What is land worth guys?

[freewheat]

Hey everyone. What is land worth in your region? What is the price in relation to assessment? What is the price per acre? how do you feel these relate? How do you guys arrive at a land valuation?

I have some land for sale on my doorstep, and am just trying to get my head around a valuation. Thanks for any input, as this is the first land I have a crack at...

[wade]

Fair bit selling in this area for $850/$1000/acre. Assement 65000-75000(new. Lots of 1.8/1.9 times assesment.

Not sure if guys are losing there f&^% marbles. Last winter $15.00/bus, canola, $4.00/bus oats, $6.50/bus malt, and land prices were 25% less than this winter. And this winter we also have higher input costs than fall of 07.

Most of them have been pissing matches between neighbors.

Guess there is alot to be said about having a Gr.8 education.

[Hopperbin]

Our assessment here is 50 to 65000.
Myself I totally ignore the assessment and value the land on drainage, if has some trees, salinity spots, and how good the crops have looked in the area over the years.
The price range is 80 to 100 thousand some poorer land valued lower yet.
So that works to 500 to 625 per acre.
Maybe up 20 percent over a few years ago.
Just bought another quarter of better land at the 500 rate that I really did not want(the land was never advertised, I was targeted to purchase it from the owner), it was better land so found it hard to pass up, and buying opportunities are fast disappearing here.

[freewheat]

Thanks for your ideas. My conundrum is that it is assessed at 43 000, while land adjacent is 65 000 plus.
The reason for lower assessment is some rock, sloughs and bush, but they could be made into 150 plus acre quarters with a cat and some patience. The better land seems to be 80-90a quarter ish. most guys DO look at assessment, and bid accordingly. I however, farm a bit of the same type of land that is for sale, and it is a consistently high producing soil. Assessment to me is a bit of a farce. I'm leaning to the per acre style of bid, which gets me to 2 or more times assessment...I feel 650 a cultivated acre will get it. i'm just trying to get a feeling out there of how guys buy land, because i have never had a chance to buy land before, and we are in an area of a high productivity, with a high density of 30 and 40 something farmers. The land came up for tender, so there is no going back and bidding it up if you are the loser.

[freewheat]

Its amazing that those with grade 8 education are some of the leading producers and have accumulated significant wealth.

A real interest development in this area this week. "Mr anonymous" tried to influence a land sale by bidding up the price after the bids had long past. Its a good thing that the land owner knew the true character of this guy. He knew that in no way he could get financing or be able to pay the debt even if he did. In the end the land would be turned back so he laughed of the bullshitter and sold it to the current operators who rented it.

All they had to do is match the highest bidder at which was around $800 an acre.

This is what they were willing to pay anyway.

[freewheat]

It was sold to the current operators who HAD been renting it.

Guess I'm typing too fast

[gustgd]

In this area of Sask. we just bought some for 85 a quarter or about 1.5 X assesment. good flat land farm 158 acres most years 150 in wet years.

[checking]

Freewheat, you are looking at buying doorstep land which is the correct way to go. No one likes road travel, and if you can obtain it in a block such that you seldom have to fold equipment, you should be able to justify paying more for the convenience. In this area little changes hands except for the odd estate settlement, or the occasional divorce division of assets. There are a fair number of absentee landlords who won't part with their dirt due to surface lease potential from oil companies, or simply sentimental reasons. That which does come up for sale, well $35,000 to $60,000 would catch most of it. Rents are $12 to $20/acre, or one guy 200 bushels of canala per quarter. Hopperbin is right. Assessment means nothing, unless you are the RM, and it has tax tools to get what it needs to handle the Queen's roads. Best of luck with your purchase.

[bluefargo]

I beg to differ with those that think there is no use using the assessment to to make land purchase decisions. It's a very useful tool. The assessment tells you a lot about the relative value of land. Don't ignore it.
I don't remember all the factors that go into the assessed value. But some of them are soil type and texture. topography, rocks, salinity, sloughs etc.
In our area last spring land sold for 1.3 to 1.7 times the current assessment. This translates into $500 to $775/acre. The quarters I checked were assessed at 60000 to 71000 /quarter.
There has been some land move here this winter and I am curious to know what it went for. I suspect it's up a little.
In some ways the "old" assessment was more useful in determining land value because it didn't change as often as the "new" assessment.
I usually don't rent land but I am renting a 1/2 section this year for $30/ac.

[checking]

Here's my assessment of "assessment". It wouldn't be around if RMs didn't require taxes to do the things that individual farmers no longer have time for, like building and maintaining roads. If it wasn't around, what would bluefargo use instead as a value for land? Here is a little story. Not to date myself, because it does not represent my age or education, but I recall a grade seven history text used in the 1970's that had a section on South America, particularily the rain forests of Argentina and Brazil. It specifically stated the land was good for subsistence agriculture only. Fertility lasted but a couple of years once it was cleared for their equilivant of yam production, then the natives moved on to their next clearing. Wow!, fast forward to 60 million tonnes of soybeans for Brazil, 47 million tonnes for Argentina, one of two or three different crops per year - same soil - 30 to 40 years apart. I believe that eliminates soil type as a basis for land value. I'd say land value should be based on availability of natures sprinkler system, unless you are on the northern China plain! All else can be added, picked, levelled (bad word), consolidated, and filled.

[bluefargo]

Yes , that's what we're talking about. The assessment of land for tax purposes. But that's what makes it so useful. The land is assessed so the guy that owns a quarter of sandy soil doesn't pay the same taxes as a guy with a quarter of heavy clay. The assessment people have come up with a pretty elaborate system to evaluate the relative value of each piece of land. Since the assessed value is public we get to use it to make our decisions.

What would I use if it didn't exist?
I'd have to make my own evaluation.
I'd use some of the things I do now: my eyes, aerial photos, drive over it, talk to neighbours etc.
Assessment is only one tool to value land. But its a good one. I repeat: Don't ignore it!

[freewheat]

In my case, assessment is lower on the tendered land as it is a transitional soil. It is a class 2 soil, based on less than ideal soil structure. I don't think it matters when you don't fallow it, as no-til builds/maintains soil structure. It is called a dark grey chernozem, (though it still looks perty black to me!) vs. the thick black bordering it. This dark grey soil is still quite high in OM,(5% or so) and is a loam-clay loam texture. The A horizon is slightly shallower than the black land. These factors are on the assessment sheet from years ago, and would be more of a factor before the years of no-til and fertility packages. An assessment sheet I have says it would produce 25-30 bushels of hrs wheat under summerfallow conditions. Well, if no-tilled with any kind of fertility measures, a minimum of 50 bushel wheat would be realized.

What I am saying, is that in this case the assessment which calls this soil 50% less productive than the higher assessed land nearby, is grossly inaccurate, as it would produce at worst 95% of the crop you could grow on the "better" soil adjacent...

Thanks for the input.

[Hopperbin]

I guess land in my area has undergone many improvements that may not be reflected in the assessment. Also since my highest assessed land is also my poorest productively, we have a new assessment now so will see if many changes, I would immagine anyone wishing to sell has bragged his land up while others paying taxes for the next 30 years have given reasons for reducing the assessment. If you have driven past the land since forever and have experience with how you can improve the land your judgement is sound. Looks like you can make a good deal, myself I would jump at something like that. Then again I keep telling myself I am not buying anymore land.

[bluefargo]

Interesting discussion. I too have hilly, rocky, sloughy land (52000 assessment) that seems at times to out produce my flatter no rock land.(66000 assessment). But the flat land is way easier to farm and has 155 cult acres.
The lower assessed land has only 135 acres and is a pain to farm. The sloughs are deep and there isn't much potential to improve.

Freewheat - if the land is closeby, you are confident it is productive and you can make the payments buy it!

It looks like you will be bidding about $86000 which would be a little high for this area but it sounds like you are in a pretty productive area.

[gustgd]

Another thought on assessment is that's what the lenders will use as a value
ex Affinity will only lend at 75% of assessed value.
or If the land is paid off loan 75% of assessed value as security on your LOC which gets you better rates.