- What are the terms of the offer?
- Has the farm been exposed to the market?
A private offer can be a good option. However, you should understand your family farm value before making a decision.
Why Does Buyer Competition Matter?
Competition can help establish market value.
Imagine that one buyer offers $12,000 per acre.
Is that the market value?
Maybe.
But what if another buyer would pay $13,000? What if a neighboring farmer would pay $14,000 because the property connects to land they already own?
You may never know unless those buyers have an opportunity to participate.
This is why marketing matters.
How Does Marketing Help Determine a Fair Price?
Buyers cannot compete for a farm they do not know is for sale.
A good farmland marketing plan should reach more than the closest neighbors.
Potential buyers may include:
- Local farmers
- Neighboring landowners
- Farmland investors
- Previous farmland bidders
- Cash buyers
- Absentee landowners
- Recreational buyers
- Developers
The right buyer may live down the road. They may also live several states away.
Reaching a larger pool of qualified buyers can create more competition for the property.
Should We Auction the Family Farm?
An auction can be a good option when several buyers may be interested.
The property is marketed before the auction. Then, interested buyers have an opportunity to compete.
This can help answer one of the biggest questions families have:
Would someone else have paid more?
An auction gives qualified buyers an opportunity to show what they are willing to pay.
However, auctions are not right for every farm.
What About a Sealed-Bid Sale?
A sealed bid can also create competition.
Buyers submit their offers by a deadline. The seller then reviews the bids based on the terms of the sale.
This approach may work well when there is a known group of likely buyers.
The important part is choosing a sale method that fits the farm and your family’s goals.
Should We Get an Appraisal?
Sometimes.
A farmland appraisal provides an opinion of value based on the property and available market information.
An appraisal may also be needed for an estate, trust, tax matter, loan, or other situation.
However, an appraisal and an actual sale are different.
An appraisal estimates value. A sale shows what a buyer is willing to pay under the terms of the transaction.
If you are dealing with an estate or tax matter, talk with your attorney or tax professional about whether an appraisal is needed.
Should We Accept an Offer From a Neighbor?
A neighbor may be one of the strongest buyers for your farm.
However, do not assume the first offer is automatically the best offer.
Before accepting it, compare the offer with your family farm value and recent sales.
Also consider whether other buyers should have a chance to make an offer.
Sometimes a private sale makes sense. Other times, taking the farm to the open market can create more competition.
Does Selling the Farm in Multiple Tracts Help?
Sometimes.
A large farm may be too expensive for some buyers to purchase as one property.
Dividing it into smaller tracts can allow more farmers and investors to participate.
For example, a 400-acre farm may have several potential buyers if it can be divided into four logical tracts.
However, some farms are more valuable when sold together.
Before deciding, consider access, soil quality, drainage, boundaries, improvements, and buyer demand.
How Do We Know We Got a Fair Price?
There is no way to guarantee that you received every possible dollar for a farm.
However, you can create a process that gives your family confidence in the result.
Before selling:
- Understand your family farm value.
- Review recent comparable sales.
- Identify likely buyers.
- Choose the right sale method.
- Market the property.
- Give qualified buyers an opportunity to compete.
- Compare both price and terms before accepting an offer.
Those steps can help reduce the question families often ask after a sale:
Could we have gotten more?
Frequently Asked Questions
How do I know what my family farm is worth?
Start with recent comparable farmland sales. Then consider your farm’s location, CSR2, soil quality, tillable acres, drainage, access, improvements, leases, and current buyer demand.
How do I know if an offer on my farm is fair?
Compare the offer with recent comparable sales and the estimated value of your property. You should also consider the terms of the offer and whether other qualified buyers have had an opportunity to compete.
Should I accept a private offer for my farm?
It depends. A private offer may be strong, but you should understand the farm’s market value before accepting it.
Does an auction guarantee the highest price?
No. No method can guarantee a specific sale price. An auction can create competition by allowing interested buyers to bid for the property.
Should I get an appraisal before selling farmland?
Not every farmland sale requires an appraisal. However, an appraisal may be useful or required for certain estates, trusts, tax matters, or other situations.
Get to Know Your Family Farm Value Before You Sell
If your family is considering selling farmland, do not start with the question, “What price should we accept?”
Start with:
“What is our farm worth, and how do we give the market an opportunity to prove it?”
At Whitaker Marketing Group, we help farmland owners and families evaluate their land before making a decision.
We review comparable sales, property characteristics, local demand, and potential buyers. We can then recommend a sale strategy based on the farm and the family’s goals.
That may include an auction, sealed bid, or traditional listing.
When you are selling land that has been in the family for generations, you want more than a number. You want to know the property was properly marketed and buyers had an opportunity to compete.
That process can help your family feel more confident about the final sale price.
Land is our Brand.
