Farm and ranch appraisals are similar to all appraisals in that the purpose of these assignments is for the appraiser to render his or her opinion of value. But agricultural appraisals go into more detailed and unique areas that the rural appraiser must adhere to.
“Unlike residential and commercial appraisals, the land component of the subject property in farm and ranch appraisals represents the majority to 100 percent of the total value,” Heartland Ag Group of Springfield, Inc. Senior Partner and President Ernest Moody told Valuation Review. “With farm and ranch appraisals, the ‘value in use’ is what gives the land value. How many bushels of corn or bales of cotton will the farm acre produce? How many cow-calf units per acre or per section will the ranch support? The production of an economic good or perceived personal recreational use is what gives the land value.”
The topic of the appraiser shortage would tend to be an appropriate area of discussion regarding rural appraisers. Is this particular area an opportunity for the appraiser to explore different avenues of appraising, possibly bringing more valuers into the industry raising the number of appraisers that would address the “shortage” issue?
But what role do the industry regulations and guidelines play regarding farm and ranch appraisals?
“As regulations are imposed upon appraisers, from USPAP to state laws, the number of farmland appraisers has declined in Illinois, causing the appraisal burden to be loaded on the shoulders of fewer experienced appraisers,” Moody said. “When appraisal licensing became mandatory in Illinois in 2010, from 30-40 percent of those doing appraisals quit, causing long delays in the completion of reports.
“Those delays have diminished in the past two-three years so that a person can expect to get an appraisal completed within 30 days in most cases,” Moody added. “Good farm appraisers are staying busy, and as we all grow older and closer to retirement, there is a demand for the training of those who will become qualified and experienced farm and ranch appraisers, although there are few entering the market locally.”
With such intricacies involved in becoming a rural appraiser dealing with these types of properties, one would believe an extensive background in training and education would be necessary to work in this type of an arena. Moody outlined what it would take for appraisers to be well-“schooled” for this environment.